It’s been a week since the#SellersQuitFlipkartmovement was started on Twitter. Online sellers at Flipkart are upset because the marketplace introduced major commission changes without consulting them. To make things worse the new fee structure eats a significant proportion of seller profits.
What are Online Sellers Saying?
Though the online marketplace hasn’t really said much about the uproar it is causing, the sellers have said a lot. Online seller association eSeller Suraksha (ESS), conducted asurvey among 300 online sellersout of its 1000 online sellers. Those participating in the survey were asked for their feedback on the policy.
More than 42% of them were considering increasing their product prices by 15% or 20% to avoid substantial losses once this policy comes into effect. 98% claimed the new policy would“kill online sellers”and 57% said they might rethink their decision of selling with Flipkart.
Product returnsare already an issue affecting Flipkart seller profits. This new policy will only double their troubles on account of baseless returns.
As perDNA reportson the situation, Flipkart might only be claiming to have 85,000 online sellers. The real number could be anywhere from 50,000 to 55,000. An expert of the ecommerce industry said,“Out of which only 5,000 sellers are active and the 1,000-odd sellers that are protesting against the new policies make for a decent 20% of Flipkart’s active seller base. That’s a decent enough number for Flipkart management to take note of,”
Doing the Math
Online SellerShakti Gandhidid us all a favour and posted images of the actual commissions the online marketplace will charge him as of 20 June.
Besides the many new deductions, or what the marketplace calls commissions, online sellers have to pay other charges too. Liketaxes to the government, warehousing rent and otherecommerce coststo sustain their online retail business.
Flipkart Defends its Policy
Flipkart’s reaction to the policy did not provide much comfort to its online sellers. It appears that the etailer is defending its new policy. It claimed that this policy would make things easier for online sellers in terms of predictability and payment control.
A spokesperson of the marketplace evensaid, “Our policy and process continue to be the best and the easiest in the industry.”
What they didn’t mention was, the financial burden it would become for online merchants. However, they did advise sellers to take up adequate steps in processes like cataloguing and packaging to prevent unnecessary returns on account of false shipments.
The ecommerce platform also cut down the number of return duration from 30 days to 10. This the marketplace feels will ensure products are returned and replaced immediately making both the consumer and seller happy.
Online Sellers to Take Matters into their Own Hands!
The online sellers association eSellerSurksha plans on starting a disobedience movement against the unfriendly marketplace policy. The following message was sent out to its members:
AIOVAhas also played a part in this movement, but through itssocial media effortsto make online sellers aware of the policy.
ESS sellers are requested to support the#OnlineDharnaand#SellersQuitFlipkart campaign on Facebook and Twitter. And on 20 June declare zero stock on Flipkart.
eSellerSuraksha’s President,Sanjay Thakur saidthat Flipkart sellers want the new policy to be withdrawn. The marketplace on the other hand has not provided any clarity or remedy for the grievances online sellers will face.
In Thakur’s opinion this new policy from Flipkart is killing the very sellers that made it what it is.
He specified that Flipkart is the only marketplace with such unfriendly policies. If a seller has to raise his prices by 25%, buyers will concentrate on other marketplaces where the same product is available at a cheaper rate!
As an online seller it’s really up to you, stay and pay or reduce your inventory to zero in 2 days?
Sellers are already on the edge overFlipkart’s recentpolicy changes. Many are planning to quitand stageOnline Dharna(protest).
Those who are still indecisive might quit now or will be shown the door by the etailer, thanks to the two new updates announced by the ecommerce leader on 17 June 2016.
Unclaimed brands without Trademark Certificate will be delisted
In its mail to sellers, Flipkart informed that unclaimed brands would be live only till June 30 on its platform. Sellers will have to apply for trademark certificate if they wish to continue selling unclaimed brands of sarees and dress materials.
“We have disabled multi-tagging for Sarees and Dress Material on Flipkart and have made it mandatory for all brands and labels selling in these verticals to have a Trade Mark Certificate. Basis your past performance on quality metrics, we would like to offer you an opportunity to apply for Trademark Certificate(s) for unclaimed brand(s) (brands with no Trademark Certificate submitted on Flipkart) selling on Flipkart, and also being sold by you,” informed Flipkart.
