Why Amazon wants its sellers to create their own websites for free

The plan, called SmartBiz, allows sellers to create websites without coding for free while using Amazon’s logistics and payment systems for their sales. The move comes as India’s e-commerce landscape breaks up, with brands avoiding centralized marketplaces to sell through social media and their own websites.

While the strategy risks reducing Amazon’s high-margin ad and commission revenue, estimated at over ₹25,000 crore in India, the tech giant is betting that sellers will become dependent on the ecosystem.

The plan is similar to the early days of Amazon Web Services (AWS), where it used low entry barriers to become indispensable for sellers. If successful, it could give Amazon a strong position not just as a retailer, but also as the infrastructure provider for India’s entrepreneurs, eventually gaining an upper hand over rivals like Shopify and the government-backed Open Network for Digital Commerce (ONDC).

Queries sent to Amazon India did not elicit a response until press time.

Amazon India’s advertising revenue grew 25% in FY25, against a 21% growth in its mainstay marketplace business, Mint reported earlier. While the marketplace remained Amazon India's backbone, contributing ₹17,328 crore, or 58% of operating revenue, advertisements and logistics brought in another ₹8,342 crore.

Amazon’s closest rival, Flipkart, reported advertisement revenue of ₹6,317 crore in FY25, up 27% year-on-year, but unlike Amazon, it has not pursued a strategy that enables sellers to set up independent, off-marketplace storefronts.

“Commerce is fragmenting across brand websites, social media, and offline-to-online channels. With platforms like Meta increasingly enabling transactions, it makes strategic sense [for Amazon] to position itself as the underlying infrastructure layer,” said an industry executive working in the e-commerce sector.

There are plans to monetise the product by introducing a paid subscription after March 2026, said another sector executive, adding that the exact pricing details have not yet been officially announced. “Post–free-offer pricing is likely to be lower than that of typical e-commerce SaaS (Software as a Service) platforms.”

Deja vu

“Amazon has long been an essential gatekeeper for sellers trying to reach end customers, and it will naturally try to leverage that vantage point,” said Isha Suri, an independent researcher and global AI and market power fellow at civil society organisation, the European AI Society Fund. She added that Amazon, like other large technology companies, often uses zero-cost or bundled offerings to lower entry barriers, embed users in its ecosystem, and aggressively monetize once businesses become dependent on those services.

Analysts say the approach closely mirrors Amazon’s AWS playbook. “It’s reminiscent of how AWS lowered barriers with free credits and ultra-low pricing before becoming indispensable infrastructure,” said Sohom Banerjee, senior research associate at CUTS International, a policy and research advocacy group.

That positioning could raise sellers' switching costs over time.

Sellers that embed themselves into SmartBiz may find it difficult to unwind payments, logistics, and data flows from Amazon’s systems.

Checkout and payments routed through Amazon systems would need to be rebuilt elsewhere, forcing merchants to re-integrate gateways and potentially re-onboard customers—a major friction point, said Banerjee.

Rebuilding checkout and payment integrations, renegotiating logistics, and migrating customer data and analytics could prove costly and disruptive.

India has seen a sharp shift toward direct-to-consumer (D2C) channels over the past three to five years, with brand-owned platforms growing from about 2–3% of online retail gross merchandise value (GMV) to an estimated 10–15% today, according to CUTS International.

If just 15% of high-quality sellers shift 30% of their sales to D2C, it would create a ‘noticeable dent’ in marketplace revenues, said Banerjee.

Cost of cannibalization

A roughly 5% hit to marketplace fees—on an FY25 base of ₹17,328 crore—could mean ₹800–900 crore less in commission income, while reduced ad spending could shave another ₹400–500 crore off advertising revenues. In total, the impact could reach ₹1,000–1,500 crore annually, and potentially more if larger sellers lead the shift, CUTS estimates.

Several sellers Mint spoke to said SmartBiz’s biggest draw is its tight integration with Amazon’s fulfilment network, with some describing it as a practical alternative to Shopify for small businesses that began on Amazon.

Others remain cautious.

“At scale, brands want full ownership of their websites and customer journeys, and larger or VC-funded brands are unlikely to want Amazon controlling their storefronts,” said Akash Valia, founder of Secret Alchemist, a perfume brand.

As marketplace commissions remain steep—often 20–30% of sales—rival platforms are also trying to differentiate.

Amazon’s SmartBiz competes most closely with platforms like Shopify and Dukaan, but with a key structural difference. Shopify, while fully operational in India, relies on third-party partners for payments and logistics and charges dollar-denominated subscription fees that can be prohibitive for smaller businesses. Dukaan, backed by Sequoia Capital and Lightspeed India and having raised $24 million, similarly depends on external logistics providers.

Yet, Dukaan has integrated with ONDC and is emphasising technical gains such as faster page loads, while Shopify is courting larger brands with a broad app ecosystem and global reach. “Everyone is trying to avoid becoming just a generic front-end,” said Banerjee.