A group of sellers on e-commerce marketplace Flipkart went on a virtual strike on Monday to protest the company’s revised commission structure and return policy.
eSeller Suraksha, an independent online sellers’ forum that has about 1,000 members and the All India Online Vendors Association (AIOVA), which has about 800 sellers attached to it, had called for the strike. The sellers decided not to process any orders on Monday and displayed out-of-stock notifications against their listings on the platform. While Flipkart maintained there were only a handful of sellers participating, AIOVA said about 1,000 sellers protested against the move to revise commissions.
Flipkart, which has about 90,000 sellers on its platform, is understood to have increased commissions from sellers by 10-40% across various categories. Flipkart has also asked return charges to be borne by sellers, regardless of the reason. These change in policy came in to effect from Monday. Flipkart did not respond to the queries from FE.
Commenting on the impact, Sanjay Thakur, president of eSeller Suraksha, said, “With Flipkart increasing the commission rates, we estimate that the selling prices of the product will have to be increased by 20-25% to make sure we’re not at a loss. Many sellers are not happy with the recent changes and close to 1,000 sellers participated in today’s strike and have displayed out-of-stock for about 1 million SKUs (stock keeping units).”
“While the vendors may not quit Flipkart in totality, it is very likely that the majority of them will go inactive, as a result of which transactions may get impacted,” he added.Meanwhile, AIOVA want the marketplaces to take sellers into consideration and consult them before any policy changes that would have an effect on the seller ecosystem are made.
Flipkart’s competitor Amazon India too had increased the commission marginally in April, but subsequently reduced it last week by 2-7% for various categories. According to sources, Amazon had decreased the commission rates for mobiles and tablets from 5% to 3.5%, for laptops from 4% to 3%, non-education software products from 8% to 5% and educational products from 12% to 5%.
A recent Nielsen report said Amazon tops the chart as the most preferred e-commerce websites among sellers, followed by Flipkart and Snapdeal. With cut-throat competition, online marketplaces have been trying to woo customers and at the same time increasing the commission charged from sellers on the platform in order focus on profitability and reduce cash burns.
However, not all sellers aired similar views. A few sellers who did not participate in the protest, who FE spoke to, said the commission was on a par with other marketplaces and such a thing was expected as the marketplaces evolved. Aditya Agarwal, a seller (fashion and lifestyle segment) on Flipkart, said, “Although the return shipment charges would push up the cost by about 3-4%, it is a standard practice across marketplaces. Flipkart initially was taking the burn on itself but now has started passing back some cost to the seller. And as the industry matures, we should expect more such changes.”