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Dec 25, 2023

Shopping From Amazon Likely To Become Costlier From May 31st

Do you shop on Amazon? If yes, then doing so is likely to get costlier for you

Do you shop on Amazon? If yes, then doing so is likely to get costlier for you starting May 31st as the ecommerce giant is increasing commissions and fees collected from sellers across multiple categories, including electronics, beauty, apparel, eyewear, pharmaceuticals, home, and pets.

This could potentially increase prices for customers, as per what the sellers said, according to the ET report. Several sources and brands working with Amazon India said the e-commerce giant has seen the highest impact among the leading e-commerce platforms.

Last year, in November, Amazon became the world's first public company to lose $1 trillion in market value.

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The seller fee for over-the-counter medicines has been increased from 5.5% to 12% for products priced less than or equal to Rs 500 and 15% for items priced above Rs 500, effective May 31, 2023.

However, Amazon has also lowered seller rates for certain categories like wall paints, tools, inverters, and batteries and reduced tiers or allocated a single rate of commission for some categories like makeup. "Marketplaces know that there will be a direct impact on pricing," said one of the sellers. "Whatever the change in commission, it is done more to change the behaviour of the seller. Marketplaces keep changing these rates based on what they want consumers to see. So, if the commission goes up by 2%, naturally the prices also go up by 2%."

E-commerce companies like Amazon and Flipkart make money by charging commissions and fees from sellers for products sold through the marketplace. The rates keep changing depending on market conditions, Amazon reportedly said. Sellers pay fees for inventory storage, shipping, and returns for each product in the marketplace.

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"As part of our annual process, we have recently announced fee revisions that will be effective from May 31, 2023," Amazon said in an emailed statement to ET.

"Seller fee revisions are based on various factors including change in market dynamics and various macroeconomic factors. As a part of our recent fee revision, we have made certain changes to our fee rate card, including introduction of new fee categories and also reduction of fees in certain categories."

Amazon has made changes to referral fees, long-term storage fees, refunds related to returns, and fulfilled-by-Amazon (FBA) pickup fees for sellers, which are shipping rates. Amazon has also increased shipping rates by about 20–23% for products that need to be shipped nationally.

The seller fee hike comes as the ecommerce giant is seeing a slowdown in growth across businesses and is undertaking layoffs across the globe as a part of cost-cutting initiatives. Globally, a consumption slowdown has impacted Amazon's overall growth. The e-commerce giant has already laid off 27,000 employees in two phases (18,000 in the first phase and 9,000 in the second phase), with Indian employees being impacted as well.

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