Are new marketplace policies always countering previous ones? Is impact on sellers ever considered?

Rebecca Menezes | Sep 09, 2020


Some say change is a form of progress. In ecommerce, the landscape is continuously changing and definitely progressing. Every year, the online retail market breaks old records, be it during the festive season or otherwise.

Marketplace policy changes help push the industry forward. And renewed policies like these enable this:

  • Amazon’s sponsored ad payment revision now allow sellers overcome issues like ad campaign delays, delayed updates and inconsistencies in ad campaigns.
  • Snapdeal’s renewed return policy was appreciated by online sellers. The etailer introduced product return restrictions that online sellers approved of. Buyers returning electronics must attach now proof supporting their return claims.

Sadly, in spite of these progressive revisions, there are cases where change has caused chaos and confusion.

One can definitely say with every step forward there are a few instances where the industry has moved backwards. Some blame the lack of a proper formal body to oversee Indian ecommerce; others say it is the fault of online marketplaces. Etailers are continuously changing their policies with the intention of improvement but are these really working out for online sellers?

Let’s find out what online sellers think of the latest online marketplace policy changes.

Marketplace policies disrupting Online Seller business

“Online sellers have cultivated the habit of accepting the implemented policies,” claims online seller, Bhavya Mehta.

Marketplaces have been striving to provide better online buyer experience, but what about the sellers? The men’s apparel seller questions. Compared to the initial startup honeymoon period for online seller’s marketplaces have now imposed challenges for online sellers making stable online selling impossible. Policies have gone from worse to intolerable he adds.

1. Policy revised but no alert received

An Electronics accessory seller on, (name withheld on request) says, the etailer changed its reimbursement policy without alerting sellers about it. To make matters worse this policy is hurting business the seller states.

He says, “Earlier if items received were in damaged condition, after raising a case, Amazon used to reimburse 50 % of product selling price. (Suppose product sold at Rs. 100, so Amazon used to reimburse Rs. 50).

Now, Amazon refunds sellers 50 % of what it transfers to sellers. (For Rs. 100 sale price of product, suppose Amazon gives us Rs. 70, so now it reimburse only Rs. 35 only)”

2. Unreasonable hike in commissions

The same online seller also mentions that Amazon’s commission policy is troublesome when it comes to his category of mobile screen guards and cases.

“For sellers the commission fee charged by Amazon is just like taxes, because it is charged on the product sale price. But Amazon raises its commission to 17% from its original 8% on our category. Imagine your tax rate increased by 9 %,” says the frustrated seller.

3. Policy with no purpose

The above online merchant states that Amazon’s Runway Program is a disappointment too.

“Basically in Amazon runway, as the customer raises return request Amazon manages the refunds to the customer. Earlier sellers had to refund. If there is some problem in return product then we can raise a case.  

But the catch here is, sellers should refund the product charges and not the shipping charges if the customer has ordered wrong product or placed a wrong order (Suppose product price is Rs. 400, shipping charges is Rs. 50, so out of total of Rs 450, seller should refund Rs.400 and keep Rs. 50 based on mutual agreement with customer)

Now, due to runway, sellers are not in a position to keep this Rs. 50 (shipping charges)!” Exclaims the online seller.

4. Illegal TDS policy

“Amazon’s TDS policy is illegal! We must deposit TDS in section 19H, and after depositing the amount, we have to claim it back from Amazon. But the section states that the person who is paying the commission (i.e. sellers), has to cut the taxes and pay.

Suppose, we pay monthly commission to Amazon as Rs. 100. We must cut Rs. 5 and pay Rs. 95 to Amazon. But the cycle is Amazon gives us the money left after charges, we pay T.D.S. amount and have to claim it back from Amazon,” explains the online retail seller.

In July, IOS also noted that Flipkart was giving sellers trouble on this front. The etailer refused to refund seller TDS. When asked why the marketplace said it had received delayed claims from sellers for TDS refunds.

5. Product returns auto-authorized

The most prominent marketplace policy for online seller, Asad Virani is Flipkart’s and Amazon’s auto-authorise return requests from buyers. He claims these marketplaces do not investigate the matter. They simply take the customer’s word for it.

