Latest news with #IndranujPathak
Mint
6 days ago
- Business
- Mint
Amazon India introduces ₹5 marketplace fee, aligns with peers in e-commerce landscape
Amazon has introduced a flat ₹ 5 marketplace/platform fee on all customer orders in India, including those from Prime members. The move aligns it with competitors like Blinkit, Zepto, and Swiggy Instamart, all of which have added similar fees in recent months. Flipkart had rolled out a ₹ 3 fee in mid-2024. This marks Amazon's entry into a broader pricing strategy increasingly adopted across Indian e-commerce and quick-commerce platforms. What began as pilot surcharges has gradually become standard practice. 'It's a behavioural pricing play— ₹ 2- ₹ 5 is too low to trigger user churn but enough to anchor future hikes. It normalises the idea of paying per order, giving platforms room to raise it later without sudden backlash,' said Indranuj Pathak, Manager, Public Policy at Primus Partners. Analysts note that platforms often rely on small, per-order charges to offset rising costs in delivery infrastructure, staff, and fuel. 'And at the scale these platforms operate, even a ₹ 1 fee added to every order helps cover rising expenses,' Pathak said. Amazon redirected the emailed queries from Mint to a blog post published on 19 May. Amazon's decision to apply this charge, which is non-refundable, solely in India highlights the country-specific challenges: high volumes, low margins, and price-sensitive customers. 'India delivers huge volume but wafer-thin margins. Prime subscriptions here cost ₹ 399– ₹ 1,499 a year versus $139 (around ₹ 11,500) in the US, so membership revenue covers a far smaller share of delivery costs. A flat ₹ 5 fee is the simplest way to plug that gap without touching headline product prices,' said Pathak. While the exact number of daily orders handled by Amazon India is not publicly disclosed, order volumes spike significantly during major sales events. For instance, during Prime Day 2024, Amazon India recorded a peak order rate of 24,196 orders per minute, according to media reports. Platforms are also banking on habit and urgency to make the fee stick. Low or zero delivery fees attract new users by lowering the entry barrier. "Shoppers often switch apps when faced with surge or high delivery fees. Gradually increasing fees helps platforms improve margins and encourages larger basket sizes, making the model more sustainable,' said Subhendu Roy, partner at Kearney India. 'As users grow familiar with a platform, minor fee increases have a diminishing impact on their behaviour. This allows platforms to raise fees incrementally — often by ₹ 1–2 — without significant drop-offs,' he added. The move also reflects a structural shift toward profitability. 'Multiply ₹ 5 by even a conservative one million orders a day and you book ₹ 5 crore in daily top-line, enough to shift EBIT from red to black for a country P&L. In a sector where net margins hover in the low single digits, every rupee counts,' Pathak said. With quick-commerce emerging as the preferred choice for everyday purchases, Amazon may be looking to strengthen its position through faster delivery and better service.
Mint
6 days ago
- Business
- Mint
Amazon India introduces ₹5 marketplace fee, aligns with peers in e-commerce landscape
Amazon has introduced a flat ₹ 5 marketplace/platform fee on all customer orders in India, including those from Prime members. The move aligns it with competitors like Blinkit, Zepto, and Swiggy Instamart, all of which have added similar fees in recent months. Flipkart had rolled out a ₹ 3 fee in mid-2024. This marks Amazon's entry into a broader pricing strategy increasingly adopted across Indian e-commerce and quick-commerce platforms. What began as pilot surcharges has gradually become standard practice. 'It's a behavioural pricing play— ₹ 2- ₹ 5 is too low to trigger user churn but enough to anchor future hikes. It normalises the idea of paying per order, giving platforms room to raise it later without sudden backlash,' said Indranuj Pathak, Manager, Public Policy at Primus Partners. Analysts note that platforms often rely on small, per-order charges to offset rising costs in delivery infrastructure, staff, and fuel. 'And at the scale these platforms operate, even a ₹ 1 fee added to every order helps cover rising expenses,' Pathak said. Amazon redirected the emailed queries from Mint to a blog post published on 19 May. Amazon's decision to apply this charge, which is non-refundable, solely in India highlights the country-specific challenges: high volumes, low margins, and price-sensitive customers. 'India delivers huge volume but wafer-thin margins. Prime subscriptions here cost ₹ 399– ₹ 1,499 a year versus $139 (around ₹ 11,500) in the US, so membership revenue covers a far smaller share of delivery costs. A flat ₹ 5 fee is the simplest way to plug that gap without touching headline product prices,' said Pathak. While the exact number of daily orders handled by Amazon India is not publicly disclosed, order volumes spike significantly during major sales events. For instance, during Prime Day 2024, Amazon India recorded a peak order rate of 24,196 orders per minute, according to media reports. Platforms are also banking on habit and urgency to make the fee stick. Low or zero delivery fees attract new users by lowering the entry barrier. "Shoppers often switch apps when faced with surge or high delivery fees. Gradually increasing fees helps platforms improve margins and encourages larger basket sizes, making the model more sustainable,' said Subhendu Roy, partner at Kearney India. 'As users grow familiar with a platform, minor fee increases have a diminishing impact on their behaviour. This allows platforms to raise fees incrementally — often by ₹ 1–2 — without significant drop-offs,' he added. The move also reflects a structural shift toward profitability. 'Multiply ₹ 5 by even a conservative one million orders a day and you book ₹ 5 crore in daily top-line, enough to shift EBIT from red to black for a country P&L. In a sector where net margins hover in the low single digits, every rupee counts,' Pathak said. With quick-commerce emerging as the preferred choice for everyday purchases, Amazon may be looking to strengthen its position through faster delivery and better service. "Introducing a customer-side marketplace fee could be a strategic move to monetize its premium customer base while investing in faster, more reliable service,' Roy added.