The last date to apply for or submit the Trademark Certificate is 30 June 2016 and those who fail to do so will be delisted.
The marketplace also added a disclaimer, “Please note that Flipkart is not responsible if these brands already have an existing Trademark Certificate.In case of any dispute for brand ownership, we will accept the Trademark Certificate that was first applied for, based on the date on the Trademark Certificate document.”
It is definitely a good step to combatbrand infringementand fake listings. As a seller even with valid copyright certificate has to suffer on online marketplaces given that few people create fake listings and copy brand logo/productslike this Amazon sellerwho had shared his ordeal with IOS.
This move by Flipkart will help to get rid of unauthorized sellers, at least in sarees and dress material verticals. However, the marketplace will lose several merchants as not all have TMCs or know how to apply for one. Moreover, 2 weeks is less time, isn’t it?
Gears up for Fashion Sale in June despite DIPP’s stern warning
While other marketplaces are lying low, Flipkartmanaged to host a 3-day mega salein May.
The etailer is now gearing for a 3-day Flipkart Fashion Sale to be held from June 24thto June 26th.
“Flipkart Fashion Sale is back (June – August). First Spike Sale: June 24, 25, 26. Opt-in to offers and enjoy a huge surge in additional sales,” notified Flipkart to its sellers via an email.
Flipkart urged the merchants to participate in this event by promising that it will be heavily promoted across print, television, digital and social media.
What caught our attention though in the ecommerce company’s mail, are the two lines written in a tiny font. Flipkart wrote,
“The campaign call out for Lifestyle Offer on Sale Days is a minimum 50% off on MRP. Please edit your Flipkart Selling Price accordingly to be part of our campaign.”
If this is not influencing price of the product, then what is? Isn’t this a direct violation of the FDI guidelines instructed by DIPP? And how will sellers give 50% discount, pay the gazillion marketplace charges and still make some profit?
Any Flipkart seller happy?
A large number of sellers have threatened to quit Flipkart after 20thJune. Will they actually do it is something we’ll know only after the new policies are implemented.
Few will be kicked out after 30thJune when unclaimed brands will be delisted. Few others might voluntarily leave if the etailer continues to host mega sale events that call for minimum 50% off on MRP.
Question is how will Flipkart continue to function if they keep burdening sellers and push them away? Can a marketplace exist without sellers? Other marketplaceslike Amazonhave already started taking advantage of this situation. International ecommerce playerslike Alibabaare all set to enter and will take aggressive approach to on-board sellers. So how will Flipkart compete without a strong army of online sellers?
Ifproduct returns,high commissions,wrongful chargesare what make online sellers upset, what keeps online marketplaces up at night? Itsentry taxes!
State governments have been picking on online marketplaces through the use of entry taxes. Some may say they want a share of the ecommerce boom, some may say entry taxes are just a guise to exploit etailers. Online marketplaces don’t like being pushed around and certainly will fight back when someone tries to take away their earnings.
Just ask Flipkart! The online marketplace refuses to pay the unjust taxes imposed by the state governments ofUttarakhand,West BengalandGujarat. Flipkart has even filed legal motions against these state governments imposing entry tax on ecommerce goods being brought into the state. The etailer feels the state governments are being discriminatory.
Amazon Challenges the Bases of Entry Tax in Gujarat!
Recently Amazon India took the Gujarat state government to court for levying 6 – 12% entry tax on all ecommerce goods delivered from sellers in other states, (6% on normal commodities and 21% on specified products.) The stateimposed its entry tax law, in Marchto level the playing field for sellers within the state.
The etailer challenged the definition and very concept of entry tax at the Gujarat High Court, according toa person familiar with the case.
The source toldET retailer, “The tax should be applicable to anyone who is importing items.”
“Now, in this case, Amazon is only a facilitator and only arranging the buyers and the sellers on the portal, and is neither the importer nor the consumer, and the company as such has nothing to do with the goods. It is not a case where Amazon is purchasing and selling,” said the person.
