Flipkart has reduced its marketplace fees and certain other charges it collects from sellers hoping to revive sales volumes in a market where growth has nearly flattened in recent months.
The company signaled that the reduced fees for doing business on India’s largest online marketplace could translate into lower prices for consumers. Flipkart has lowered collection charges for cash-on-delivery (CoD) orders by at least 40 percent, depending on the product category and seller’s rating, marketplace head Anil Goteti said.
The company has reduced forward-shipping fees by at least 10 percent and the fixed fees it charges merchants for selling on the platform by more than 30 percent. These changes will bring down the overall cost of doing business through Flipkart by about Rs 30 per unit (of 500 grams shipped in the same zone or state) on an average, Goteti said.
Goteti said, "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 now also want to help sellers by reducing the cost of doing business."
Flipkart had raised its fees in June, when it introduced additional charges on processing CoD orders, which account for up to 60 percent of the company’s shipments. It had also increased the commission fee charged from sellers per transaction.
One of the main changes in June that had riled sellers was Flipkart’s return policy, in which it had introduced reverse-shipping fees and collection fees for every returned product.
Goteti said product returns had dropped by 15-20 percent since June. A spokesman for the All India Online Vendors Association, which represents about 2,000 online merchants, said the decision could have been triggered by falling orders at Flipkart because of higher product prices and the impact of demonetisation.
He said, "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."
Harish HV, Partner, Grant Thornton India, said, "The current move by Flipkart is indicative of increasing throughout in terms of volumes. Also, this will draw in serious sellers, which means better business for the marketplace."