https://www.moneycontrol.com/news/business/amazon-notifies-sellers-of-revised-fee-structure-potentially-leading-to-increased-prices-10592971.html
While sellers said most of the price increases would be passed on to customers, they feared that their products would be ranked lower on the list of options that popped up under the ‘similar’ tab, largely because of how Amazon’s algorithms work. There were also chances that the same product would be sold at a lower price by sellers either on Amazon, by taking a price hit, or on another platform, thereby hurting sales, another seller said.
In a recent notification to its sellers, Amazon announced a revision in its fee structure that will take effect from May 31, 2023. This change is expected to result in price increases for certain items sold on the platform.
Currently, for every item purchased from a seller on Amazon, the seller pays fees to Amazon, including charges for inventory storage, shipping, returns, and a seller fee.
One seller interviewed by Moneycontrol expressed concerns that the increased seller fee would likely lead to lower sales and reduced earnings from the platform.
Amazon’s notification stated that the revised fee structure encompasses changes in each category of items, long-term storage fees, and refund fees. It’s important to note that these fee increases do not include the 18 percent Goods and Services Tax (GST) that will be levied on the seller fee.
The steepest increase in seller fee was observed in the over-the-counter (OTC) medicine category. Previously set at 5 percent, the fee has now been raised to 12 percent for items below Rs 500 and 15 percent for items priced above Rs 500.
Beauty products, including haircare, bath and shower products, and makeup, also experienced significant increases in seller fees, as did apparel.
While certain categories saw fee increases, Amazon also reduced fees for specific products such as solar panels, gym equipment, automotive parts like floor mats, and more. These fee reductions are expected to be implemented by the end of May.
Although most of the price increases will likely be passed on to customers, sellers are concerned about potential repercussions on their ranking within the platform’s search results.
They fear that the higher prices resulting from the fee revisions could negatively impact their position in the “similar” tab, primarily due to Amazon’s algorithmic ranking system. Additionally, there is a risk that the same product may be available at a lower price either from other sellers on Amazon or on alternative platforms, leading to a decline in sales.
The decision to revise the seller fee follows Amazon’s move in September of the previous year to reduce the fee by half for new sellers joining the platform, aiming to encourage them to sell on multiple e-commerce marketplaces.
In addition to changes in seller fees, Amazon has also made adjustments to inventory holding fees, shipping charges, and other related aspects. More details can be found in the provided link.
Moneycontrol reached out to Amazon for further details but had not received an immediate response at the time of reporting. The article will be updated upon receiving a response.
