Flipkart faces e-sellers’ wrath; latter stocks out SKUs

Three days since Flipkart introduced its new commission fees, reports are surfacing that many sellers, angry with the unilateral decisions made by the country’s largest online marketplace, are pulling back their products.

Hindustan Times had reported that online sellers’ association eSellerSuraksha has asked its 1,574 members to raise prices of products on Flipkart. They have already taken out one million stock keeping units (SKUs) from Flipkart, the report said. The same organisation had launched #sellersquitflipkart campaign on Twitter too.

Although Flipkart denied these statements, some sellers have told YourStory that about four million SKUs have been stocked out already and more will follow. Flipkart agreed that some sellers went offline for a short while, but came back on the platform after some time.

Flipkart, however, said that any marketplace which runs out of an item will put up ‘Out of Stock’ sign till they replenish the stock. Those sellers who went offline and came back later had only about 4000 SKUs listed, it said.

In an official statement, Flipkart spokesperson said, “The number of active listings from our sellers as well as number of units sold has increased this week. We have received a positive response to our new policy from an overwhelming majority of our 90,000 sellers. We are confident that the new policy will not only help sellers to boost their business but also empower them to improve on quality and grow a loyal base of customers in the long run. We are working closely with our sellers to ensure a smooth transition.”

More trouble on the way?

Complexities in Flipkart policies have troubled the sellers. Sayak Sahu, Co-founder of Smiledrive, said, “Flipkart has told me that 72 lakh [7.2 million] SKUs have been deactivated. Their policy is that even if you are selling something generic, you must have a trademark when you list your product. For that you need to have trademark application certificate. Lot of items sold are generic, and have no brand name.”

Despite denying the number, Flipkart told YourStory that this move is to ensure zero duplication. They currently have 40 million products across more than 80 categories. Snapdeal has a similar policy – sellers must produce a letter of permission from the brands which they are selling. If they are selling their own brand, then they have to give a trademark certificate. This is applicable for all categories. This is a part of the on-boarding process. But if there is a conflict those sellers will be deactivated. Amazon also has policies on private goods, but none on trademark per se.

As a part of increasing the commission, Flipkart had told the sellers to revise their prices. But if a seller on Flipkart increases a product’s price from Rs 330 to Rs 400 on Flipkart for margins, Amazon might be still selling it for Rs 330. Even if a customer buys it from Flipkart, once he notices the same product for a lesser price on Amazon, Flipkart seller’s products will get returned.

Double-edged sword

Stocking out definitely affects sellers’ revenue. But Mumbai-based Chirag Haria, a member of All India Online Sellers Association (AIOVA), told YourStory that even if they do not stock out, they will end up with a negative pay-out. He says that if an item normally sells for Rs149 without shipping costs, the seller will get not more than Rs 20 according to the new rate card. Flipkart has let the sellers charge for shipping now. “We get only Rs11 if it’s national shipping. For local, it is Rs 51, the rest is taken by Flipkart in shipping fee, reverse shipping fee, collection fee, pick-pack fee, commission and fixed fees. In an offline store, sellers get about 40 percent,” Chirag adds.

Flipkart argues that their increased rates are still in line with the industry standards. But Amazon, which had increased their rates a few months ago, has cut their commission by around seven percent -- timing it perfectly against their arch rival. Suraj Vazirani, CEO of Maniac Store, said, “We have been able to meet union ministers and bureaucrats for a regulatory framework and fixed rules regarding e-commerce; but Flipkart’s higher officials are not ready to work on the ground level issues. They never respond.”

Flipkart, however, claimed that they are very responsive to their sellers’ queries, and had conducted webinars to help them with the transition to the new policies.

Return dilemmas

Amazon and Flipkart provided 30 days returns whereas Snapdeal has seven-day return policy. Currently, Flipkart has made it 10 days returns, except in the fashion category, which still has a 30-day return policy. “We are not against returns, but we get used products back,” Chirag says. He recounts that a shoes’ store recently got orders for 400 shoes, worth Rs 5000 each, in one month. But 25 percent of them were returned, all of them used and damaged. This is pure loss for the seller.

Flipkart pays the sellers in 15 days after transactions. Chirag says that there will be more protests after the 15-day period is over. “Many new sellers and those who are not tech savvy do not even know how these things work. With the new rate card and commission, sellers will get a clearer idea in the next 15 days. Once they receive the payments, there will be uproar,” he adds.

While marketplaces like to think that this is a passing phase, one can’t help but wonder if this protest is a sign of more troubles to come. Whether it is discounts or returns, how long will this cat and mouse game go on? Watch this space.