Homegrown e-commerce major Flipkart on Friday rolled out a zero commission model for all products priced below `1,000. The move aims to boost consumption on its platform and compete with new-age value retail players such as Meesho, which already operates on a zero commission structure.
“While we have tested the zero commission model in certain categories and price points earlier, this is the first time we are doing it across all products under Rs 1,000, which constitute a large share of our overall selection,” Kapil Thirani, vice-president of Shopsy and Flipkart Marketplace, told FE.
Commission fee is a percentage-based charge applied to the final selling price of a product on Flipkart and varies depending on the category a product belongs to.
The company has also extended the zero commission model to its hyper value-focused platform, Shopsy, for products across all price points. Shopsy competes with players such as Meesho and Amazon Bazaar and typically sells products in the range of `150-250. Over 70% of its shoppers come from tier 2 and smaller cities, with top categories being fashion, home decor and general merchandise.
Alongside the zero commission, Flipkart has also reduced return fees across verticals by Rs 35. Return fees typically vary from Rs 160-175, Thirani said. Returns have long been a pain point for sellers, and the company believes this reduction will offer meaningful relief.
“Returns are neither good for the seller, nor the ecosystem, nor the consumer. But since you cannot get away with it, the pain should be as low as possible,” he added.
The revised commission model, combined with lower return fees, is aimed at reducing the cost of doing business by up to 30% for sellers on products below Rs 1,000.
Thirani expects the move to bring more sellers onto the platform and to encourage existing sellers to scale their catalogues beyond the current price bands. Many small sellers currently avoid listing higher-priced or higher-volume products due to higher fees.
The company doesn’t expect the change to materially impact its earnings from sellers. “A lot of this is funded by efficiency. We have been able to use the right tech to get the most efficient outcomes for us, and much of this has been AI-driven,” Thirani said, adding that the move is expected to bring major scale in the business.
“We also want to make sure that sellers continue passing on these benefits to the consumers, the same way they did during the recent GST rate revision,” he added.
