Post FDI E-comm Rule Amazon Dials Down Commissions Charges

In the aftermath of the FDI e-commerce rule, Amazon India has reportedly reduced its commission charges to attract more independent sellers and establish itself as a friendly marketplace.

The commission has been lowered down by 35 percent for famous fashion sellers and by over 50 percent on specific FMCG categories.

“We introduce limited-period fee promotions regularly for our sellers to motivate them to grow their business on the Amazon.in the marketplace,” an Amazon India spokesperson reportedly said in an email.

In a bid to boost sales from independent sellers, Amazon has started a rating-based commission system for fashion vendors. The best performers will pay around 35 percent less commission as compared to what they were paying before. The vendors will reportedly earn incentives based on their position on the rating scale and will gain the maximum benefit as reduced commission rates, the source added.

With the new e-commerce FDI rules applied from February 1, Amazon and Walmart’s have together lost USD 50 Bn in market capitalization.

In December 2018, the government notified changes for large online marketplaces with the new FDI policy for e-commerce. According to these rules,  e-commerce companies can enter into transactions with sellers only on B2B basis. They will not exercise ownership or control over the inventory. Cash back provided by group companies of marketplace entity to buyers shall be fair. E-commerce marketplace entity will not mandate any seller to sell any product exclusively on its platform only.

Beyond exclusivity, the notification also prohibited marketplaces from making more than 25 percent of purchases of a vendor.

Amazon India has also removed all the product listings from its preferred sellers such as Cloudtail and Appario Retail in India to comply with the rulings.

The changes in the FDI e-commerce had a negative effect on the company’s private label brands such as Symbol (fashion), Myx (fashion), Solimo (home and kitchen), and its smart speaker range, Echo. The smart speakers which were earlier unavailable on the website, are now being sold by online sellers such as Hariom Communication LLP and 4 U Marketing. However, the delivery time will get extended to about 15-20 days.―Inc42

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