According to Business Today, Amazon and Flipkart are mounting a fee war by doing away with commissions or fees charged to sellers for transacting on their platforms. The companies have waived commissions twice since last year for a wide range of products across categories priced within Rs 1,000 — lower price points that drive a large part of sales in smaller cities and towns. Earlier this month, Flipkart also removed commission altogether for the fashion category. Sellers selling on Amazon and Flipkart typically pay a fee to the companies for every product sold through their websites.
Fee waivers: what changed for sellers
The commission waivers apply to a wide range of products across categories priced within Rs 1,000, according to Business Today. This price band tends to drive a large part of sales in smaller cities and towns, pushing up overall volumes for the platforms. Flipkart went a step further earlier this month, removing commission altogether for its fashion category.
Reducing fees translates into a lower cost of business for sellers, who can pass that benefit on to consumers through lower pricing, the report said. The move also incentivises smaller, often local, sellers to come on board, widening selection for consumers in a market where regional nuances shape buying habits.
The strategic shift toward non-metros
E-commerce was largely a top-10-city play, and firms will have to strategise differently as it spreads, said Ankur Bisen, partner at The Knowledge Company. "The way things are bought, shopped as well as the price points that work in smaller cities are distinct from metros," Bisen told the publication.
For Amazon, more than 70% of new Prime sign-ups this year came from tier two and three cities. Flipkart is onboarding sellers from places like Azamgarh, Saharanpur and Bhilwara, said Kapil Thirani, vice president at Flipkart Fashion. "We are focusing a lot on ensuring that sellers from tier two cities start selling online," Thirani told the publication.
The data behind the shift
A joint report by Kantar and DB Corp published on Thursday showed the growth of online shopping in non-metros. In 2016, just over one-fifth of consumers residing in non-metros shopped online. By 2025, this share had grown to nearly one-third.
| Metric | 2016 | 2025 |
|---|---|---|
| Share of non-metro consumers shopping online | Just over 1/5th | Nearly 1/3rd |
Satish Meena, founder at Datum Intelligence, said the fee waivers are essential for sellers to make sales. "If the commission is not low or zero, sellers will not be able to get sales on these platforms. And to capture consumers looking at affordable products, items at low prices are needed," Meena told Business Today.
Sellers face a profitability trade-off
The commission waivers come with a short-term cost for the platforms. "It is a balance between sales and profitability. In the short-term, Amazon and Flipkart's profitability will take a hit due to the commission waivers but in the long term, as sales grow, profitability should improve," said Ashish Dhir, senior director, consumer and retail at 1Lattice.
What sellers need to do
The actions for sellers follow directly from the fee changes, according to Business Today. Sellers should:
- Review their catalogues for products priced within Rs 1,000 across categories, where commission has been waived twice since last year.
- Check Flipkart fashion listings, where commission has been removed altogether.
- Factor the lower cost of business into pricing, since savings are expected to be passed on to consumers through lower pricing.
- Consider the profitability balance described by 1Lattice when planning volumes: platform profitability may take a short-term hit, but sales growth is expected to improve profitability over time.
- Evaluate the opportunity of tier-two and tier-three city demand, which is driving new Prime sign-ups for Amazon and seller onboarding for Flipkart.
For sellers and marketplace operators, the fee war signals that price-sensitive, non-metro demand is now a battleground, according to the report. The commission waivers lower the cost of transacting, and sellers who align their catalogues and pricing with this segment stand to benefit as both platforms push for growth outside India's top cities.
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