Walmart-owned Flipkart will hike various marketplace fees from next month, irking sellers hit by the coronavirus pandemic. The move may lead to increased prices of products on the platform for consumers.
The decision, reviewed by TOI, concerns marketplace fee components like fixed and local shipping charges. These have been increased across price buckets, especially doubling in the lower order value bracket of less than Rs 500.
Additionally, the online commission for products that are in demand after the lockdown would be increased — in a range of 30-80% from current rates — from July 1. These products include trimmers, shavers, inverters, headphones, FMCG essentials and air coolers.
Merchants say the new policy will hit them hard in the current economic environment and they will be forced to increase prices in different categories. Since receiving Flipkart’s new fee structure, merchants in their Facebook groups have been protesting the implications of this change when economic activity has just started to pick up.
For instance, Flipkart now charges an 8% commission for a trimmer priced up to Rs 500. This will be 14% from July 1. It will charge 9% for trimmers above Rs 1,000 compared to 8% now. Similarly, for what it calls ‘FMCG combos’, the new commission would be 4-6%, depending on unit value, compared to almost a uniform fee of 3% now.
“Sellers like us are going through a time of crisis. We were already fighting Flipkart SmartBuy in search results and pricing, but after the coronavirus struck, business suffered immensely. Now the arbitrary increase in commissions, shipping, and storage prices will lead to a further burden on us. Shipping cost increase will hit us hard because it is charged both ways — when the customer orders and when the customer returns. Products being sold for Rs 149 or Rs 199 will start incurring losses,” said Mohit Anand, a seller on Flipkart. “Sellers will be forced to increase their prices — the only option left to cope with this,” he added.
A Flipkart spokesperson said it is working with lakhs of sellers so they can resume operations. “We regularly revise our commissions and shipping rate cards based on business metrics and this is a periodic exercise,” Flipkart said.
“The price hikes by Flipkart need to be rolled back and they should instead reduce their fees in order for sellers to survive while giving the best benefits to consumers. With the revised fees, the sellers will be forced to increase prices by 5-7%, depending on category and selling price,” a spokesperson of online vendors’ group Aiova said.
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