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Amazon to add distance-based shipment fee for third-party sellers

24 July 2017

Amazon will add a distance-based shipment fee for third-party sellers from next month which, according to vendors on its platform, will result in a 15-per cent additional cost of doing business.

According to the sellers, the new policy will negate the cost relief they had got with the implementation of goods and services tax (GST) which they claim was being passed on to consumers. The new 'Go Local' fee structure will take effect from 8 August, according to a communication sent by Amazon to its sellers.

"We will launch the Go Local structure by introducing distance-based weight handling fee rates for Fulfillment by Amazon (FBA) sellers. This will lower your shipping costs by up to 35% by charging weight handling fee in proportion to the distance that the shipment travels to the customer delivery location," Amazon said in a letter to the sellers.

An online seller group, All India Online Vendors Association (AIOVA), has termed the policy, unethical. The group wrote to Amazon, and pointed out that the policy will result in higher cost of business for sellers and prices, necessitating increased prices.

In April, the Seattle-based e-commerce giant hiked the commissions it levies on its sellers by 50-100 per cent across most categories. Amazon boasts a seller base 2 lakh strong.

Meanwhile, a report in The Economic Times, says the costs divide the country into four regions. The new charges, under Amazon's 'Go Local' programme, make it cheaper for sellers to ship to customers who fell under the same region as the seller. However, the weight handling fees charged by Amazon on shipments across regions will rise 15-16 per cent.

Sellers using Fulfilment by Amazon (FBA) programme with their inventory stored in the Amazon fulfillment centres will be liable for these new charges. According to the report, the FBA covers over 60 per cent sellers on Amazon.

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