Indian E-commerce Sellers Face Rising Costs Ahead of Festive Season

E-commerce sellers in India are facing increased operational costs ahead of the peak festive shopping season as major platforms adjust their fee and penalty structures. While companies like Amazon India and Flipkart have reduced commissions to attract merchants, new logistics fees and cancellation penalties are impacting profit margins.

Changes to Fee Structures

Flipkart implemented a zero-commission policy for fashion categories in July, which resulted in a significant increase in new seller registrations. However, the company also introduced new penalty fees, charging sellers ₹30 for delayed dispatches and ₹60 for cancelled orders, regardless of the item’s total value. Sellers report these flat fees disproportionately affect smaller businesses and those handling low-value goods.

Amazon India has revised its cancellation fee model to be linked to the order value rather than a flat rate. Under this new structure, penalties for cancelled orders range from 10% for orders up to ₹10,000 to 2% for orders exceeding ₹1 lakh. Sellers are also required to pay an additional 18% GST on these charges.

Logistics and Market Pressures

Operational costs are further strained by rising logistics expenses. Amazon has raised its closing fees, while logistics provider Delhivery has introduced a surcharge on direct-to-consumer shipments. Flipkart is also evaluating potential adjustments to its seller fulfillment fees. The growth of quick commerce, which requires frequent, smaller shipments, has added to vehicle requirements and increased wait times at distribution hubs.

Sellers have expressed concerns regarding the difficulty of contesting these charges, noting that the dispute process remains burdensome even when proof of timely dispatch is available.

Why it matters: The festive season is typically the most critical period for retail revenue in India. For small and medium-sized enterprises, rising platform costs and logistics overheads directly threaten the viability of online operations, potentially limiting the variety of goods available to consumers during the year’s busiest shopping window.