Why Amazon wants its sellers to create their own websites for free

The plan, called SmartBiz, allows sellers to create websites for free, no coding required, while using Amazon’s logistics and payment systems for their sales. The move comes as India’s e-commerce landscape is disrupted, with brands eschewing centralized marketplaces to sell through social media and their own websites.

Although the strategy risks reducing Amazon’s high-margin advertising and commission revenue ₹The tech giant, valued at Rs 25,000 crore in India, is betting that sellers will become dependent on the ecosystem.

The plan is similar to the early days of Amazon Web Services (AWS), when it used low barriers to entry to become indispensable to sellers. If successful, it could give Amazon a strong position not only as a retailer but also as an infrastructure provider for entrepreneurs in India, eventually giving it an edge over rivals like Shopify and the government-backed Open Network for Digital Commerce (ONDC).

Queries sent to Amazon India were not responded to by press time.

Amazon India’s advertising revenue grew 25% in FY25 against 21% growth in its core marketplace business. Mint reported earlier. While the marketplace remains the backbone of Amazon India, ₹17,328 crore or 58% of operating income, advertising and logistics brought in from another ₹8,342 crore.

Amazon’s closest rival Flipkart reports ad revenue ₹6,317 crore in FY25, up 27% year-on-year, but unlike Amazon, it has not pursued a strategy that allows sellers to set up independent, off-market storefronts.

“Commerce is fragmenting across brand websites, social media and offline-to-online channels. With platforms like Meta increasingly enabling transactions, it makes strategic sense [for Amazon] is to position itself as the basic infrastructure layer,” said an industry executive working in the e-commerce sector.

There are plans to monetize the product by offering paid subscriptions after March 2026, another industry executive said, adding that exact pricing details have yet to be officially announced. “Pricing after free bidding will likely be lower than typical e-commerce SaaS (Software as a Service) platforms.”

Déjà vu

“Amazon has been “It’s an important gatekeeper for vendors trying to reach end customers and will naturally try to capitalize on that vantage point,” said Isha Suri, an independent researcher and global AI and market power expert at the European AI Community Fund. He added that Amazon, like other major tech companies, often uses zero-cost or bundled offerings to lower barriers to entry, onboard users into its ecosystem and aggressively monetize businesses once they become dependent on those services.

Analysts say the approach closely mirrors Amazon’s AWS playbook. “This is a reminder of how AWS lowered barriers with free credits and ultra-low pricing before it became essential infrastructure,” said Sohom Banerjee, senior research fellow at CUTS International, a policy and research advocacy group.

This positioning can increase sellers’ switching costs over time.

Merchants who include themselves in SmartBiz may struggle to get payments, logistics, and data flows back out of Amazon systems.

Payments and settlements routed through Amazon systems will have to be restructured elsewhere, which could force sellers to reintegrate gateways and potentially re-engage customers, Banerjee said. This too was a major friction point, Banerjee said.

Rebuilding checkout and payment integrations, renegotiating logistics, and migrating customer data and analytics can be costly and disruptive.

According to CUTS International, India has experienced a sharp shift towards direct-to-consumer (D2C) channels in the last three to five years; brand-owned platforms have grown from approximately 2-3% of online retail gross merchandise value (GMV) to an estimated 10-15% today.

Banerjee said that just 15% of high-quality sellers shifting 30% of their sales to D2C would create a ‘noticeable decline’ in market revenues.

Cost of cannibalization

Approximately 5% increase in marketplace fees based on FY25 ₹17,328 crore—could mean ₹800-900 crore less in commission income, while reduced ad spend could shave another ₹400-500 crore cut from advertising revenues. In total, the effect can reach: ₹1,000-1,500 crore annually, CUTS estimates, and potentially more if larger vendors lead this shift.

several sellers Mint He said SmartBiz’s biggest feature is its tight integration with Amazon’s fulfillment network, with some describing it as a practical alternative to Shopify for small businesses starting on Amazon.

Others remain cautious.

“Brands want full ownership of their websites and customer journeys at scale, and larger or VC-funded brands are unlikely to want Amazon to control their storefronts,” said Akash Valia, founder of Secret Alchemist, a perfume brand.

While market commissions remain high (usually 20-30% of sales), rival platforms are also trying to differentiate.

Amazon’s SmartBiz competes most closely with platforms like Shopify and Dukaan, but with a key structural difference. While Shopify operates fully in India, it relies on third-party partners for payments and logistics and charges subscription fees in dollars, which can be a deterrent for small businesses. Dukaan, which is backed by Sequoia Capital and Lightspeed India and has raised $24 million, is similarly reliant on external logistics providers.

Still integrated with Dukaan While it highlights technical gains like ONDC and faster page loading, Shopify is interested in larger brands with a broad app ecosystem and global reach. “Everyone is trying to avoid being just a generic front end,” Banerjee said.