Setback for Flipkart - sellers protest return policy, threaten to exit marketplace

Revolting against Flipkart’s new return policy, a small group of merchants are threatening to either exit or be inactive on the online marketplace, reports The Economic Times.

Although making a tiny fraction of Flipkart’s 90,000 sellers, two trade associations representing small groups of online vendors said that they have decided to stop selling on Flipkart due to changes that would shoot up their cost of doing business.

It was reported earlier that amongst other measures, Flipkart had decided to increase sales commissions it levies on merchants, by up to five percent in some categories. Further, the online marketplace is reported to charge sellers a shipping fee, a reverse shipping fee and a collection fee for every product returned.

Earlier although the company did say that it will pass the shipping cost to the customers, sellers shot it down by saying that they still have to bear the logistics cost of one side of the shipping, as the platform doesn’t seek their approval when accepting a return from a customer.

According to the merchant association, it is not so much the higher commissions but rather Flipkart’s frequent policy changes and charges on product returns which have got the vendors to take this step.

According to Sanjay Thakur, spokesman for EsellerSuraksha, an association of about 1,000 online sellers, on return due to a fault in the product, Flipkart used to charge a fee of less than one percent (of the order value) from the online sellers. But now Flipkart, Sanjay said in the ET report, will deduct shipping charges and collection fees from sellers (in case of returns), resulting in the return percentage to range anywhere between eight to ten percent (deliveries) in most of the categories.

However, while addressing the revised policies for shipping earlier, a Flipkart spokesperson said that the new structure would enable sellers to have predictability and better manage their online business, and in turn standardise the process.

Ninety eight percent of the 300 sellers who participated in a recent EsellerSuraksha’s survey on Flipkart’s recent policy rejigs said that the policy changes would "kill sellers," and about 57 percent said they would "rethink" selling on Flipkart. While more than 42 percent of the respondents said that they would hike the price for customers (by 15 - 20 percent) to make up for the cost.

A senior member of the All India Online Vendors Association (AIOVA) also said that close to 300 of its 1,000 members had decided to quit selling on Flipkart due to company’s new decision of passing on the product return charges to them.

On Tuesday, it was reported that to avoid faulty bills Flipkart had made revisions in their shipping policy allowing sellers who don’t use the company’s warehouse facility to weigh, measure and dispatch their products themselves.

According to another report by EsellerSuraksha 85 percent of the 150 Flipkart sellers involved (in the survey) across geographies and categories were unfairly charged for excess weight at some point in time.

Further, even online marketplace Amazon has increased commissions, but deny charging sellers for handling products.

What seems ironical is that just on Monday, as per a study by Neilson, Flipkart was named as one of the most preferred e-commerce websites for sellers along with Snapdeal and Amazon.