A senior executive at one of the largest ecommerce firmsclaimed that:
Ecommerce companies are mere intermediaries in the value chain, so they should not be the ones taxed.
Ecommerce firms are organized entities, so it is easier to chase after them instead of multiple sellers.
Entry Tax is Bad?
The secretary general of the Federation of Indian Chambers of Commerce and Industry, Dr. A Didar Singhsaid, “Any special tax that is ecommerce specific will result in negating the benefits to Indian MSMEs and also to end-consumers at large, as the increase in taxes will ultimately make the goods more costly.”
He also reasoned that entry taxes couldn’t possibly uplift state revenues. However, they could become a barrier to trade between states!
Indian ecommerce is getting bigger everyday. Making$30 billion in revenueis no joke! Rapid growth of the internet and the numbers using it for ecommerce have enabled the country to pull ahead of its Asian counterparts. The ecommerce industry is basically booming and everyone wants to be involved.
However, with great power comes responsibility. A responsibility thebig players of ecommerce and the many low scale misbehavers refuse to recognise. Indian ecommerce is fairly new, that’s granted, but for how long can we keep saying that?
It’s time someone took action against the wrong doers and protected the best interests of the entire ecommerce community.
Initiative by AIOVA
TheAll India Online Vendor Association(AIOVA), has been working tirelessly towards the creation of a non-bias regulatory body for ecommerce. One that does not only looks into assisting online sellers but every individual that interacts with the ecommerce playing field.
In April, the association had a strength of 500 sellers, since then their numbers have multiplied. They now have 1000 online sellers on board and the need for a regulatory body has never been greater.
WhenIOS last spoke to AIOVAabout their efforts to establish a regulatory body, the lobby group told us they were knocking on every door including the Central Government’s. Yesterday after multiple Twitter interactions with Jayant Sinha, the Minister of State for Finance, AIOVA was scheduled to meet with the minister.
AIOVA said they spoke with minister Jayant Sinha about the need for an online regulatory body in ecommerce and were requested to come forward with their demands after the Parliament session was over. After many more attempts the association finally secured a spot on Jayant Sinha’s agenda for 1 p.m. on Friday.
What was Discussed During the Meeting?
During their half hour meeting with the Minister of State for Finance, they discussed the challenges faced in online retail and ecommerce in general and the pressing need for a body to control and protect those participating in ecommerce. AIOVA informed the minister about the importance of including sellers in policy making and not just thepolicies from the marketplace, but from thegovernment too! Holdingmarketplaces accountable for their actionsand securing the interests of ecommerce stakeholders were also spoken of. The association also requested the marketplace executives be pulled up for unethical behavior through their platforms.
The agenda for the meeting
How did the Government Respond?
The Minister, Jayant Sinha, explained to the association the challenges of setting up a regulatory body that suits the ecommerce requirement. The fact that the ministry has more pressing matters to cater to at the moment has pushed the subject of ecommerce onto the back burner. However, the association was connected to the right committee and informed of the necessary measures required to move forward.
What’s the Next Step?
AIOVA said, “We are not here for publicity, this was just the first of many meetings with the government. Setting up a regulatory body is a long process with many requirements and now we know what the next step is to continue forward. The minister has requested us to put together numbers and figures that the concerned committee can look into.”
The association also said this is progress in their endeavors and a sort of hope for better things to come.
Earth’s most consumer-centric company,Amazonis all set to improve its buyer-friendly quotient even further. The etailer, which is buyers’favourite ecommerce company,introduced a new returns policy for Fulfilled by Amazon (FBA) customers on 16 June 2016.
Amazon India sent an email to its sellers informing,
“FBA customers can now exchange their Apparel and Shoes which they had purchased when they return such FBA product for size and colour issues. Amazon will facilitate such exchange of Apparel and Shoes for FBA customers by the sellers.”
The etailer went to explain that earlier, buyers were asked to place a new order to get the replacement item for a different size or colour in case of orders fulfilled by Amazon. But now buyers can request for an exchange free of cost, assuming that the returned original product meets all eligibility criteria.
