Is Selling on Amazon Profitable in India? An In-Depth Guide for Business Owners
Selling on Amazon has become a buzzword among Indian entrepreneurs, D2C brands, and even traditional retailers looking to expand online. But is selling on Amazon truly profitable in the Indian market, especially in a landscape shaped by fast-moving Q-Commerce models, competitive marketplaces, and rising procurement costs?
In this blog, we break down the key factors affecting profitability on Amazon India and offer actionable insights for B2B and B2C businesses.
Why Indian Businesses Are Turning to Amazon
Amazon India has over 12 lakh sellers and growing. For many, it’s a gateway to nationwide reach, seamless logistics, and digital visibility. Here’s why sellers are choosing the platform:
- Pan-India Reach: Sellers can tap into customers across metros, tier-2 and tier-3 cities.
- Fulfilment by Amazon (FBA): Offloads warehousing, delivery, and customer service responsibilities.
- Trust & Brand Recall: Customers tend to trust purchases from Amazon due to easy returns and reliable delivery.
- Support for MSMEs: Amazon’s “Saheli” and “Karigar” programs enable women entrepreneurs and artisans.
However, a wide reach doesn’t always translate into profitability. Let’s explore the challenges.
Key Costs to Consider When Selling on Amazon India
Profitability on Amazon hinges on understanding the hidden and visible costs involved:
1. Referral Fees:
Amazon charges a percentage of the selling price, typically ranging from 5% to 20% depending on the product category.
2. Closing Fees:
A fixed fee per item sold. This can vary by price band and item category.
3. Fulfilment Costs (FBA):
Includes storage fees, shipping fees, and service fees. Seasonal storage surcharges can apply.
4. Advertising Spend (Amazon Ads):
To get visibility, most sellers rely on Sponsored Products. Ad budgets can quickly spiral if not optimized.
5. Return and Refund Costs:
High return rates in categories like fashion and electronics impact margins.
6. GST and Compliance:
You must register for GST and adhere to invoicing and e-way bill rules. Non-compliance can lead to penalties.
Example: A D2C skincare brand selling a 300-rupee product might spend 80-100 rupees on Amazon fees, ads, and logistics—leaving thin margins unless pricing and procurement are optimized.
Market Trends Impacting Profitability in India
1. Rise of Q-Commerce and Instant Delivery
Consumers expect faster deliveries. Platforms like Zepto and Blinkit are changing the game. Amazon is catching up with same-day and next-day delivery, but only in select locations.
2. Price Wars and Deep Discounts
Heavy discounting during festive seasons and sales events reduces average order value and profits.
3. Competition from Private Labels
Amazon’s own brands often undercut sellers on pricing and visibility.
4. Customer Acquisition vs. Retention
Sellers often overspend to acquire customers but lack tools for retention on Amazon’s closed ecosystem.
Tips to Improve Profitability on Amazon India
1. Optimize Procurement & Supply Chain
Negotiate better rates with suppliers and reduce lead times. Partner with local logistics vendors for hybrid fulfilment.
2. Focus on High-Margin Products
Avoid commoditized, low-margin categories. Opt for niche or premium offerings with less competition.
3. Use Amazon Ads Strategically
Run A/B tests, use long-tail keywords, and monitor ACoS (Advertising Cost of Sales) to control spend.
4. Bundle Products & Upsell
Product bundling can increase average order value and reduce shipping cost per item.
5. Leverage Multi-Channel Sales
Don’t rely solely on Amazon. Explore your own D2C website, social commerce, or listing on multiple marketplaces.
6. Monitor Returns & Customer Feedback
Track return reasons and reviews. Use insights to improve product quality and reduce returns.
Who Can Profit the Most From Amazon?
Amazon may be more profitable for:
- Established D2C brands with strong branding and loyal customers.
- Manufacturers who can cut middlemen and sell directly.
- Private-label sellers importing or producing in bulk with strong margins.
- Niche product sellers with differentiated offerings and less competition.
Final Thoughts
Selling on Amazon India can be profitable—but it’s not plug-and-play. Success requires a strategic approach to pricing, procurement, operations, and marketing. For Indian businesses navigating the chaos of supply chains, competition, and Q-Commerce disruptions, the key lies in operational efficiency and smart decision-making.
Are you struggling with sales, procurement, or operational challenges in the fast-paced world of B2B, B2C, Q-Commerce, or D2C? At Scaling Dreams, we specialize in solving these problems for Indian businesses—online or offline. Share your challenges with us at tarun@scalingdreams.in and let’s grow together.
