Consider a kurta priced at ₹799 sold directly on Flipkart by a fashion brand such as Globus Fashion.
Since July, Flipkart stopped charging a commission on fashion products, so on paper the seller keeps more of each sale than it did a year ago.
But under Flipkart’s new penalty structure, effective August 23, the seller is penalised ₹30 or about 3.8% of the sale price the moment the kurta misses its dispatch-by date.
If the order is then cancelled, the seller is penalised another ₹60.
Flipkart now also counts three missed deadlines as a cancellation. But the flat penalty (a total of ₹90) means that sellers face a greater burden to clear low-value orders.
This is one example of how selling online has become costlier this festive season, and penalties are just one part of it. Besides this, there are fee surcharges that apply to every order, whether or not it is delayed or cancelled. And the cost of production and fulfillment have also gone up due to issues ranging from a crunch in raw material supply as well as high fuel prices due to the instability in West Asia.
No matter the seller, whether it is a brand or an Amazon-specific seller, these charges and surcharges are making it harder and costlier to seller on ecommerce at a time when business is at its peak.
Third-party sellers usually operate on thinner margins than brands and have no control over the price listed on Amazon India, according to industry sources we spoke to.
Some brands take up the operations themselves, depending on the marketplace. Globus Fashion, for instance, sells directly on Flipkart but through Cocoblu Retail on Amazon.
Another brand, Ruhe India, which sells smart kitchen and smart home products, holds its own seller account and sells directly on the marketplaces. The approach is different but the charges will remain.
The changes coincide with the peak festive season sales on Amazon India and Flipkart. According to Redseer projections, festive ecommerce GMV will reach $15–16 Bn in 2026, up about 25% from roughly $12.5 Bn in 2025, with online festive shoppers rising to 180–185 Mn from 160 Mn.
But these estimates do not account for the higher cost that customers and sellers will have to pay for using the ecommerce platform. And that’s before we even account for the potential slowdown due to the merchant discount rate or MDR coming up in merchant UPI payments.
The New Penalty Structure
On August 17, months before its main festive season shopping window, Amazon changed how it charges cancellation fees for sellers on Easy Ship and Self Ship.
Under Easy Ship, Amazon picks up the order from the seller and delivers it; under Self Ship, the seller delivers it through its own courier.
The fee, earlier tied to flat category-based referral charges, is now a percentage of the order value, according to Amazon’s communication to sellers. Amazon now charges 10% of the order value on orders up to ₹10,000, 8% between ₹10,001 and ₹50,000, 5% between ₹50,001 and ₹1 lakh, and 2% above that, plus 18% GST.
A cancelled ₹30,000 order can end up costing the seller about ₹2,832 including the GST which is applicable on cancellation fee. Sellers of electronics, appliances and other big-ticket goods carry the most exposure per order.
“This fee is conditional and only applies in the rare event of a seller-initiated cancellation, which accounts for less than 1% of orders on Amazon.in. We have appropriate measures in place to ensure sellers are protected when cancellations are due to circumstances beyond their control,” Amazon told Inc42 in an emailed statement.
Electronics sellers are already under pressure due to expectations that the 2026 winter season will result in slower sales than 2025. This is largely due to the rising prices of mobile devices and electronics this year, but the extra charges will also play a role in whether sellers even offer some products for sale.
Flipkart did not respond to Inc42’s queries.
People familiar with the company’s operations said the penalties follow its zero-commission push, which has nearly doubled seller onboarding year-on-year. In July, Flipkart dropped commissions across its fashion catalogue, removing an earlier ₹1,000 price ceiling for the waiver.
Whose Fault Is A Delay?
The platforms’ position is that penalties apply only when sellers fail. Sellers, however, claim the line is not always clear.
Responding to Amazon’s notices on its seller forum, some sellers said cancellations were sometimes caused by delivery personnel failing to turn up for scheduled pickups, and asked why the fee should apply in such cases.
A founder of a snacking brand, who wished to be anonymous, told us when a logistics-side delay gets billed to the seller instead of the carrier, this becomes a source of friction and can disrupt many smaller sellers. “We have contested such cases with evidence of timely dispatch, but found the process cumbersome,” the founder added.
Kapil Gupta, founder of Ruhe India, whose catalogue runs from sub-₹500 to ₹3,000-plus, told Inc42 that Flipkart’s flat ₹90 penalty would land hardest on the brand’s value-tier catalogue.
