Online marketplace Amazon India has increased shipping fees for its 2 lakh sellers by 10-15 per cent, a cost that will ultimately be passed on to the customers, two months before its biggest annual festival sale kicks off.
As per the new rate card sent out to sellers, which BusinessLine has access to, all prices have been increased in the range of 10-15 per cent for weight handling fees in national zones. The card also includes a new regional zone concept, offering lower shipping costs by up to 35 per cent.
In an email sent out to sellers, Amazon explains: “The new ‘Go Local’ fee structure by introducing distance-based, weight-handling fee rates for FBA (Fulfilment By Amazon) sellers will reduce your cost of doing business on Amazon whenever you place inventory closer to your customers, resulting in faster deliveries, satisfied customers and increased sales for you.”
Irate sellers
Fulfilment By Amazon (FBA) is a paid service that gives sellers access to Amazon’s fulfilment resources, fast and free delivery options for their products, and trusted customer service. Sellers send products to an Amazon fulfilment centre, where the e-tailer stores it, picks, packs and ships the orders across India and provides customer service.
Irate sellers that BusinessLine spoke to, said the regional zone concept has been introduced and promoted in the mail just to mislead sellers regarding savings in cost. “The reality is, Amazon does not provide any technical facility to sellers which can enable them to charge customers separately on the basis of region, neither does it compensate sellers on costs incurred on GST registrations that will have to be done in each State, an extra cost that sellers will have to incur. We were happy that we no longer have to pay 15 per cent Service Tax under the GST tax regime, but that benefit has effectively been wiped out with the corresponding increase in national shipping fees” they said. On being contacted, an Amazon India spokesperson said: “The recent shipping fee change for our FBA sellers, which is independent of the GST implementation and is based on our regular seller feedback...To help sellers further, we recently launched the ‘Go Local’ programme that will assist sellers to avail our FBA services in additional regions by placing their inventory closer to customers and reduce their cost of business by up to 35 per cent, leading to faster deliveries for customers. The early response from sellers has been highly positive.”
A spokesperson from AIOVA (All India Online Vendors Association) Forum, which has over 3,000 registered sellers who sell in various online marketplaces, disagreed with Amazon’s viewpoint. “The benefits received under the GST tax regime could have been passed on to online shoppers in the form of reduced prices, which in our estimate would range from 1-5 per cent across categories and price points. However, with the national shipping fee hike of 10-15 per cent, it may no longer be possible.”