Amazon India Slashes Seller Fees and Shipping Costs to Support Small Businesses

Amazon India is eliminating referral fees for over 12 million products under ₹300 across 135+ categories, starting April 7, 2025. Items like clothing, shoes, jewelry, groceries, and kitchenware will now have a 0% referral fee, removing the usual 2%-16% charge.

Shipping costs are also being reduced, with national rates dropping from ₹77 to ₹65 for third-party fulfillment services. Weight handling fees for items under 1kg will decrease by up to ₹17, and sellers can save up to 90% on shipping for multiple items in one order.

This initiative aims to help small businesses by making it cheaper to sell on Amazon and offer more competitive prices. In August 2024, Amazon had already reduced selling fees for 59 subcategories.

The move comes amid regulatory scrutiny from the Competition Commission of India (CCI), which had flagged Amazon and Flipkart for antitrust violations in 2024. By cutting fees, Amazon is positioning itself as a more seller-friendly platform while addressing competition concerns.

Amazon India Slashes Seller Fees and Shipping Costs to Support Small Businesses

In a major effort to support small businesses, Amazon India has announced its biggest-ever fee reduction for sellers. Starting April 7, 2025, sellers will no longer have to pay referral fees—a percentage Amazon takes from each sale—on over 12 million products priced below ₹300. This change applies to more than 135 categories, including everyday essentials like clothing, shoes, jewelry, groceries, home décor, cosmetics, toys, and kitchenware. Previously, referral fees ranged from 2% to 16%, but they will now be completely waived for eligible products, allowing sellers to save significantly.

Lower Shipping Costs Too

Alongside eliminating referral fees, Amazon is also reducing shipping costs to ease the financial burden on sellers. For services like Easy Ship and Seller Flex (which handle delivery for sellers), national shipping rates will drop from ₹77 to ₹65 per order. Additionally, weight-handling fees for items under 1kg will decrease by up to ₹17. Sellers can save even more when shipping multiple items in a single order—the cost for the second product in an order could be reduced by up to 90%. These changes aim to make shipping more affordable, particularly for small businesses selling low-cost, high-volume products.

Why This Move Matters

Amit Nanda, Director of Selling Partner Services at Amazon India, stated that the initiative is designed to help sellers expand their reach and increase profitability by lowering operational costs. With reduced fees and shipping expenses, sellers can price their products more competitively, attracting budget-conscious shoppers. This is particularly beneficial for everyday essentials and low-priced goods, which are highly popular among India’s price-sensitive consumers. Nanda emphasized that Amazon aims to create a “win-win” scenario, where sellers can grow while customers enjoy lower prices.

Building on Previous Efforts

This is not Amazon’s first fee reduction in India. In August 2024, ahead of the festive season, the company lowered selling costs by 3% to 12% across 59 product categories, including electronics and fashion. However, the latest cuts are broader and more aggressive, targeting millions of low-priced products.

Addressing Regulatory Challenges

The timing of these changes is significant. Amazon and its rival Flipkart have faced scrutiny from India’s Competition Commission (CCI) over alleged antitrust violations. In 2024, the CCI accused both companies of favoring select sellers, thereby undermining fair competition. By slashing fees and shipping costs, Amazon may be working to rebuild trust with regulators and small businesses. This move positions the company as a platform focused on affordability and inclusivity, which could help mitigate regulatory pressures while attracting more sellers.

What This Means for Small Businesses

For small sellers, particularly those in tier-2 and tier-3 cities, the fee cuts could be transformative. Many businesses operate on tight profit margins, and even small savings on fees or shipping can free up funds for marketing, inventory, or expansion. For example, a seller earning ₹50,000 per month from ₹300 products could save up to ₹8,000 in referral fees alone. When combined with lower shipping costs, these savings enable businesses to adjust pricing, offer discounts, or enhance product quality.

Customers will also benefit from these changes. Reduced operational costs for sellers often lead to lower prices for buyers. This could drive higher sales volumes for everyday products such as groceries, kitchenware, and accessories, creating a cycle of growth for both sellers and Amazon.

Looking Ahead

Amazon’s strategy reflects a broader shift in India’s e-commerce landscape. With millions of small businesses yet to transition online, platforms are competing to attract sellers by offering better terms. Walmart-owned Flipkart, for instance, has also introduced seller-friendly policies, such as waived storage fees during peak seasons. Amazon’s aggressive fee cuts could set a new industry benchmark, compelling competitors to follow suit.

For now, Amazon’s focus on affordability and accessibility aligns with India’s push for a more inclusive digital economy. By supporting small businesses, the company not only strengthens its own ecosystem but also contributes to local job creation and economic growth.

Conclusion

Amazon India’s latest initiative is a bold step toward empowering small sellers, enhancing customer affordability, and addressing regulatory concerns—all while maintaining a competitive edge in one of the world’s fastest-growing e-commerce markets.