Snapdeal hikes margins by 30%, burdens sellers to fund upcoming sale

While customers rejoice every time a big sale event is announced by online shopping sites, vendors selling on these platforms are often coerced to offer discounts at the cost of suffering personal business loss. Don’t believe us? Take a look at this recent news of Snapdeal asking for 30 per cent rise in margins from merchants to carry out their home decor sale.

What’s the deal?

Snapdeal is going to host ‘Decor Carnival’, a sale event exclusively for the home décor category, tentatively from June 15 to June 30. Since the ecommerce competition is at an all time high, Snapdeal plans to kick-start two weeks promotional drive for this sale. And how they plan to fund the ad campaigns? By asking sellers to shell out from their own pockets.

The marketplace informed sellers through an email about the hike in margins by 30%, which will be applicable for the event period. An excerpt from the mailer read as, “To create a new milestone in terms of sales, we would require extra promotion fee on the value of all your home decor orders taken on website during these days.”

While speaking about this move by Snapdeal, a spokesperson from their team said, “Any change in commercials for a specific product line is done in a fair manner by involving all sellers. For such promotional days, our sellers have an option to stay out of the promotional period if they wish to.”

Fair enough?

Is it truly fair? No it isn’t.

Snapdeal sounds quite smug when they say ‘sellers have an option to stay out’. Not all sellers afford to miss out. Isn’t the very purpose of merchants signing up with these top online marketplaces like Snapdeal is to leverage on their popularity and increase their business without bearing additional expenses? And marketplaces already take a cut from profits then why increase the margins for sale events. Admitting that 30% margin is a huge burden, a seller said “We work on very thin margins. Participating in this sale for better revenue by giving 30% extra is not making much sense.”

There is no record of other ecommerce players asking the same from sellers in order to fund flash sales. Though it won’t surprise anyone if the news of others too doing the same comes on surface. What will this lead to? More and more cases of vendors inflating their selling price and giving fake discounts.

Burning VCs money in the name of customer acquisition and now asking sellers too to spend money, all for ‘Bumper Sale’ is not a healthy business model. In addition, these passive aggressive bullying tactics by marketplaces such as Flipkart & Airtel Zero Net Neutrality case, App-only strategy and now this case of sudden increase in margins, where it forces buyer & seller to accept a change against their will ‘for their own good’ needs to stop.