“As a result, the buyer gets a full refund and the seller has to bear return courier charges. Most of the times the buyer has either purchased the product out of error or swaps it with a used item,” Asad says.

“This is taxing us. Also with no stringent checks by marketplaces while returning items, the seller gets used or broken items back. Many buyers give a reason of wrong item being delivered as this is the fastest way for them to get refunds and replacements through marketplace returns policies,” the seller further informs us.

What can sellers do about policies affecting their online retail?

A. In case of fake return requests

Asad says in the event of fake returns, “Sellers have to go through a long procedure of proving fake claims to the marketplace via photos or videos with continuous followups. And if they are lucky then the seller ends up getting only a partial refund!”

When asked if he will continue selling on marketplaces he asks,

“Do we have an option?”

The accessories and fashion vendor feels there isn’t much online sellers can do but hope for the best.

“Unfortunately we are at the mercy of the marketplaces. Still, there is no foolproof solution. We are considering such losses as a part of doing business online.”

B. In case of wrong orders

“Unnecessary returns charges have been biting up the little earned profits of online sellers,” says online seller Bhavya.

“But If we talk about Amazon we have the authority to deduct the shipping charges in case buyer feels that he no longer needs the product or product style was not as expected.”

For Flipkart and Snapdeal you will not find these options the seller says. Bhavya mentions that on account of this overbearing returns burden they have:

– Stopped selling on Snapdeal

– Increased prices on Flipkart

– Started deducting shipping from Amazon buyers upon product return

Another online seller and owner of Upspring Enterprises claims he will all be leaving Snapdeal because of its logistics fees.

“It can not be managed,” the seller says, “we have to keep our prices low because of competition and on the other hand, we suffer because of returns. All profits are eaten by Snapdeal!”

C. In case of no reimbursement option

Mobile accessories seller, Rahul Bhatia declares, “On Amazon, there is no reimbursement policy for categories like modems and routers. This results in loss of revenue. To prevent losses it is best to stop selling under these categories.”

Marketplace policies counter each other

Looking at this negative feedback puts a damper on online selling through marketplaces. But, if that is the case how is ecommerce still functional on these platforms. To get to the bottom of this we spoke with bags and accessories category manager, Shashank Shenoy from multi-channel order and inventory management firm, Browntape.

In his opinion, online marketplaces have multiple policies rolling out but they always end up countering each other. “This is the rule on every marketplace. If a marketplace introduces a policy that isn’t entirely in the seller’s favour, that marketplace will introduce another policy that counters the effects of the previous one,” he says.

Shashank gave us the example of Flipkart’s changing policies. He says, earlier on Flipkart sellers couldn’t charge shipping beyond Rs.100 and in case they fell into the 0% commission category they weren’t allowed to charge shipping. However, recently the marketplace changed its policy which now allows sellers to charge shipping based on product dimensions.

According to the ecommerce category manager, sellers can reduce their burdens by:

– Thoroughly checking their listings

– Not playing around with the product MRP

– Providing exact volumetric details (do not add extra or less variables)

Is there a silver lining in the form of good policies?

When asking about other marketplaces and their policies, Asad reveals that eBay is the best. Asad says, “If taken in the right manner and with business ethics in place, Ebay’s seller protection policy is the best.”

Even though Rahul Bhatia claims there are problems with Amazon’s reimbursement policy he still feels Amazon tops all marketplaces in the seller policies department.

Online seller Soviet Munbhre an Amazon seller listed these policies as the most helpful out of all the portal’s policies:

1.Order removal – allows sellers to remove inventory from FBA warehouses by ordering a certain quantity of their commodities from their FBA centre. This helps avoid  ls to avoid blocking their inventory.

2. Seller reward – is most encouraging for sellers selling high volumes. Not so much for medium sized sellers. The seller reward program is one where sellers can choose whether or not they want to participate. As a result, there is no major issue with this policy.

The rules of the game are certainly not fair according to some. Especially since marketplaces get to dictate what goes and what doesn’t. However, there are a couple of marketplace policies to take comfort in.

Have you noticed more positive policies on your online marketplace? Also, what are the troublesome marketplace policies you have come across? Tell us about it through the comments section below.

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Rebecca Menezes

Rebecca Menezes

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