BENGALURU: Amazon is changing its terms of services in India following the settlement it reached with the German anti-trust authority on Wednesday. This would mean Amazon would have to update its policies for third-party merchants in India, which will strengthen seller rights here. This may also push up overall logistics costs for the e-tailer in the country.
Amazon confirmed this to TOI, saying it is making changes in India following the German ruling. The major changes will include Amazon sharing liability with business partners, a 30-day notice before removing merchants from the platform, and being more considerate when charging sellers for product cancellations & returns.
Sellers told TOI the changes in who will bear the cost of returns would be a significant gain for third-party merchants as it costs them 7-15% of the product value. India is a market that typically sees 15-20% of order volumes being returned by consumers after delivery. Amazon has over 4 lakh sellers on its India marketplace.
If implemented in spirit, this would have an impact on Amazon’s logistics cost as well. According to regulatory documents, Amazon Seller Services, which runs the marketplace, spent Rs 2,958 crore and Rs 2,459 crore for logistics services in the financial years ending 2018 and 2017 respectively. This translates into 32% and 33% of total expenses for the entity in the comparable period. In comparison, the same entity had revenue of Rs 4,928 crore and 3,256 crore respectively for the last two financial years.
The significant spends in ‘logistics delivery charge’ for Amazon’s marketplace is also attributed to subsidising of delivery cost for certain sellers working closely with the marketplace. In January, TOI reported how sellers like Cloudtail and Appario, where Amazon holds a stake, pay less platform fee compared to other third-party sellers. Now, if Amazon absorbs some of the costs of refunds as part of the German ruling, its cost for logistics service charge would go up. “For example, sellers using fulfilled by Amazon (FBA) will now be able to demand that items returned to Amazon be returned to them and object to Amazon’s reimbursement decision within 30 days,” the order from the Bundeskartellamt — the German anti-trust office — said.
This office added that Amazon in its final letter has assured the Bundeskartellamt that an objection to a refund claim against a seller will only be asserted if Amazon proves that the product in question was in fact the one supplied by the seller. Sellers often say consumers allegedly misuse Amazon’s customer-first approach to get products and return them for no valid reasons.
On Wednesday, the Bundeskartellamt said in an order it had conducted a seven-month investigation into allegations by third-party merchants of unfair treatment by Amazon, and now Amazon has agreed to change its terms for these sellers. “Amazon’s consumer-first focus is so extreme that concerns of sellers are often not the priority. This has been a major concern across all scales of sellers. The new changes would bring balance towards sellers and not be tilted towards consumers only,” said one of the mid-sized online sellers who sells across Amazon and Flipkart.
“We made these changes because we agree they are good for our sellers. We listen to our sellers and other stakeholders as we work to provide the best service to our sellers and customers,” said an Amazon India spokesperson.
Amazon is also looking to amend terms to make sure fake reviews do not affect seller rankings as it has an impact on both sellers and consumers. Sellers were earlier asked to get written approval from Amazon before speaking publicly. According to the recent order, Amazon has promised to do away with this requirement.