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Amazon and Flipkart cut seller fees to accelerate growth in smaller Indian cities
Our read
India's marketplace fee war will move from headline commissions to the hidden cost of fulfillment, ads and returns as platforms chase non-metro volume.
For operators
Lower seller fees can unlock assortment and price competitiveness in tier-two and tier-three cities, but marketplaces must offset margin dilution with higher order density, advertising uptake and fulfillment efficiency.
Watch
Changes in Amazon and Flipkart take-rate disclosures, seller-service revenue, advertising revenue and contribution-margin commentary.
The report,
Amazon and Flipkart are cutting seller commissions, including Flipkart’s zero-fashion commission, to attract merchants and affordable-product demand in smaller Indian cities. The platforms expect short-term profitability pressure but higher volumes and customer growth from non-metro markets.
Reported figures
From the report. Source details below
| Seller fees cut twice since last year for products priced below | Rs 1,000 |
|---|---|
| Online-shopping penetration in non-metro cities rose from just over one-fifth in 2016 to nearly one-third by | 2025 |
Also in the report
- Flipkart removed fashion-category commissions entirely earlier this month
- More than 70% of Amazon's new Prime sign-ups this year came from tier-two and tier-three cities
Why it matters to operators
The commission reset increases the strategic value of acquisitions or partnerships in regional seller enablement, low-cost fulfillment, vernacular commerce and value-fashion supply chains.
What to watch next
- Whether fee reductions extend above Rs 1,000 or into electronics, home appliances and other higher-ticket categories.
- Seller onboarding growth and active-seller churn in tier-two and tier-three cities.
- GMV/order growth versus average order value, indicating whether volume is compensating for lower commissions.
- Growth in fulfillment-service adoption and shipping charges paid by sellers.
- Meesho, Shopsy, Myntra, JioMart and ONDC responses on commissions, logistics subsidies and seller incentives.
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- Return rates and counterfeit/quality complaints in low-price fashion and unbranded categories.
- Regulatory scrutiny of marketplace fee structures, seller parity clauses, preferential services or deep-discount practices.
Likely next moves
Our read of what comes next — analysis, not reported by the source.
- Expand zero- or low-commission programs into additional low-AOV categories, particularly beauty, home, accessories and regional fashion.
- Bundle fee relief with fulfillment adoption incentives, reduced shipping thresholds and faster delivery promises for non-metro pincodes.
- Increase seller acquisition through regional-language onboarding, GST/compliance support and local seller events.
- Raise the prominence of sponsored listings and performance advertising as commission revenue declines.
- Introduce differentiated fees based on fulfillment usage, delivery speed, return rates, seller quality and customer ratings rather than a single category commission.
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- Target Meesho-heavy seller cohorts with migration incentives and catalog-upload tools.
The counter-case
The case against this reading — not reported by the source.
Fee cuts may be a defensive response to slowing seller acquisition, weak unit economics, or intensifying competition rather than evidence of durable tier-two and tier-three demand. Lower commissions can attract low-quality or marginal sellers, worsen catalog duplication and returns, and shift marketplace economics toward higher logistics, advertising, or fulfillment charges. If GMV growth comes mainly from sub-Rs 1,000 orders, incremental volume may not cover last-mile costs, especially outside metros.
The source
Published
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