Amazon and Flipkart Revise Seller Fees and Penalties Ahead of Festive Season
E-commerce majors Amazon and Flipkart have introduced changes to their seller fee and penalty structures in the weeks leading up to the festive shopping season. The revisions come at a time when sellers are preparing for a surge in order volumes, but they also add to the financial burden on small and medium enterprises already operating on thin margins, according to seller representatives.
Amazon's New Cancellation Fees
Amazon has revised its cancellation fees for sellers using its Easy Ship and Self Ship services. The new structure, effective August 17, links the cancellation charge to the order value, instead of the earlier referral-fee-based calculation.
Under the revised structure, sellers are charged 10% of the order value for orders below ₹10,000, 8% for orders between ₹10,001 and ₹50,000, 5% for orders between ₹50,001 and ₹1 lakh, and 2% for orders above ₹1 lakh. An 18% goods and services tax (GST) is levied in addition to these charges.
The fee applies when a seller cancels an order for reasons other than a buyer request. It is also levied when an order is automatically cancelled because the seller fails to ship and confirm the shipment within 24 hours of the estimated shipping date. Buyer-initiated cancellations are excluded from the revised fee structure.
According to a notice issued by Amazon India on its seller forum, the fee was earlier based on category-specific referral charges and is now computed as a percentage of the order value.
Amazon's Closing Fee Increase
Separately, Amazon will increase its closing fees from September 7, 2026. The fee will rise by Re 1 for products priced up to ₹500 and by ₹3 for products priced above ₹500. The increase will apply across Amazon's Fulfilment Centre (FC), Easy Ship, and Seller Flex channels.
A closing fee is a fixed fee Amazon charges a seller for each item sold, separate from charges like referral fees and fulfilment fees. Amazon attributed the increase to higher fuel and logistics costs.
Flipkart's Graded Penalties
Flipkart has introduced a new per-order penalty structure for sellers who have been on the platform for at least three months. The structure, effective August 23, imposes penalties ranging from ₹30 to ₹90 depending on the nature of the order failure.
Under the new structure, a ₹30 penalty applies when a seller fails to hand over an order to Flipkart's logistics partner by the agreed dispatch-by date (DBD). The penalty rises to ₹60 when a seller cancels an order after receiving it from a customer. If a seller misses the DBD and subsequently cancels the order, the penalty is ₹90.
According to people familiar with the matter, the new penalty structure replaces an earlier regime where a DBD breach could result in the seller's account being locked for a period of time. New sellers on the platform, up to three months old, are not impacted by the new policy.
Flipkart's move is aimed at inculcating better seller behaviour and improving customer experience, according to sources. Sellers who comply with DBD are rewarded with benefits such as faster settlement of payments and complimentary advertising credits.
Seller Concerns
Vinod Kumar, Trustee of FIRST INDIA, an e-commerce seller association, expressed concern over the recent increase in penalties by major e-commerce marketplaces. He noted that MSMEs are facing thin margins and rising costs, and that not every cancellation is seller-caused.
"Sellers should not become the default financial shock absorbers of the ecommerce ecosystem," Kumar said.
Some sellers on Amazon's seller forum said cancellations were at times caused by factors outside their control, such as delivery personnel failing to arrive for scheduled pickups, and questioned why cancellation fees should apply in such instances. One seller said the difference in total fees between sellers using Amazon's fulfilment network and those on Easy Ship could be as high as ₹45 per unit on comparable orders, creating unfair competition.
In addition, sellers are facing potential additional costs from changes to UPI merchant discount rates, adding to margin pressure.
Context and Response
The fee changes come ahead of the festive season, when order volumes typically rise sharply and sellers increase inventory and fulfilment capacity.
Amazon and Flipkart did not immediately respond to queries from businessline. An email query to Amazon also did not elicit a response.