As the festival season approaches, e-commerce giants are lining up to maximise sales. Preparing ahead, Amazon and Flipkart have revised fee and penalty structures for sellers on their platforms. However, the fee hike means sellers could face additional costs, raising concerns among small and medium enterprises which operate on thinner margins.
According to a notice issued on Amazon India’s seller forum, it has changed its cancellation fees policy, which is now linked to the value of the order rather than the earlier referral-fee-based structure.
The fee applies to both delivery options: Easy Ship and Self-ship services. Easy Ship is Amazon’s delivery service, where an executive from the company itself delivers the order after receiving the package from the sellers. Under Self-ship mode, sellers arrange both packing and delivery through their own courier or delivery service.
The revised structure came into effect on August 17. Under the new policy, the cancellation fee is 10 per cent for orders below ₹10,000, and 8 per cent for orders between ₹10,001 and ₹50,000. The charges are lower for bigger orders, with 5 per cent commission for products priced between ₹50,001 and ₹1 lakh and 2 per cent for orders above ₹1 lakh.
However, the fees will not apply when a buyer requests cancellation. It will only apply when the seller themselves cancels the order or if the seller fails to confirm the shipment within 24 hours of the estimated ship date. Remember, all of this also has an additional GST of 18 per cent.
For example, if a seller cancels an order for a T-shirt costing ₹1000 because of dead stock, the seller will pay Amazon a total cancellation charge of ₹280.
Some sellers said that cancellations are beyond their control, including situations when the delivery personnel fail to arrive for a scheduled pickup.
Amazon has also increased its closing fee, a fixed fee charged to sellers on every item sold. The fee has been increased by ₹1 for products priced up to ₹500 and by ₹3 for products priced above ₹500.
Meanwhile, Flipkart has introduced penalties for order fulfilment failures, effective since August 23.
The revised policy says that a shipment not ready for pickup by the committed Dispatch By Date (DBD) will be fined ₹30. An order automatically cancelled after three missed dispatch deadlines, or an order cancelled by the seller itself, will be fined ₹60 per shipment. If the order is delayed and then cancelled, the penalty will increase to ₹90.
For e-commerce giants like Amazon and Flipkart, an order cancellation triggers a costly chain reaction across their complex supply chains because of reverse logistics stocking. Amazon also flagged concerns about a hike in fuel and logistics prices.
However, sellers also face the same costs and might even have to bear the Merchant Discount Rate on UPI transactions. This can further increase costs for small sellers who operate on thin margins.