May result in more returns
The returns rate in ecommerce is already very high thanks to easy returns policy. With Amazon’s new changes, there is a high possibility that the percentage of returns will spike up even more.
Not to forget that theburden of these returnswill fall directly on sellers. Why you ask? Read below.
“You hereby instruct and authorize Amazon to facilitate the above exchange of products for and on your behalf. The price of the exchanged product of a different size or colour can be different from original. The exchange functionality gives the same price to customer as the original order.In the event the exchanged product is of a higher value than the original product, you hereby acknowledge and agree to bear the additional cost of such price difference.In the event that the exchange product is of a lower value than the original product, it will not be clawed back from you,” wrote Amazon in its mail.
In simple words, if a buyer exchanges the original ordered product with a one that costs more, he/she won’t have to pay the extra price, instead the seller will have to pay for it.
At this rate, the American etailer will lose the most preferredmarketplace for sellerstag.
Will sellers switch to fulfilment from FBA service?
Based on the conditions laid out for ‘free exchange on Amazon-Fulfilled orders’, it won’t surprise us if FBA sellers switch toself-fulfillmentfor good. Sellers feel weighed down by thecountless marketplacefees,no-questions askedreturn policies,incorrect shippingcharges, andreverse logisticsfees. On top of it, being asked to pay price difference for exchanged goods is taking it too far.
Marketplaces urge and in few casesbullysellers to sign up for their fulfilment service. But if Amazon andothers continueto introduce seller-unfriendly policies, then vendors have no option but to choose fulfilment over fulfilment.
Snapdeal might have many flaws according to its sellers, but the marketplace has managed to do good things too likedeliver products the fastest,boost SD+ seller salesand now make early COD payments to online sellers.
Early Payment Option = Capital Assistance
In an email the marketplace informed its sellers that they can request for cash on delivery payments 3 days in advance. There is a catch though. Those availing of this facility must forfeit 0.5% of that payment as a nominal fee.
The marketplace has introduced this service in the attempt to enable easy cash flow for online sellers. This should allow them to meet working capital requirements.
The following email illustrates thiscapital assistfeature from Snapdeal:
Word from the Online Marketplace
Snapdeal launchedcapital assistancelast year in August, like its competitors Flipkart and Amazon which already have financial assistance programs (for sellers) in place. However, this aspect is still in the trial phase.
The marketplacesaid, “We continuously engage with online sellers to help them become more successful.To take a broader view, Capital Assist is conducting a survey among select sellers on Snapdeal to assess their requirements. It is a standard practice to seek seller feedback on any new service or policy we plan to introduce.”
Since the initiative is still at the feedback stage, steps will be taken according to seller response. Also, this arrangement is not a change of any policy the marketplace said, just an optional facility for those interested in it. The procedure will be conducted between the seller and banks tied up with Snapdeal’s Capital Assist platform.
Do Online Sellers Love it or Hate it?
Despite the etailer stating the “early payment option” will benefit online sellers, they are in the least bit impressed. Especially because with the 0.5% charges!
eSellerSuraksha president, Sanjay Thakursaid,“It would have been better if payment was made upfront instead of just three days before due date.”
Questionable Features and Policies
IOS spoke with AIOVA about this new feature from Snapdeal and how they felt about. The associationrecently met with the Minister of State for Financefor the initiation of an ecommerce regulatory body.
The sellers group feels there is certainly something fishy about this approach by Snapdeal. AIOVA said according to regulations from the RBI, a nodal account must be maintained by etailers, e-wallet companies and payment gateways. The funds in this account cannot be touched by anyone nor do they belong to anyone, till the particular product sold has reached the consumer. So promising advanced payments seems impossible.
The marketplace may say it is making advanced payments out of its own pockets to provide this service, but how can they, AIOVA questioned. “Snapdeal claims to have3,00,000 online sellers. Do they honestly have the bandwidth or large enough pockets to pay all these sellers in advance? It’s highly uncertain! Also who said they could charge nominal fees of 0.5% on the seller’s money?” the association said.
“If you ask them about it, they will say this is a pilot project to engage seller reactions,” added the association. Their opinion is the marketplace is simply trying to cover up its very questionable features and policies.