Vinod Kumar, trustee of the Forum for Internet Resellers, Sellers and Traders (FIRST INDIA), said online sellers accept the need for timely fulfilment, but the increase in fees and penalties just before the festive season is a concern for MSMEs already dealing with thin margins and rising costs this year.
Unlike the penalties, these charges apply regardless of seller performance, which seems like a blanket rule meant to punish even those who have a very low proportion of cancellations or delays.
Deliveries Turn Costlier Too
What makes matters worse is that delivery fees and logistics costs have gone up across the industry, meaning no brand or seller is immune to this.
From September 7, Amazon raised its closing fee, a flat per-item charge separate from the commission, by ₹1 on products priced up to ₹500 and by ₹3 or higher-priced items. Amazon’s seller fee page attributes the increase to higher fuel and logistics costs.
Similarly, Flipkart’s logistics arm is mulling a revision in fulfillment fees for sellers, according to sources.
Logistics platform Delhivery added a surcharge on D2C shipments of ₹4 per express shipment and ₹2 per surface shipment, on top of contracted rates from September 1,. The company has reportedly attributed it to higher aviation turbine fuel prices, ground-staff costs and inflation across its network.
The new pricing structure affects a specific group: brands shipping orders from their own websites. Delhivery declined to comment to Inc42 related to queries on increase in the pricings.
Ruhe India’s Gupta said the surcharge would be a challenge for brands building native website sales, which rely on third-party logistics players such as Delhivery.
Globus Fashion, which sells directly and through marketplace sellers, said that logistics or fulfillment costs “can be renegotiated between the brand and marketplace”, but others say that this is not a standardised process.
The fashion brand expects festive logistics spending to rise with demand, but does not expect a big impact on revenue, because inventory placement and warehouse use have already been allocated ahead of time.
Large enterprises stock regional warehouses months in advance to lock in contracted freight rates and accept the holding costs. Other brands may not have these pieces in place.
But, freight operators see more and more brands responding to the festive rush ahead of time. Geetali Sunil Khare, founder of Rachana Speed Logistics, said brands and wholesalers are building inventory ahead of the rush rather than cutting order sizes to protect margins, to avoid stockouts and supply disruptions at peak demand.
In categories such as electronics and apparel, sellers need to retain minimal stock to avoid post-festive inventory risk, and absorb higher, fragmented spot freight costs instead. Truck rental rates in September held above year-ago levels, but month-on-month increases across most corridors have been relatively modest, Khare added.
The bigger festive challenge, she said, is meeting tighter service expectations with higher shipment volumes and heavier consignments.
“On the logistics side it is mostly the truck movement to warehouses that makes up for substantial expenses operation wise. With the deliveries now expanding to regional markets , it makes it harder to to fill vehicles on the way out and leaving return legs empty or under-used,” Aman Mahlawat, founder of Mahlawat Logistics, added.
On local runs, Mahlawat said, highway transit is smooth, but city entry restrictions and long queues at distribution hub docks cause major delays.
Quick commerce, according to the industry players we spoke to, has also added to the cost-strain. High-frequency replenishment of dark store inventory is changing how stock moves upstream from warehouses to the distribution endpoints.
Mahlawat said dark stores and retailers now prefer frequent, smaller drops to monthly bulk dispatches, which splits loads into smaller vehicles and leaves trucks spending more hours waiting at congested unloading docks than moving on the road. These frequent, fragmented dispatches need constant vehicle availability, squeezing truck turnaround times and load consolidation.
“More predictability, enough lead time on fee and policy changes to plan for them, rather than absorbing them mid-season is the only way sellers or brands can work around these changes,” Ruhe India’s Gupta added.’
Can Commission Cuts Offset Rising Costs?
While Flipkart, Amazon India and others have cut commissions for sellers this year, the rising logistics costs, the extra charges this year, and the growing dependency on advertising spending on marketplaces have eaten into the margins of sellers.
Amazon waived referral fees on products under ₹1,000 in March, and Flipkart extended zero commission to all fashion categories in July. Those cuts cover specific categories and price bands while closing fees, shipping charges and penalties apply across categories
Sellers are bemoaning the lack of clarity on when new charges are introduced or why they are applicable to all sellers regardless of their past performance. What sellers are asking for is more predictability from marketplaces and platforms, especially around the peak festive season.
The post Why This Festive Season Is Getting More Expensive For Ecommerce Sellers appeared first on Inc42 Media.