Amazon.com, Inc. (AMZN) Boosts Commissions Charged to Third-Party Sellers

Amazon.com, Inc. (AMZN) Boosts Commissions Charged to Third-Party Sellers

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Amazon.com, Inc. (NASDAQ:AMZN) is looking to reduce its losses and increase profits in India. One way to achieve this is to boost commissions it charges to third-party sellers. The retail giant isn’t the only one doing this. Other ecommerce firms are looking to make more money in the South Asian economic powerhouse.

Amazon.com, Inc. Irks Indian Sellers With Changes

Amazon has been in India since 2013. At first, the website simply sold films, TV shows and books. Today, it pretty much sells everything, from mobile phone accessories to clothing.

Amazon India has raised the referral rates, or commissions, it charges to third-party sellers. On the marketplace, these sellers can now expect to pay up to an additional nine percent. The website applied the referral rate hike on an array of products last month.

The tech titan also raised fees for logistic support it offers sellers. According to revised rates, a minimum charge will be applied to products with weights of up to 500 grams. If a product is heavier than 500 grams then the third-party seller will be charged in multiples of the price for every 500 grams.

Sellers are upset by these changes. They are even more bothered by the fact that some sellers face less charges than others. It was reported that CloudTail saw its commissions fall, while others had to pay heftier fees.

A spokesperson of the All India Online Vendors’ Association (AIOVA) adds that the firm did not consult with its sellers before making the changes.

“Changes in commission cannot be avoided. But Amazon is on a one-sided track, not taking sellers’ views on policy changes,” a media rep told a local news outlet.

In the meantime, sellers have passed on the extra costs to customers. This has resulted in the drop in sales as high as 60 percent. The steep decline is huge considering that the nation’s ecommerce market is projected to spike from $26 billion to $103 billion in 2020.

Amazon.com, Inc. Trying to Make its Mark in India

A lot of brands have been established in India. An array of firms are looking to profit from the growing economy in the South Asian land. It isn’t just Amazon, but also Wal-Mart Stores, Inc. (NASDAQ:WMT) and Apple Inc (NASDAQ:AAPL). But Amazon is trying to beat them all.

Earlier this year, the website bought Indian payments process Emvantage. The move is part of an attempt to provide local customers with an in-house payments processing platform. The acquisition would be merged into Amazon India in an effort to boost sales.

Amazon wants a big piece of that $103 billion pie. This is why it’s trying everything to maintain a steady and loyal customer base. However, in recent months, Alibaba Group Holdings Ltd (NYSE:BABA) has also been sniffing around India, making its presence known.

Whether or not others can oust the firm from the top seat remains to be seen. Amazon already has an edge over its rivals and that is instant gratification.

The website has developed its own logistics and distribution networks. This means customers can buy and receive their products much faster when using Amazon.

And one survey found that Indian shoppers trust the Amazon brand more than any other one.

For the time being, the firm’s investment in India is paying off. Can other brands beat Amazon at its own game? Only time will tell.


source: Learnbonds