Sellers Benefit as Amazon India Extends Zero Referral Fee on Low-Value Products

According to an Economic Times report, Amazon India has eliminated the referral fee for sellers of goods under INR 1,000 until December 31. Depending on the product category, the referral fee, a commission that Amazon charges for every sale, normally varies from 2 to 16.5%. The waiver was previously only valid through November 30. Although not all products are covered by the most recent extension, the move is comparable to a tactic used by Flipkart, which is supported by Walmart.

Flipkart Started the Move of Zero-Commission

Flipkart implemented a zero-commission policy for items under INR 1,000 two weeks ago. Additionally, regardless of price, vendors can now post products on Shopsy, its hypervalue portal, without having to pay a commission. Value-commerce websites like Meesho, which primarily rely on advertising and logistics markups rather than seller commissions to generate revenue, are the target of the campaign.

Additionally, Flipkart has reduced return costs for sellers by INR 35, which might result in a 30% reduction in operating expenses. During the winter sales season, prices could drop dramatically if vendors pass the savings on to customers, increasing internet demand. Flipkart anticipates that the action will attract more vendors from semi-urban manufacturing centres like Shantipur, Morbi, and Khurja, as well as smaller towns.

Tug of War Between the Ecommerce Players          

In an effort to assist small businesses, Amazon India previously reduced referral fees for items under INR 300 in April 2025. The goal of Flipkart's zero-commission policy and additional cost reductions is to draw in middle-class customers and expand the platform's portfolio. Meesho primarily targets mass-market customers, Amazon caters to premium segments, while Flipkart concentrates on urban and tier-1 and tier-2 city consumers, according to a recent note from BofA Securities.

Due to its permanent zero-commission strategy, which attracted small suppliers from Tier-2 and Tier-3 cities, Meesho has long controlled this market. Flipkart has taken a strong stance against this by waiving its own fees in an effort to prevent sellers from moving. By extending its waiver, Amazon makes sure it doesn't fall behind. Merchants may have transferred their less expensive product elsewhere if Amazon had continued to be the "expensive" location to sell, leaving Amazon with a hole in its inventory.