Flipkart changes fee structure & policies; sellers consider closing account

Indian ecommerce leader Flipkart recently announced changes it has made to fee structure, shipping and returns policy.

In its mail to sellers, Flipkart wrote,

“Today we are a strong community of over 90,000 sellers and over 75 million registered users. We thank you for being a part of our wonderful journey. We are making important changes to our marketplace fees and policies which will be effective from June 20 onwards, and will impact all sellers on the platform.”

Revised Fee Structure

“Flipkart will be moving away from the complex Fees structure of Zero+ commissions and going forward all verticals will have the new Fees structure which is simple and easy to understand,” informed the marketplace.

From June 20, 2016, Flipkart will charge sellers the following fees:

• Commission fees
• Shipping fees
• Collection fees (to cover for payment  gateway or cash collection charges)
• Fixed fees (for successful orders only, not for returns)
• Cancellation fees (for orders cancelled by sellers or due to SLA breach)

Altered Shipping Policy to bring clarity

Flipkart states in its email, “We have been listening to your feedback, and are making changes to our shipping policy to give you better control and predictability of your shipping charges, hence clarity on estimating your payments.”

• For all orders, shipping fees will be calculated based on details of the courier package entered by sellers
• Sellers will have to compulsorily enter the length, breadth, height (in cm) and weight (in kg) of the courier package in the ‘my listings’ or ‘orders dashboard’
• Starting from June 20, 2016, sellers will not be able to process any order if length, breadth, height and weight of the package is not mentioned
• Shipping fee will be charged based on the volumetric weight ( = L x B x H / 5000) or product dead weight; whichever is higher
• Starting from June 3^, 2016, sellers will be able to charge shipping fees for Non-Flipkart Advantage orders (not exceeding the above calculated fees) to the customer, for all categories

Modified Returns Policy to reduce returns

• From July 2016 onwards, buyers will be able to return products only within 10 days of purchase instead of 30 days across all verticals. Although, the 30-day returns policy still applies to clothing, footwear, watches & eye-wear, jewellery & fashion accessories and large appliances categories
• Consumable products (like software, personal care, and innerwear) will have a no return policy.
• In case of customer returns, sellers will be charged shipping fee, reverse shipping fee, collection fee and pick-pack fee ( Flipkart Advantage)
• Commission and fixed fees will not be charged on any customer return
• For Flipkart Advantage orders, Reverse Shipping Fee will be compensated if the returned items are found to be damaged, missing or mis-shipped when verified at the Fulfillment Center
• In case of courier returns, no charges will be levied on sellers

Other changes

• From June 1, 2016, the effective rate of tax would be 15% (Service Tax of 14% + Swachh Bharat Cess of 0.5% + Krishi Kalyan Cess of 0.5%), and will be applicable on all seller fees and charges
• For Flipkart Advantage sellers:

1. Pick & Pack Fees – 50% discounted rates on non-fragile products and up to 60% on fragile products (Effective June 20, 2016 until September 30, 2016)
2. Storage Fees – For all products on Flipkart Advantage, up to 45% discounted rates on storage fees (Effective July 1, 2016 until September 30, 2016)
3. Long-term storage Fees – From August 1, 2016, this fee will be charged for storing products in the etailer’s warehouse for longer periods of time
4. Recall Fees – From June 20, 2016, this fee will be charged for sending product back to seller from the etailer’s warehouse
5. Next day/Same day delivery Charges – Through this fee, Flipkart will recover the amount paid by buyers for availing Next day/Same day delivery service from sellers

The Good

Wrong shipping charges, and unfair returns are two main issues that sellers have been grappling with on Flipkart. Therefore, vendors will welcome few of the changes made to shipping & returns policy such as 10-day returns, freedom to charge shipping fees to buyers and enter clear package details to avoid wrong shipping fees.

The Bad

We can clearly see that the etailer has introduced many new charges besides hiking rates. From recovering same day delivery charges from sellers to long-term storage fees, Flipkart is looking to squeeze out as much as possible from merchants.

“At present they (Flipkart) are not charging for color/fit/size issue returns but after 20th June they will charge on that too. Earning from those increased commission + earning for useless returns too. More Returns and More Replacements = More Profits for Them. They are in hurry to raise their valuation in one shot, which was recently devaluated, by earning profit from this Sale & Return Game,” shared Jitendra Rawal, an online seller and member of All India Online Vendor Association (AIOVA) while speaking to Indian Online Seller.

There’s only one question on every seller’s mind – ‘How will we survive in this condition?’ The net payable to sellers will reduce even further once Flipkart applies the new rate card. Needless to say, vendors are not happy and many are considering closing their seller account on Flipkart once the new rates come into effect.

Online Sellers, any message for Flipkart? We welcome your thoughts and comments.