Amazon Goes All Out To Take On Flipkart By Undercutting Sellers’ Fee

Seattle: Electronic commerce and cloud computing company, Amazon has slashed seller commssions on smartphones and software, following rival Flipkart’s decision to increase fees, while also passing on the cost of shipping and return to sellers.

A seller’s group has threatened to stop selling on Flipkart. Electronics, mainly smartphones, make up a third of all online sales in India. Amazon has reduced commissions on smartphones and tablets to three percent from five percent of the cost of the device. For movies and educational content, it has reduced the commission to five percent from twelve percent.

Amazon’s decision to cut commission allows sellers to offer products at a lower cost, effectively by passing Foreign Direct Investment (FDI) norms for e-commerce marketplaces that ban such players from offering discounts.

Flipkart and Snapdeal will feel the pressure of matching Amazon’s rates. The three players had combined losses of about Rs 7,000 crore in 2014-15. In the US, too, Amazon has reduced shipping costs for small items such as phone accessories, a segment dominated by Chinese e-commerce giant Alibaba and US-based eBay.

“We think these revised rates can help sellers to perform even better,” Amazon India said in a statement. “We hope sellers will take advantage of these revised rates.” Amazon said it had increased its seller base to 85,000, growing annually by 250 per cent. Three years ago, when Amazon set up shop in India, it had around 100 sellers. “Amazon has taken a big call in reducing commissions,” said Sanjay Thakur, president of eSellerSuraksha, a lobby group for sellers on online platforms. “Flipkart, on the other hand, is charging more than the industry.”