Amazon cuts commission rates for certain brands to boost sales

Amazon cuts commission rates for certain brands to boost sales
Photo Credit: Photo Credit: Reuters
13 Feb, 2019

E-commerce major Amazon India has reduced seller commission charges for certain brands in the sports, fitness and outdoor category from January 15 to February 15 to give sales a fillip during that period, said media reports. Typically, sales during the February-March period is reduce due to a lack of festival-driven shopping in the retail industry.

According to a report in The Economic Times, the commission rates have been cut by up to 35% for fashion sellers and up to 50% for sellers in certain fast-moving consumer goods categories selling on the platform.

An Amazon India spokesperson told TechCircle that this was part of a regular exercise by the platform, not commenting on whether the promotions are in contravention of the Press Note 2 issued by the Department for Promotion of Industry and Internal Trade (DPIIT) which came into effect on February 1. The ruling prohibits sellers from binding contracts to sell exclusively on a given platform.

“We introduce limited period fee promotions regularly for our sellers to motivate them to grow their business on the Amazon.in marketplace,” said the Amazon spokesperson.

After Press Note 2 came into effect, Cloudtail, one of the largest sellers on Amazon India, had its ownership restructured to ensure that it does not violate the FDI guidelines. The marketplace had also pulled out some of its private labels to ensure compliance.

Seller bodies, however, have been critical of violation of the guidelines in spirit and indicated that the promotions undertaken by Amazon are in conflict with the notification.

“Sellers have received no communication from Amazon regarding the change in fee structure. However, Amazon has started extending promotional rate cuts for specific brands and period in an opaque manner. This violates the point 9 of Press Note 2,” said a spokesperson for the All India Online Vendors Association, a group of small and medium online sellers.