Sellers of online marketplace Amazon India will now have to start paying delivery costs based on distance and region as the ecommerce major has revised shipping costs for sellers using its logistics service.
According to a report in the Economic Times, the revised costs divide the country into four regions. The new charges, under Amazon’s ‘Go Local’ programme, makes it cheaper for sellers to ship to customers who fall under the same region as the seller. However, shipments from one region to another will see an increase of 15-16% in the weight handling fees charged by Amazon.
Sellers using Fulfilment by Amazon (FBA) programme and storing their inventory in the Amazon fulfillment centers will come under these new charges. ET reports that FBA covers more than 60% sellers on Amazon.
Only the weight handling fees will be revised while the other components like pick and pack and storage fees will remain constant. Amazon India told its sellers in an email that the revised rates will come into effect from August 8.
“The recent shipping fee change for our FBA 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,” an Amazon India spokesperson said in an email response to ET.
Amazon spokesperson claims that sellers can reduce their costs by 35% by placing their inventories closer to customers by availing FBA services in additional regions under the Go Local program.
However, vendors don’t seem to agree to this. ET spoke to a few vendors who say that for Amazon’s claim to be true, all orders should be from a single region.
“Only if a seller’s 31.8% orders or more are from his own regions will the new rate be beneficial,” an independent seller told ET.
According to a report in the Times of India, online seller group, the All India Online Vendors Association (AIOVA) has called the new policy by Amazon unethical.
The association also wrote to Amazon saying this will result in higher cost of business for sellers and prices will have to be hiked.
"Till now we were faced with the cascading effect of taxes, which got eliminated due to GST. Amazon has increased prices by 15%, which is similar to the service tax. In the post-GST regime, sellers were absorbing 4-5% benefit that would have been passed onto consumers. Now Amazon will eat up this benefit,” an AIOVA spokesperson told TOI.