E‑commerce sellers face higher costs as India’s festive season approaches

Online retailers in India will see tighter margins this holiday period after Flipkart and Amazon introduced new penalty fees and higher surcharges on shipments.

Flipkart stopped charging commission on fashion items in July, but a penalty of ₹30 (about 3.8%) is now imposed when a seller misses the dispatch deadline, with an additional ₹60 if the order is later cancelled. The platform counts three missed deadlines as a cancellation, resulting in a flat ₹90 charge that disproportionately affects low‑value orders such as a ₹799 kurta.

Amazon has also revised its cancellation fees. Effective August 17, the e‑commerce giant moved from flat category‑based charges to a percentage of order value: 10% on orders up to ₹10,000 and 8% on higher‑priced items. The change applies to both its Easy Ship service, where Amazon handles delivery, and the Self Ship model, where sellers use their own couriers.

Additional cost pressures

Beyond penalties, sellers must absorb fee surcharges that apply to every transaction, regardless of timeliness. Production and fulfillment costs have risen due to raw‑material shortages and higher fuel prices linked to instability in West Asia. Industry sources say third‑party sellers, who typically operate on thinner margins than established brands, have little control over pricing on Amazon India.

Brands such as Globus Fashion sell directly on Flipkart while using a third‑party retailer on Amazon, whereas companies like Ruhe India manage their own seller accounts on multiple marketplaces. Both models now face the same fee structure.

Market outlook

Research firm Redseer projects festive‑season gross merchandise value (GMV) on Amazon India and Flipkart to reach $15‑16 billion in 2026, a 25% rise from 2025, with online shoppers climbing to 180‑185 million. The forecasts do not factor in the added expenses sellers and consumers will incur, nor the potential slowdown from an upcoming merchant discount rate on UPI payments.