Amazon, Flipkart restructure seller fees, penalties ahead of festival season

Ecommerce majors Amazon and Flipkart have revised fee and penalty structures for sellers on their platforms in the weeks leading up to the festive shopping season, a move that sellers say adds to the financial burden on small and medium enterprises already operating on thin margins.

According to a notice issued by Amazon India on its seller forum, the company has, effective August 17, 2026, changed how it calculates order cancellation fees for sellers using its Easy Ship and Self Ship services.

Under Easy Ship, sellers store their own products, pack them when they receive an order and then hand them over to the Easy Ship Pickup executive, who then ships the product and ensures timely delivery.

In Self Ship, the seller packs and delivers the product themselves, using their own courier or delivery service, with no Amazon logistics involved.

The fee, previously based on category-specific referral charges, is now calculated as a percentage of the order value.

Under the revised structure, sellers are charged 10% of the order value for orders below Rs 10,000, 8% for orders between Rs 10,001 and Rs 50,000, 5% for orders between Rs 50,001 and Rs 1,00,000, and 2% for orders above Rs 1,00,000, with an 18% goods and services tax levied in addition.

The fee applies when a seller cancels an order for reasons other than a buyer's request and when an order is automatically cancelled because the seller does not ship and confirm the shipment within 24 hours of the estimated ship date.

In another notice, Amazon said it will increase closing fees across its Fulfilment Center, Easy Ship, and Seller Flex channels with effect from September 7, 2026.

Amazon charges a closing fee every time a product is sold, based on the product's price range. This fee varies based on the fulfilment channel a seller is using.

The fee will rise by Rs 1 for products priced up to Rs 500 and by Rs 3 for products priced above Rs 500. The company attributed the increase to higher fuel and logistics costs.

"We expect orders placed by customers to be fulfilled reliably by sellers on our marketplace. To encourage timely and dependable fulfilment, we have revised cancellation fees for Easy Ship and Self-Ship sellers. This fee is conditional and only applies in the rare event of a seller-initiated cancellation, which accounts for less than 1 per cent of orders on Amazon.in. We have appropriate measures in place to ensure sellers are protected when cancellations are due to circumstances beyond their control," an Amazon spokesperson said.

Responding to notices on Amazon's seller forum, some sellers said cancellations were at times caused by factors outside their control, such as delivery personnel failing to arrive for a scheduled pickup, and questioned why cancellation fees should apply to the seller in such instances.

Another seller said the difference in total fees between sellers using Amazon's fulfilment network and those on Easy Ship could be as high as Rs 45 per unit on comparable orders, which the seller said creates an unfair competitive situation.

Flipkart, meanwhile, has put in place a three-tier penalty structure for order-fulfilment lapses, effective August 23, 2026.

Under this structure, a shipment not made ready for pickup by the committed Dispatch By Date (DBD) attracts a fine of Rs 30 per shipment. An order cancelled by the seller, or automatically cancelled after three missed dispatch deadlines, attracts a fine of Rs 60 per shipment. Where an order is both delayed and subsequently cancelled, the penalty rises to Rs 90 per shipment.

Under the earlier regime, a DBD breach could lock the seller's account for a period of time, which had a greater impact on the seller's business.

New sellers on Flipkart, up to three months into their selling journey, will not be impacted by this policy.

The new structure aimed to inculcate better seller behaviour and encourage sellers to plan better, with the objective of improving customer experience, people aware of the development told PTI.

They said sellers were also rewarded for maintaining good DBD compliance, with benefits such as faster payment settlement and complimentary advertising credits.

Vinod Kumar, Trustee of the Forum for Internet Resellers, Sellers and Traders (FIRST INDIA), said Indian online sellers recognise the need for timely fulfilment and high customer service standards, but the recent increase in cancellation, dispatch and other seller penalties by major ecommerce marketplaces, particularly ahead of the festive season, was a matter of concern for MSMEs already facing thin margins and rising costs.

Kumar said not every cancellation or delay was caused by the seller, citing logistics failures, platform issues, demand spikes and customer-related factors as other possible causes.

"Sellers should not become the default financial shock absorbers of the e-commerce ecosystem.

"Marketplaces must ensure transparent attribution of responsibility, reasonable and proportionate penalties, adequate advance notice of fee changes and a simple mechanism to challenge wrongful charges. The objective should be to improve fulfilment while making digital commerce more, not less, viable for small businesses," Kumar added.