1. E-commerce major Flipkart claims sellers logged substantial growth in sales after effecting cut in commissions

E-commerce major Flipkart claims sellers logged substantial growth in sales after effecting cut in commissions

Home-grown e-commerce firm Flipkart which reduced the commission it charges from its sellers for retailing their products on its platform, from March 15, this year, claims that post the move, its sellers have witnessed substantial growth in sales.

By: | New Delhi | Updated: April 20, 2017 2:03 PM
According to Flipkart, more than 60% its top performing sellers across gold, silver and bronze categories have further reduced prices of goods.

Home-grown e-commerce firm Flipkart which reduced the commission it charges from its sellers for retailing their products on its platform, from March 15, this year, claims that post the move, its sellers have witnessed substantial growth in sales. As per the e-tailer, sellers on Flipkart witnessed a 20-25% increase in sales post reduction in prices.

In fact, the company claims that 75% of the sellers who are based in metros and sell goods such as mobile accessories, footwear, home furnishing, women’s and men’s clothing have benefited the most from the fee change.
“The idea is to continuously improve the quality of sellers along with the products sold on the site. Also a reason behind categorising sellers into three types – gold, silver and bronze. These sellers were broken into three categories towards the end of last year on the basis the number of goods sold. The categorisation of sellers has helped in bringing down the cost of operation, as we were able tackle issues like high return, fraud, etc. We then decided to pass the benefits to sellers,” said Nishant Gupta, director, marketplace, Flipkart.

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According to Flipkart, more than 60% its top performing sellers across gold, silver and bronze categories have further reduced prices of goods. However, unlike Amazon, which hiked its referral rates, Flipkart has changed the rates in case of a few categories only such as electronics and fashion accessories, where it increased the commission by 1%. While it reduced the commission earned from the sale of auto accessories by 10%.

The e-tailer largely changed the commission it earns from shipment of goods. For example, fixed fee for selling goods under Rs 500 has been reduced to Rs 10 from the earlier Rs 15. Similarly, the fixed price charged by Flipkart for selling goods priced between Rs 500 and Rs 1000, has been brought down to Rs 30 from Rs 20.

Flipkart has also reduced the collection fee it charges sellers. For goods sold under cash-on-delivery, which are valued under Rs 750, the e-tailer has reduced the collection fee to Rs 15 from Rs 25. While in case of pre-paid orders, the e-tailers has brought down the collection fee by 2% for order valued below Rs 750.

However, sellers still find selling on Flipkart an expensive proposition. “On the face of Flipkart charges are designed to be cheaper than Amazon. However hidden charges such as reverse shipping, compulsory Flipkart branded packaging, limited access to warehouses and weak warehouse infrastructure, ends up increasing the cost of selling on the platform. At the same time, Amazon has recently increased rates which will lead to sellers shifting to Flikpart and Paytm. However, both marketplaces giving, undisclosed benefits to related parties and brands,” said a spokesperson of the All India Vendor’s Association (AIOVA).

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