How does Amazon Grocery Seller like RK World make profits?
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For low priced items on amazon say 200-300 or may be consider books worth 80-90 rupees. How do the seller make a profit?
Amazon can easily charge 100-200 rupees which include the, flat commission, delivery fees, exit fees.
Further, the seller has the bear the cost of procurement, packaging, men power, electricity etc.
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It would be un-failr to provide concession for large sellers.
How are you sure they are getting concessions?
Its all LOSS Story .
Probably Amazon owned sellers and eventually is Amazon selling at a loss
They don't make any profits. It's Amazon selling you goods at a loss. In FY22 alone Amazon India made a loss of approximately 4000 crores. There you have your answer.
More importantly why they do it? They don't care. They want to create a monopoly and make profit then. They are ready to wait for that.
Scale. Economies of scale.
Jab har order me 100 ka loss hoga toh loss bhi scale hi hoga na.
Burn today earn tomorrow..
Average grocery order on amazon is 400-500rs. They take around 50-60rs loss overall on grocery orders below 500. They just need to do 550rs Average per order to BE & if someway they manage to do a cut off of 600 average per order they can easily make around 8-24% profits
Similar numbers are for Instamart & blinkit.
They are still in cash burning phase & they are expected to be fully profitable by 2026-27
PS - Case study was shared by thinkschool
RK World (and all other such big sellers) are in house sellers who get concession in fee. But online commerce isnt a profitable business in absence of sufficient minimum order values. The cost that amazon incurs on these kinds of small purchases is a part of their customer acquisition cost