India’s largest e-commerce marketplace, Flipkart, is on a drive to weed out sellers who don’t meet set parameters as it looks to streamline its service and improve customer experience.
Flipkart, said to have around 90,000 sellers on its platform, is shedding flab as it looks to become more frugal, as global rival Amazon breathes down its neck. The firm has started a Master Seller programme to promote a few large sellers who can sell products across categories and is charging lower commission rates from them.
Flipkart claims to have 90,000 sellers on its platform
Sellers on the platform recently protested over the increase in commissions
Only 30-40 per cent of sellers on Flipkart’s platform are active on a monthly basis
Only a third of the sellers on Flipkart process over 100 orders a month
Flipkart has shifted its focus away from growing GMV to improving customer satisfaction
The move to Flipkart blacklist sellers comes after the e-commerce player increased commissions last month and changed its product return policy, causing an uproar among sellers. At the same time, rival Amazon India, flush with a $3-billion fund infusion, has dropped commissions across key categories such as electronics.
In the past year, Amazon has been able to grow its gross merchandise value (GMV) from $1 billion to $2.7 billion, while Flipkart’s GMV has stalled at $4 billion. The US company’s meteoric rise has led to investors losing a bit of confidence in Flipkart, downgrading the value of the company from a high of $15.2 billion to around $10 billion.
The company now says it has shifted its focus from growing GMV to focusing on customer satisfaction. It has also roped in Kalyan Krishnamurthy, a veteran at marquee investor Tiger Global, to help bring growth back on track. Krishnamurthy had earlier served as a member of the top management at Flipkart during the heydays of its growth.
Last year, the e-commerce sector saw most players spending big bucks onboarding sellers in a bid to make available more products on their platforms which would, in turn, boost sales. However, the current trend seems to be to hold on to sellers with whom it is sustainable to do business with, while letting the rest go.
“I had been a seller on Flipkart since 2013. They said my account was deactivated because they suspected I was selling a fake product.
I have sent them a copy of the bill provided by the regional distributor, but they are still saying there cannot be any further discussion on this,” said Manoj Chaurasia.
Chaurasia, who sells laptops and other electronic accessories, pegged his business through the Flipkart platform at Rs 40-45 lakh a month. He is also part of eSellerSuraksha, a lobby group for sellers on online platforms, which organised the out-of-stock protest on Flipkart on June 20.
“They are focusing on a few large sellers and doing business with them. They are also offering better margins and letting go of the smaller guys. My sense is that they are looking to cut costs of dealing with a large number of sellers. Several sellers with eSellerSuraksha have been affected by this, as have other sellers who are not with us,” said Sanjay Thakur, president of eSellerSuraksha.
RedSeer, an advisory firm that tracks the performance of e-commerce companies on several parameters, says only 30-40 per cent of sellers on Flipkart are active on a monthly basis.
Only one out of six sellers on Flipkart have around 500 stock keeping units listed on the platform. Only a third of the total sellers get 100 orders a month. Half them get less than 50 orders a month, according to RedSeer.
Flipkart’s largest seller is its WS Retail unit, which controls a substantial portion of the sales, but India’s new foreign direct investment regulations on e-commerce marketplaces limit such sellers to 25 per cent of the overall sales on the platform.
Flipkart says it constantly monitors sellers for quality and has a three-strike policy to blacklist them. However, if sellers are found pushing fake products or refurbished items as new, they will be immediately blacklisted. The company denied it was on a drive to boot sellers off its platform.
“All our sellers are expected to adhere to standard guidelines as well if they sell with us. Sellers found violating these rules are blacklisted from our platform. To ensure ethical business practices among sellers, we have a strict seller review/rating process along with on-ground teams carrying out regular quality checks at seller facilities,” Flipkart stated.