Flipkart asks sellers to bear 60 per cent of discounting cost

This attempt by Flipkart is likely to see further cost rationalisation of products being sold by third-party merchants.
Flipkart asks sellers to bear 60 per cent of discounting cost
Flipkart asks sellers to bear 60 per cent of discounting cost
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The ecommerce business is India is going through a churning as it were with a flurry of major policy decisions coming out from the two main contenders, Amazon and Flipkart. If it was Amazon in the news earlier, for dropping the seller fee and other charges to make sellers happier, it is Flipkart now, which has sent a letter to its sellers that the discounts being offered on their platform have to be shared by them in the 60:40 ratio with the sellers picking up 60%.

These discounts or sales incentives to lure customers to buy the products on their site have been the real basis of the growth of online business in India. The current move may apply to the major ‘Sale’ events held by Flipkart from time to time but can be expanded across the board as well.

The issue of offering massive cuts on the MRP on the ecommerce sites is already a major issue with the Indian tax authorities declaring that these are long term brand promotion costs and cannot be added to the revenue expenditure and book losses in the balance sheets. Flipkart may have made this decision to lessen the impact on account of the IT directive also, though there is no official confirmation on any of these from Flipkart.

As mentioned, the ecommerce segment is witnessing these actions as the competition is heating up. Even as Amazon and Flipkart are trying to claim the leadership status, Paytm Mall is slowly inching up with powerful investors backing them up for a share in the ecommerce pie. The sellers in these platforms hold the key since the kind of attractive offers they can bring on board adds to the burns the companies are willing to throw-in. Keeping the sellers in good humor, therefore becomes a key part of the strategy.

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