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Amazon’s new Go Local policy worries online sellers

BENGALURU: Amazon will introduce a distance-based shipment fee for third-party sellers from next month, which vendors on its platform say will result in a 15% additional cost of doing business.

According to sellers, the new policy will negate the cost relief they had got due to implementation of the goods and services tax (GST), the benefits of which they say were being passed on to consumers.

The new ‘Go Local’ fee structure will be effective from August 8, according to a communication sent by Amazon to its 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,” the letter noted.

The All India Online Vendors Association (AIOVA), an online seller group, has termed the new policy by Amazon as being unethical. The association also wrote to Amazon saying this will result in higher cost of business for sellers and prices will have to be hiked.

A spokesperson of AIOVA said, “Till now we were faced with the cascading effect of taxes, which got eliminated due to GST. Amazon has increased prices by 15%, which is similar to the service tax. In the post-GST regime, sellers were absorbing 4-5% benefit that would have been passed onto consumers. Now Amazon will eat up this benefit.”

In an emailed response, an Amazon spokesperson said, “The recent shipping fee change for our Fulfillment by Amazon sellers, which is independent of the GST implementation and is based on our regular seller feedback, will provide sellers the opportunity to reduce their costs of doing business on Amazon.”

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