Amazon and Flipkart Revise Rules: Penalties for Order Cancellations—What Is the Impact?

E-commerce giants Amazon and Flipkart have modified their cancellation fee policies ahead of the festive season. According to media reports, Amazon has changed the method for calculating order cancellation fees for sellers using its ‘Easy Ship’ and ‘Self Ship’ services; this change came into effect on August 17. Meanwhile, Flipkart has implemented a three-tier penalty system for failures in order fulfillment, effective from August 23. However, sellers believe these changes will increase the financial burden on small and medium-sized enterprises (SMEs), which already operate on thin margins. Let’s look at the details.

Amazon aims to ensure that sellers reliably fulfill orders placed by customers on its marketplace. To encourage timely and reliable fulfillment, the company has revised cancellation fees for ‘Easy Ship’ and ‘Self Ship’ sellers. These fees are subject to certain conditions and apply only when the seller initiates the cancellation. Notably, such cancellations account for less than 1% of orders on Amazon. However, measures are in place to provide support if an order is cancelled due to circumstances beyond the seller’s control.

What are Amazon’s ‘Easy Ship’ and ‘Self Ship’ services?

Under Amazon’s ‘Self Ship’ model, sellers pack and deliver products themselves using their own courier or delivery services; Amazon’s logistics network is not involved. Previously, cancellation fees were based on referral charges determined by product category. Following the recent changes, however, the fee will be calculated as a percentage of the order value.

What are the charges?

Reports indicate that under the new structure, sellers will be charged 10% of the order value for orders worth less than ₹10,000. Meanwhile, a charge of 8% will be levied on orders valued between ₹10,001 and ₹50,000, 5% on orders between ₹50,001 and ₹1 lakh, and 2% on orders exceeding ₹1 lakh. Additionally, an 18% Goods and Services Tax (GST) will be applicable.

When is the fee charged?

Cancellation fees apply when a seller cancels an order for reasons other than a buyer’s request, or when an order is automatically cancelled because the seller fails to ship and confirm the shipment within 24 hours of the estimated shipping date.

What is Flipkart’s three-tier penalty system?

Flipkart has introduced a three-level penalty system for sellers who fail to fulfill orders by the deadline. Under this new policy, if an order is not ready for pickup by the designated ‘Dispatch By Date’ (DBD), the seller will be charged ₹30 per shipment. A penalty of ₹60 per shipment will be imposed if the seller cancels the order or if automatic cancellation occurs after missing the dispatch deadline three times.

If an order is delayed and subsequently cancelled, the penalty increases to ₹90 per shipment. Previously, missing the DBD deadline could result in the seller’s account being locked for a period, which could significantly impact their business. This policy will not apply to new sellers during their first three months of selling. The new system aims to encourage better planning among sellers and improve the customer experience.