Beginning Wednesday, a number of products sold on Flipkart will be 15% to 20% more expensive compared to rivals, including Snapdeal, Amazon and Paytm.
This is because in the second phase of #OnlineDharna (or protest), eSeller Suraksha, a forum for merchants selling on e-commerce websites and apps, has asked its 1,574 members to raise prices of products on India’s largest e-commerce website.
The protest is for Flipkart’s revised fee structure and return charges. The e-tailer recently reduced the period for returns on products (electronics, smartphones and books) from 30 days to 10 days. It also increased the commission it charges from sellers by 10% to 40%, and said sellers will have to pay for shipping costs in case of returns.
In the first phase of the protest, sellers at eSeller Suraksha took out a million stock-keeping-units from Flipkart.
But, the e-commerce major remained unnerved, said Sanjay Thakur, president of eSeller Suraksha. “Flipkart told us that they were running in losses and now looking to establish a profitable business.”
Sellers said the revision will have an adverse impact on their business. “There are only two options — either quit Flipkart and shift to other e-commerce businesses, or increase the prices of products,” said Thakur.
According to eSeller Suraksha’s calculations, there will be also be a 200% to 300% increase in fixed fee (paid for every processed transaction). Returns would cost a seller Rs 108.9-197.45 for a product worth Rs 600 and having a shipping weight of 400 grams.
A Snapdeal spokesperson has said that the online marketplace is not looking to change the fee structure or return policy. (REUTERS File Photo)
Returns itself, sellers said, will squeeze profits out of the business. For example, if a seller has paid a shipping charge of Rs 50, it will have to pay Rs 60 (1.2 times) if a return is placed and another Rs 50 for a reorder — a total of Rs 160, against the earlier Rs 50.
Sellers not associated with forums, too, are unhappy. “Returns in fashion category are high. We won’t make money even with 30% gross margins. The only option is to increase prices of products on Flipkart to sustain,” said a woman seller on Flipkart, based in Gurgaon.
Another seller said he has stopped selling on Flipkart. “They keep changing policies – I can’t run my business like this.”
“The no questions asked return policy was such a big burden, already. The company is pleasing buyers and is penalising sellers for returns even without their fault,” he added.
“We had approached Flipkart in April to discuss pain points of sellers,” All India Online Vendors Association (AIOVA) told HT in an email reply. “They were not interested, and are not even ready to negotiate with us… Binny Bansal seems to be busier than Jayant Sinha whom we met last week.”
Meanwhile, on June 17, Amazon lowered commissions by 20% to 58% — lowest for electronic devices and highest for movies, allowing sellers to offer products at a lower cost. “The seller forum is thankful to Amazon — a lot of our sellers don’t even want to increase the prices of the goods of Flipkart — they just want to shift their inventory to other platforms,” said Thakur.
Amazon did not respond to HT’s requests for comments.
A Snapdeal spokesperson said it was not looking to change the fee structure or return policy.