Amazon cuts seller fees, again; escalates fee war with Meesho, Flipkart

Mumbai: Amazon India has waived seller commissions on all goods priced under ₹1,000, expanding a policy first introduced in April for products priced under ₹300. The e-commerce firm said the policy will expand the zero-commission policy 10x to 12.5 crore products across categories such as home linens, casual apparel, small electronics, toys, and fashion accessories.

“The daily consumption [on e-commerce] is mostly from products of sub- ₹1,000,” Amit Nanda, director, selling partner services for Amazon India, told Mint in an interview. “This is the segment most of our sellers are keen to grow,” he said, adding that seller response to the previous zero-commission policy from April was ‘extremely positive’. Amazon saw a 50% increase in new sellers joining the platform after it first offered zero commission in April, Nanda said.

This is the second time Amazon has reduced seller fees this fiscal year, including commissions and shipping costs for ‘small sellers’. Amazon India does not have a formal definition of a ‘small’ seller in India, Nanda said, but such sellers tend to operate from home or a small unit in a single city or area and store their goods on their premises rather than at an Amazon fulfilment centre, he said. These sellers constitute 70-80% of Amazon’s 1.7 million seller base in India, Nanda added.

“Everyday consumables get a lot more traction online, and this change will expand that category for us,” Nanda added. “Business for sellers who have been listing only 1-2 products or have not yet listed a highly niche product with relatively thin margins will now become more viable.” Nanda cited examples of products such as atta additives, cheap casual t-shirts, and seasonal goods cashing in on a fad or trend, particularly toys and novelty items.

“We have also seen over time across the world that these are actually flywheel impacts,” Nanda added. “Sellers add new products, the marketplace gets new products that weren’t there earlier, more appealing to buy in the marketplace. Some sellers may also drop their prices, making the product more attractive to buy. As a result of both of these things, in the medium to long term, you recover this just in volume leverage.”

However, he declined to say how much revenue Amazon will lose with these cuts in seller fees. In June, Amazon introduced a ‘marketplace fee’ of ₹5 per transaction.

Amazon's ₹5 marketplace fee applies to all orders across the platform and is paid by the customer at checkout. It is a flat fee that applies to an order, regardless of its value, number of units, or unit type. However, it is not applicable to orders from Amazon Bazaar, the company's dedicated zero-commission vertical, or to some items, such as gift cards and digital services.

Chasing Meesho

Competition among specialized e-commerce models has been rising. Platforms such as Meesho have found success by focusing on value retailers and value-conscious customers in small-town India and by making zero-commission models successful in these high-volume markets. Analysts tracking Meesho, which had a blockbuster debut on the Indian bourses in December, say its business model still faces little competition.

“The largest cohort of sellers that sell on Meesho are also selling on other horizontal e-com platforms—but end up focusing on selling different products,” analysts from Bank of America’s brokerage arm wrote in a report last month. “The better price-point and quality products are mainly sold on Amazon & Flipkart. Horizontal e-com platforms charge largely similar commission rates—these range across categories from 10-15% to even 20-25%.”

However, in November, Amazon’s rival Flipkart also announced zero commission on all products priced below ₹1,000. Besides, both platforms run separate zero-commission marketplaces for small sellers—Amazon Bazaar and Flipkart Shopsy. Amazon’s Nanda said Bazaar is ‘small but growing very fast’ but declined to share details.

“As per experts, both platforms’ scale is less than 10% of Meesho,” BoFA analysts quoted above said in their January note. In the December 2025 quarter, it reported a nearly 32% year-on-year jump in revenues from operations to ₹3,518 crore, although losses ballooned 13x to over ₹490 crore. In FY25, Amazon Seller Services Pvt Ltd—the marketplace business of Amazon India—reported a 19% increase in revenues to ₹30,491 crore while losses shrank substantially to ₹374 crore, per data from research firm Tracxn.