Amazon India reduces referral fees, critics dismiss it as a façade.
CAIT has criticized Amazon India for what it deems as a superficial move in reducing referral fees. Praveen Khandelwal, the Secretary General of the Confederation of All India Traders, expressed his skepticism about Amazon’s intentions behind this decision to MediaNama. In response to the news of Amazon India cutting its referral fees for products priced below Rs 300 starting from April 7, 2025, Khandelwal labeled this as an attempt by Amazon to improve its image as pro-seller while still engaging in exploitative practices.
Amazon India announced a series of changes that included the elimination of the referral fees for several product categories like apparel, shoes, fashion jewelry, grocery, beauty, toys, kitchen products, and more. Additionally, Amazon also reduced shipping rates for sellers using external fulfillment channels, such as Easy Ship and Seller Flex. They claimed to have decreased weight handling fees for items under one kilogram by Rs 17 to ease the financial burden on sellers. The reductions in fees were illustrated with examples, with total seller fees for products like earrings priced at Rs 299 decreasing significantly after the implementation of these new initiatives.
Despite Amazon’s efforts to showcase these fee reductions as a helpful initiative for sellers, Khandelwal highlighted some persisting concerns. He criticized what he perceived as a strategic move by Amazon to strengthen its market dominance rather than promoting the empowerment of small sellers. The referral fee reduction was framed as a mere tip of the iceberg, with sellers facing additional costs like closing fees, weight handling and shipping charges, and other hidden expenses. Khandelwal emphasized that Amazon’s complex ecosystem, specifically its logistics service Fulfillment by Amazon (FBA), further traps sellers into relying heavily on Amazon’s services due to high warehousing, shipping, and commission costs.
Expanding on the topic of seller reliance, Khandelwal discussed how Amazon’s algorithms largely determine product visibility on the platform. Smaller independent sellers often find themselves compelled to invest in costly advertising to maintain competitiveness. Despite the reduction in referral fees, these expenses pose challenges for small businesses to sustain profitability, according to Khandelwal. He also raised concerns about Amazon’s vague suspension policies, causing revenue losses for small businesses due to account suspensions without reasonable recourse.
Additionally, Khandelwal shed light on the issue of Amazon’s alleged monopolistic practices, where the company reportedly capitalizes on data collected from third-party sellers to introduce its own competitive products at lower prices. This predatory pricing strategy limits consumer choice and stifles innovation, creating an uneven playing field for third-party sellers on the platform.
Overall, CAIT’s criticism of Amazon India’s fee reduction strategy underlines deeper structural concerns regarding algorithmic visibility, market manipulation, and the platform’s influence over pricing control. Despite Amazon’s claims of benefits for sellers, questions and criticisms persist regarding the long-term impact of these fee changes on small sellers’ profitability and growth.
