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Flipkart Revises Commissions And Shipping Fee To Attract Smaller Sellers

Home-grown online retail firm Flipkart, now owned by American major Walmart, has slashed seller commissions and shipping fee. The move is expected to help the Bengaluru-based e-commerce company attract new sellers as well as retain the existing ones, sources in the know said.

Flipkart, which was earlier offering two commission rates, for products priced above and below Rs 300, has now divided it into four slabs.

The seller commission will now vary for products priced up to Rs 300, Rs 301 to Rs 500, Rs 501 to Rs 1,000, and above Rs 1,000. “The revised rate card would be effective from June 24 this year,” said a company source.

“Flipkart intends to pass on more benefits to the smaller sellers, who typically sell low-priced products but were earlier charged a standard rate of commissions,” the source pointed out. Flipkart declined to comment on the matter.

Broadly, in the latest revision, Flipkart has reduced commissions for products in the books and general merchandise category by as much as 13 percent. For electronics, and home and furniture products, the reductions in commission are as much as 10 percent and 8 percent, respectively.

Flipkart, which has around 100,000 sellers registered on its platform, has also reduced the shipping fee for sellers who directly dispatch to customers by 57 percent in the 500 gm to 3 kg category. However, there has been an increase of Rs 1 in the 0-500 gm category for zonal and national shipments.

Arvind K Singhal, chairman at consulting firm Technopak Advisors, said both Flipkart and Amazon are aware of the ‘potential competition’ from the Reliance e-commerce business.

“In that context, you want to lock in very good (number) of merchants, vendors on your platform. Because, it is quite likely that whenever Reliance fully launches its e-commerce business in India, they would be very aggressive in terms of the kind of (terms) they would offer to the sellers and to the customers,” said Singhal.

Mukesh Ambani-led RIL is building its e-commerce platform through a mix of organic and inorganic initiatives, including acquiring small technology companies to help it create a robust platform.

“Overall, Flipkart wants to bring in more sellers on its platform at a time when many of the smaller sellers are present both on Flipkart as well as Amazon,” said Satish Meena, a senior forecast analyst at Forrester Research. “Also, they want to reduce the scrutiny from online sellers and give a sense that the company is not charging a high commission.”

Analysts also say that some of the fastest growing segments such as consumer electronics and mobile phones are going to witness slower growth as compared to 30- 35 percent seen earlier. “So you now want to expand into more categories and (are) reducing commissions across the board, especially for specific categories. Then, the pricing would be more competitive for the customers,” said Singhal of Technopak.

Flipkart reducing its seller commissions and shipping fee come at a time when Amazon is stepping up its investment in India. The Seattle-headquartered company last week pumped in Rs 2,800 crore into its India marketplace.

While announcing its financials in April this year, Amazon had said that the company was working on offering free one-day shipping programme for its Prime customers.

Like in the US, Walmart, which acquired a majority in Flipkart last year in a $16-billion deal, is pitted against Amazon, to dominate India’s e-commerce market, which is expected to touch $200 billion by 2028 from about $30 billion last year.―Business Standard

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