Flipkart reduces commission charges to boost sales

By : |March 3, 2017 0

Amid its struggle to lead over arch-rival Amazon India, Flipkart has revised policies for merchants who sell on its platform.

Starting from March 15, Flipkart will cut commission fees for the 100,000-plus sellers and also other charges affecting the end-users.

The e-tailer has reduced ‘fixed fees’ it charges merchants for selling on the platform. Now it will be 80-90 percent cheaper across all product verticals. Flipkart has also reduced shipping fees by 10 percent and collection fees by about 40 percent for all cash on delivery orders.

The latest move is expected to give sellers the flexibility to increase discounts on the online marketplace and attract customers.

According to the Flipkart vice-president and head of marketplace Anil Goteti, these changes will bring down the overall cost of doing business through Flipkart by about Rs 30 per unit on an average, however, it will not impact margins in a big way.

“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 realised 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 those back to our consumers,” said Goteti.

A spokesperson for the All India Online Vendors Association, which represents about 2,000 online merchants, said the decision could have been caused by falling orders at Flipkart because of higher product rates and the impact of demonetization.

“Total orders for our sellers had dropped by about 25 percent since June when we had raised our product prices by 25-35 percent to absorb the increased fees on Flipkart,” spokesperson said. “The current move by Flipkart is indicative of increasing sales throughout in terms of volumes.”

In November, Flipkart raised fees for sellers in certain categories, while reducing rates in other categories such as microwave ovens and washing machines.

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