Amazon India will charge third-party sellers an additional distance-based shipment fee on ‘Fulfilled By Amazon’ orders. This could lead to a 15 percent rise in the cost of business for such vendors, ToI reported. Sellers are naturally displeased as they believe that whatever GST benefits they had received (and passed on to consumers) will now be offset by this additional fee. Amazon told sellers in a letter that the charges would be implemented August 8 onward.
“This will lower your shipping costs by up to 35 percent by charging weight handling fee in proportion to the distance that the shipment travels to the customer delivery location,” the Amazon letter noted. However, the All India Online Vendors Association (AIOVA) is making efforts to oppose this. They have deemed the move unethical. “In the post-GST regime, sellers were absorbing 4-5 percent benefit that would have been passed onto consumers. Now Amazon will eat up this benefit,” an AIOVA spokesperson told the publication. ALSO READ: Amazon India rolls out ‘Local Finds’ feature on its website
Third-party sellers are Amazon’s backbone globally. Last year, the Seattle-based company announced on its Sellers Central forum that third-party vendors had achieved “record-breaking sales” in the US. Their number had grown 70 percent year-on-year. Outside the US, shipments grew 80 percent and over 2 billion ‘Fulfilled By Amazon’ orders were delivered worldwide. Third-party sellers now account for 40-50 percent of Amazon’s retail business. In India too they play a critical role. Amazon takes a cut from each third-party order and also charges the seller for warehousing and logistics.
While the online vendors association is miffed at Amazon’s revised cost structure, the company has reportedly stated: “The recent shipping fee change for our Fulfillment by Amazon sellers, which is independent of the GST implementation and is based on our regular seller feedback, will provide sellers the opportunity to reduce their costs of doing business on Amazon.” ALSO READ: Amazon India launches GST Cafes to help sellers transition into the new tax regime