To capture the Indian e-commerce market and surpass its competitors Amazon has reduced the commission it charges from sellers on electronic goods and computer software as it looks to expand its base of sellers.
According to news by Business Standard, the move by the US online retail giant comes soon after Flipkart, which is under pressure to cut losses, increased commissions, while also passing on the cost of shipping and returns to the sellers.
Amazon has reduced commissions for smartphones and tablets by 30%, charging sellers just 3% of the cost of the device. The biggest drop in commissions on Amazon was seen in the electronic content and software categories, where the firm reduced its commission by 58% from 12% to 5% on movies and educational software. These typically are animation videos or e-learning software on CDs that are targeted at young school kids.
The new rates will be effective from June 17 as per a mail sent to sellers.
“It is a business call that I really appreciate. Amazon has taken a big call in reducing commissions, which has gone down by 25% on average. They have reduced commissions for all high GMV products. Flipkart on the other hand is charging more than the industry, and I feel Amazon is calling us with open arms saying that we are taking care of you sellers,” said Sanjay Thakur, president of eSellerSuraksha, a lobby group for sellers on online platforms.
While Amazon too increased commissions for certain categories late last month, the change was largely for non-core product segments such as mobile cases and screen guards, luggage, pet accessories and shoes. The maximum increase in commissions was 9% for mobile accessories, while majority of the segments saw a 2% increase.
Amazon’s decision to cut commissions, a move which will reduce earnings, comes at a time when the company announced it would invest another $3 billion in its India business.