Flipkart follows Amazon in raising commissions for sellers in some categories
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Online marketplace Flipkart has revised commission rates for sellers—increasing fees in certain categories and reducing rates in others—while launching a new loyalty programme that will reward top sellers.
According to the new initiative, sellers will be put in three brackets and incentivized accordingly—gold, silver and bronze. This is part of a broader move to improve the quality of customer service at a time when chief executive Binny Bansal and business head Kalyan Krishnamurthy have made customer satisfaction in the form of net promoter score (NPS) a top priority for the e-commerce firm.
With gold being the highest rated, sellers in that bracket will be eligible for benefits and rewards including discounted shipping fees. “We’ve been looking at how to drive our quality for customers higher over the last year or so. Over the festive season, we wanted to launch this programme. This is a very exciting programme and a first of its kind in Indian e-commerce. What we are doing is basically rewarding and encouraging our quality sellers by clearly defining what is the criteria or the status that we would like to give them,” Anil Goteti, head of marketplace at Flipkart, said in an interview.
“Based on this criteria or status, whether it’s a gold seller or a bronze seller, we are giving them some exciting benefits. At the heart of the programme is a drive to incentivize sellers and give them an understanding on what it takes to move higher and enjoy more benefits,” he added.
As part of the plan, top sellers will be rewarded with incentives and benefits such as discounts on shipping fee, faster payouts and exclusive promotions. Flipkart will reward gold category sellers with a 20% discount on shipping fees, while silver category sellers will enjoy a 10% discount.
“Shipping fees is a big component in many sellers’ P&L, particularly in e-commerce—for gold sellers, we are offering a 20% discount on the forward shipping fee,” said Goteti. “(The criteria) will depend on two things—what sort of consumer experience they are helping us deliver and how big are they in terms of overall revenue and units for us.”
Flipkart has well over 100,000 sellers on its platform, “close to 115,000-120,000”, according to Goteti. That compares with the 120,000 sellers that sell on Amazon’s marketplace in India. Flipkart currently counts WS Retail Services Pvt. Ltd as its largest supplier.
Simultaneously, Flipkart has also revised commission rates for sellers, with price hikes in some categories and rate cuts in others such as microwave ovens and washing machines.
Last week, Amazon India raised commission rates for sellers in certain categories such as consumer electronic devices, while reducing fees in others such as large appliances, after a bruising festive season showdown with Flipkart. Amazon raised the fees for sellers on its marketplace platform in categories such as automotive accessories, mobile phone covers and cases, desktop computers and laptop batteries, and reduced the commission rates in categories such as furniture and kitchen appliances.
“As a marketplace, we have been looking at newer policies and commissions and we do that every quarter. As part of this roll-out today, we are making a few changes to our commissions as well. In fact, in a lot of categories, we are actually slashing rates—such as microwaves and washing machines. In a few categories, we are also increasing rates,” said Goteti.
Earlier this year, Flipkart changed its policy toward third-party sellers on its platform, charging higher commission rates in key categories, passing on costs of product returns to sellers and encouraging them to use its logistics service, as part of an effort to improve its customer service and brand, Mint had reported in June.
Flipkart had told more than 90,000 of its sellers that it will charge higher commissions in categories such as fashion, and that sellers will have to bear the full cost of product returns.
Earlier this year, Flipkart also decided to shift a majority of its sales to a select group of third-party sellers to regain its once-vaunted customer service levels, in a significant departure from its strategy last year when it attempted to have tens of thousands of sellers generate most of the business on its platform.
Flipkart has already identified at least four large seller entities that will help it comply with two potentially troublesome foreign direct investment regulations on offering discounts and capping a single seller’s contribution to overall revenues at 25%, Mint reported in July.