Walmart-owned e-commerce company Flipkart is trying to relist inactive sellers on its platform to increase selection and optimally use regional hubs to speed up delivery and trim supply chain costs, sources have told ET.
“If a customer from Mumbai orders a product on Flipkart, the company would want to deliver that order from their local warehouse or seller in Mumbai rather than shipping it from say, Delhi, which could lead to higher logistics and supply chain costs, and eventually higher price for the buyer,” said a person in the know of things.
“Shipping an item from the same region can significantly improve the bottom line for the marketplace,” he said, adding that regional utilization (RU) is the industry metric of efficiency for e-commerce entities such as Flipkart and Amazon.
In a bid to lure sellers, which would in turn improve RU, the company is reaching out to inactive sellers to understand why they have been dormant. Flipkart plans to use the data to take corrective measures including seller training and refining seller policies before its next Big Billion Day festive season sale later this year, they said.
Activation of long-tail sellers is crucial to marketplaces such as Flipkart and Amazon for growth, even though they have alpha sellers on board for the fastest selling categories.
Selection coverage can only be achieved with a wider seller base — which US-based rival Amazon has been implementing, resulting in higher coverage of the consumer basket.
“Sales (GMV) aside, customers care about selection while generating habit for a marketplace, including that one-off item which may be insignificant in terms of monetary value, but valuable to generate brand stickiness,” said an investor in the e-commerce business.
In December, Flipkart said about 45% of its sellers were from small towns and cities, without specifying the total number of such sellers. However, it is believed that only between 20% and 30% of registered sellers are active across Amazon and Flipkart.
Flipkart, in a survey to sellers, had asked questions including why they have stopped listing on the platform and sought areas of improvement for the etailer.
The survey was primarily aimed at understanding whether the barriers for sellers were the complex process of listing on the marketplace or issues related to business growth. “The next step is to evaluate this data, and offer solutions to convert them into active sellers,” said a person in the know.
“This also has to do with countering Reliance e-commerce,” said another person in the know.
Mukesh Ambani’s Reliance Industries is expected to shake up the country’s online retail market with its entry later this year. The Reliance group recently started pulling out own brands across lifestyle and apparel and the ones it has rights to sell domestically, from online marketplaces such as Flipkart and Amazon, ET reported earlier.
Sellers say there are several reasons why they have delisted from Flipkart. These include a complex on-boarding process, unfair returns from customers, high logistics costs, lower sales, competing private label brands and increasing commissions charged by the marketplaces.
“Sellers are being penalised for issues which are not under their control. Returns metrics are calculated wrongly and consumer-initiated returns are charged to sellers even though product is genuine and delivered on time,” said a spokesperson for the All India Online Vendors Association.―Gadgets Now