In a sudden move that took the vendors on Flipkart by surprise, the ecommerce company has increased the rates of sales commissions it charges from apparel vendors on its platform. The vendors say they received a communication without assigning a transit window and Flipkart has said these increases have come into effect immediately from March 1.
Sellers of western wear, kurtis, innerwear, smartwatches, blazers and waistcoats are the ones targeted in this exercise and the increase varies between 6.5% to 15% on the existing rates on commissions charged. The smartwatch category is reportedly where the increase is steep, from 20% to 23%. Sellers of jeans, tops, t-shirts and shirts, classified as western wear, will now pay Flipkart 1% more, 16% instead of 15%. Obviously, the sellers are unhappy and have said they will take it up with the company.
According to the observers, Flipkart’s decision to increase the commission on these product categories on its platform is due to the trend noticed in the past few months of the fashion category clocking very good sales next only to smartphones, which undoubtedly are the runaway leaders among the different categories sold on the ecommerce platform. This is in terms of the number of pieces sold as well as the gross merchandise value, which is the measure these firms are evaluated by.
Interestingly, though Flipkart owns exclusive fashion outlets Myntra and Jabong with a host of private labels on them, the Flipkart Fashion category within the main Flipkart site still holds its own and does exceedingly well. No wonder the company felt now is the time to cash in on this trend and increase its commission from the sellers in this category.
Ironically, Flipkart’s rival Amazon did the opposite. It has reduced the commissions it charges on the sellers of fashion.