Amazon India has announced a significant reduction in referral fee for over 12 million products priced below ₹300. Effective from April 7, this is the company’s largest seller fee cut to date. The initiative aims to support small businesses, making online selling more profitable. The zero-referral fee policy applies to 135 categories, including home decor, apparel, groceries, and footwear. Previously, Amazon charged sellers a commission of 2-4% per sale. Additionally, Amazon has reduced national shipping rates from ₹77 to ₹65 and lowered weight handling fees by up to ₹17 for items under 1 kg. The move is part of Amazon’s long-term commitment to empowering small and medium enterprises (SMEs) and strengthening its foothold in India’s competitive e-commerce sector.
1. Amazon India: Business Model, Revenue Streams, and Founders
Amazon India operates as a subsidiary of Amazon, the global e-commerce leader founded by Jeff Bezos in 1994. The company entered the Indian market in 2013, offering a vast range of products, including electronics, fashion, home essentials, and groceries. Amazon India generates revenue through multiple streams, including referral fees, subscription-based services like Amazon Prime, and advertising revenue from sellers. Additionally, it earns from its logistics services, including Fulfillment by Amazon (FBA), where sellers store their products in Amazon’s warehouses for efficient delivery.
1.1 Founders and Growth Story
Amazon was founded by Jeff Bezos, a former hedge fund executive, in the United States. In India, Amazon’s leadership includes Manish Tiwary, Vice President of India Consumer Business, and Amit Nanda, Director of Selling Partner Services. Since its launch in India, the platform has aggressively expanded its seller network and logistics capabilities to become a dominant force in the Indian e-commerce industry.
2. Understanding Amazon India Referral Fee Reduction
Referral fees are commissions that sellers pay to Amazon for every product sold through its platform. Previously, sellers had to pay a referral fee of 2-4% on low-cost products. With the new policy, Amazon has completely waived this fee for products priced below ₹300. This benefits lakhs of small and medium-sized sellers across India, particularly those dealing in low-cost, high-volume items.
2.1 Categories Benefitting from Zero Referral Fee
The zero-referral fee policy covers over 135 product categories, including:
- Home decor and furnishings
- Grocery and daily essentials
- Fashion and footwear
- Jewellery and accessories
- Toys and kids’ products
- Kitchenware and home appliances
3. Shipping Fee and Weight Handling Cost Reductions
Apart from referral fee elimination, Amazon India has also introduced cost reductions in shipping and weight handling. National shipping rates for sellers using external fulfillment channels like Easy Ship and Seller Flex have been reduced from ₹77 to ₹65. Weight handling fees for lightweight products under 1 kg have also been cut by up to ₹17. Sellers shipping multiple products in a single order can now save up to 90% in selling fees on the second unit, making bulk sales more cost-effective.
4. Why is Amazon India Cutting Seller Fees?
Amazon India’s decision comes amid growing competition from quick commerce platforms like Blinkit, Swiggy Instamart, and Zepto, which dominate the grocery segment. By reducing seller fees, Amazon aims to retain and attract more small business owners to its marketplace, ensuring a diverse and competitive seller ecosystem. The move is also in line with Amazon’s long-term vision of expanding its influence in India’s e-commerce sector.
4.1 Impact on Small Businesses and Sellers
With reduced costs, small and mid-sized businesses will find it easier to compete with larger brands. More affordable pricing for consumers is also expected, as sellers pass on their savings to customers. The move strengthens Amazon’s value proposition, making it the preferred platform for Indian entrepreneurs.
5. Background: Amazon India’s Previous Fee Reductions
Amazon India has made similar seller-friendly moves in the past. In September 2024, the company reduced selling fees by 3-12% across 59 product categories. This was aimed at easing financial pressure on sellers before the festive season. The latest referral fee waiver continues Amazon’s commitment to supporting seller growth in India.
6. Regulatory Scrutiny and Industry Impact
Amazon India reduces referral fee that has come at a time when regulatory bodies are closely monitoring e-commerce platforms. The Competition Commission of India (CCI) previously found Amazon and Flipkart guilty of anti-competitive practices. Additionally, the Bureau of Indian Standards (BIS) recently conducted search operations at Amazon warehouses, seizing non-certified products. By offering financial incentives to sellers, Amazon is not only improving its market position but also countering regulatory challenges.
7. Learning for Startups and Entrepreneurs
- Customer-Centric Pricing: Amazon’s decision to eliminate referral fees on low-cost products shows how pricing strategies can drive customer loyalty and seller growth.
- Competitive Differentiation: By reducing fees, Amazon is strengthening its seller ecosystem against competitors like Blinkit and Zepto. Startups should learn the importance of competitive pricing.
- Scaling through Cost Efficiency: Lowering fees helps Amazon onboard more sellers and increase product variety. Startups can implement similar cost-saving strategies to scale operations.
- Adapting to Market Trends: Amazon constantly adjusts its business model based on market trends. Entrepreneurs should stay agile and innovate to stay ahead.
- Regulatory Awareness: Navigating legal and regulatory challenges is crucial for any business. Amazon’s proactive approach to compliance shows the importance of understanding industry regulations.
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