Note ban effect: Amazon dials down on Platinum Sellers

Mounting losses in the marketplace due to dampened customer-spend post demonetisation, has forced Amazon.in to cut down the number of its premium ‘Platinum Sellers’ of mobile phones — its largest selling product in the electronics category — by 70 per cent.

The e-commerce behemoth, had upped its mobilephone Platinum Seller count to 13, in order to cater to the huge demand that it generated during the Diwali festival season sale last October.

It has cut it down to four Platinum Sellers — its pre-festival season count — as a result of mobile sales having dipped 60 per cent post demonetisation, sources privy to Amazon’s Platinum Seller Policy told BusinessLine .

Additionally, the e-tailer has slashed discounts on mobilephones by 6-10 per cent in order to reduce cash burn, added the sources.

While Amazon.in has over 1.5 lakh sellers on its marketplace, not all sellers qualify to become Platinum Sellers, which is an invite-only club that Amazon chooses to upgrade, based on the quantum of sales they generate, low return rates, quick service, quality products with zero defects, customer ratings they receive, among others.

Some of the benefits that Platinum Sellers receive from Amazon are: weekly payouts instead of bi-weekly; ability to add ‘platinum’ keywords to their listings, which improves visibility in search results; the option to create a custom Amazon store-front, etc.

Earlier, big and small sellers were treated on par by Amazon; today, big sellers receive preferential treatment. Platinum Seller policies that were honoured for periods of up to six months, are now being dynamically changed by Amazon in response to pressure from competition.

“For instance, if Flipkart withdraws a cash-back offer on a mobilephone, Amazon will immediately withdraw its cash-back offer on similar phones without liquidating all the mobilephone inventory committed by Platinum Sellers for that cash-back offer,” revealed the same sources.

On being contacted, Gopal Pillai, Director and General Manager - Seller Services, Amazon India, said: “Our seller policies largely continue to remain the same. These are focussed on making sellers successful and always adhere to maintaining a high bar of shopping experience for our customers.”

Without divulging any specifics on Platinum Sellers, he added: “All sellers on Amazon have access to various fulfilment services, such as FBA (Fulfillment by Amazon), EasyShip, etc; and they choose offerings that best address their business needs.”

Pointing out that demonetisation has impacted consumer-spend in the short term, resulting in the market for mobilephones dropping 50-60 per cent, Sanchit Vir Gogia, Chief Analyst, Greyhound Research, said: “Such changes in seller policies are market-infected changes that work well for both the marketplace — as it can’t commit to volume sales — and the sellers, as it will reduce the burden of holding unsold inventory.”

Rajeev Banduni, co-founder and CEO of GrowthEnabler, a London-based online advisory services firm, said it is a sensible move for Amazon to tighten the reins on Platinum Sellers to pare down its losses, given that 80 per cent of its sales comes from 30 per cent of its sellers.

International losses posted by Amazon in Q4 ended December 31, 2016, rose to $487 million from $108 million a year ago. A large chunk of those losses can be attributed to India, its next big-bet market outside of the US, say analysts.

BusinessLine had reported last November that Amazon.in’s losses are likely to hit $1 billion in FY 2017 ending March 31 as it continues to incur cash burn to wrest market share from Flipkart. However, Amazon’s India and global leadership have maintained their rhetoric of continuing to invest in India for the long term with an additional commitment of $3 billion by founder Jeff Bezos.

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