Amidst increasing rates, Flipkart attempts to stand tall by cutting seller fees

Editor | Sep 15, 2020

While we see online marketplaces firing staff, not paying sellers (Snapdeal), reducing pay out to local partner stores (Amazon), and even closing down due to financial worries, Flipkart has brought in a fresh twist to the tale. The Indian marketplace has announced that it will cut down the fees it charges its sellers. In simple terms, sellers will now need to pay less than before, thereby taking home a little more of their sales.

This is a welcome change in a world where prices only keep rising, even with said Flipkart (it had increased its fees in June 2016).

What is cheaper now?

Flipkart has made the following changes:

  • Fixed fees for selling on the platform is down by 30%,
  • Forward shipping is down by 10%,
  • Cash on delivery collection charges are down by 40%

Anil Goteti, VP and head of marketplace explains how this has been made possible,

“We’ve taken multiple measures on our supply chain side to reduce costs and streamline operations—in the sense, wherever there are leakages, we have fixed them. Given the efficiencies we’ve realized and the active growth we’ve gotten last year. We want to pass it back to our sellers, who in turn will work on passing it back to our consumers.”

A mixed bag so far

Flipkart is literally on a see-saw. It has just witnessed yet another devaluation (its fifth) in what looks like a series. Morgan Stanley has reduced the company’s share value by 3%. This is a worrying factor especially when the company is hoping to raise $1.5 billion. Things aren’t too hunky dory with customers complaining most about Flipkart and Snapdeal.

However, on the bright side, its sales for December and January is greater than its arch rival Amazon’s. The company is also taking steps towards quicker and cheaper delivery with Smart Fulfilment. Sellers who sign up for this paid service will be put under Flipkart Assured.

The intention of its recent move to reduce commission is so that sellers benefit from the company’s steps. Goteti says,

“Over the last 9-12 months, we were focused on improving quality of products on our platform and incentivised sellers who performed well. While keeping the quality intact, we also want to help sellers by reducing the cost of doing business.”

The company is trying to make things work, with rehiring two ex-employees to work on its grocery segment, and E-kart returning to B2B logistics. Profitability is that elusive dream dancing out of every company’s reach. Who will get there first?


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