Amazon India tweaks seller fees; Shoes, apparels sellers to bear higher "Long Term Storage Fee”

Inventories overstocked or stored indefinitely in fulfilment centres limit a marketplace’s ability to provide space for fast-selling products of other sellers. Thus, come the raison d’etre for Long Term Storage Fee.

As its competition with Flipkart intensifies, Amazon India rejigged its seller fee structure to make the platform an attractive marketplace for both sellers and buyers. Amazon India revised referral fee for multiple product categories, along with fixed closing fee for sellers that will be effective from April 19.

What is noteworthy is that third-party sellers have to shell out more for categories like shoes and apparels to keep their merchandise in Amazon’s fulfilment centres (FCs) for a long time. Amazon India, in a communication to sellers, said. “Effective April 30, 2018, we will charge “Long Term Storage Fee” (LTSF) for Shoes and Apparel categories for inventory units that have been stored in the FC for 6-months and 12-months, respectively”.

Inventories that are overstocked or stored indefinitely in fulfilment centres limits a marketplace’s ability to provide space for fast-selling products of other sellers. Marketplaces justify the levying of the the storage fee because slow- moving goods hog space that might have been used in a better way for fast moving goods.

An Amazon India spokesperson said, “We now have over 3 lakh sellers on our marketplace offering over 160 million products to customers across India. Many of our new sellers now come from smaller towns and semi-urban and rural areas and they are catering to a nationwide customer base. Our Prime offering too is expanding significantly helping our sellers access this loyal customer base and frequent purchasers. We feel it is now more important than ever to empower sellers more and provide them more choice, agility and flexibility to serve this growing demand from all segments of customers across the country. Thus, we are making some tweaks in our fee structure, to be effective from 19 April, 2018.”

Recently, Flipkart spoke about unsellable inventory incurring long-term storage fees in its communication to sellers. It announced a new capability - Automated Recall - where sellers can avoid LTSF for their inventory that has been unsold for more than 90 days. Such unsellable inventory will be automatically sent to the default return address that the sellers would have provided on the Seller Portal, a communication from Flipkart said.

Talking about weight handling fees, Amazon India stated to sellers, “We have revised Weight Handling Fee structure to offer lower rates when your inventory is shipped locally. With the new rate-card, you can realise savings in your Weight Handling Fee if your inventory is shipped locally or regionally”.

The rejig in seller fees structure comes months after rivals Flipkart and eBay reduced sellers’ commission rates in November to incentivise sellers of certain items such as T-shirts, books, mobile cases and covers and others, in an attempt to cash in on the huge demand for low-value products.

Continuous engagement with third-party sellers is a regular feature for these marketplaces. They not only have to make sure of making their marketplace the most attractive for both sellers and buyers, but have to also ensure that no sellers indulge in selling counterfeit goods and simultaneously reduce the return of goods from the buyers’ end.