MUMBAI: Amazon will no longer charge commission from sellers for products priced under Rs 1,000, reducing their cost of doing business on the platform and potentially pushing prices lower for consumers, a move analysts said is aimed at perking up sales volumes and retaining consumers, many of whom are moving to quick commerce platforms for small, frequent purchases.
There’s also competition from e-commerce rival Meesho which targets mass shoppers and sells goods at lower prices, a benefit the firm is able to extend users largely because of its zero commission model. Sellers selling on platforms such as Amazon and Flipkart typically pay a fee or commission to the companies for every product sold through their websites. For consumers, it means cheaper price tags, making shopping on Amazon a bit more affordable.
In a similar move in April last year, Amazon had removed seller commission for products priced under Rs 300. The new changes which will now cover more than 1,800 product categories will come into effect from March 16. The company is betting on the move to add more small sellers to its platform besides getting existing sellers to widen their assortment, Amit Nanda, director, selling partner services at Amazon India told TOI.
“Many sellers pass on between 50%-100% of the lower costs to consumers because fundamentally, they are here to grow their business,” Nanda said. The frequency of purchases in the sub-Rs 1,000 category tends to be higher, leading to more volumes. “There’s a sense in the market that volume growth is coming from categories with low average order value (AOV). If sellers cannot make money, they won’t come and list on Amazon and that’s their goal–to get more sellers. Also, for smaller categories such as toys and stationary items for instance, many households are moving to quick commerce platforms. That is a worry for firms like Amazon,” said Satish Meena, founder at Datum Intelligence.
Amazon has also slashed shipping fees by over 20% for products priced under Rs 300. The company said that sellers should save up to 70% on costs through the changes being implemented.