How Flipkart’s New Rate Card Policy is Impacting Sellers
On May 18, Flipkart, one of India’s leading e-commerce platforms, introduced a new rate card policy. This move has had a significant impact on many sellers, particularly small ones. Concerns have been raised about the viability of continuing business under the new system, and many vendors are feeling the pressure.
Sellers’ Main Concerns
The primary worry among sellers is the lack of flexibility to revise prices. This is particularly troubling as the festive season approaches, a crucial sales period for many. Small vendors have reported that they are now required to disclose their profit margins, a change from the previous system where they had the freedom to set their own prices. The new system calculates earnings for them, which many believe is eating into their profit margins.
“Flipkart is stopping us from updating prices and this will result in new SKUs getting blocked,” said one vendor. Another vendor echoed this sentiment, stating, “They cannot legally force any seller to sell at a particular price point on a marketplace model.”
Concerns of Anti-Competitive Behavior
The Forum for Internet Retailers, Sellers and Traders (FIRST) and SME India Forum, led by founder trustee Vinod Kumar, have voiced their concerns. They argue that Flipkart’s new policy might be inappropriate and anti-competitive. According to Kumar, “Most marketplaces allow sellers to sell at whatever rates they want. As long as sellers are below or at the MRP (maximum retail price), marketplaces should be fine with that. They can advise us about the right price, but there is no mechanism where somebody can dictate the price.”
There are also concerns about the foreign direct investment (FDI) policy. Sellers argue that marketplaces, under FDI norms, should not influence the sale price of goods or services and must maintain a level playing field.
Sellers Taking a Stand
Several vendors have already taken decisive actions in response to the new policy. Approximately 25 sellers have reportedly reached out to FIRST, and many others have been affected. Some have even made their product portfolios inactive on Flipkart, preferring to sell on other platforms like Amazon and Meesho, which allow them to maintain better profit margins.
A seller from Kolkata, for instance, stopped selling on Flipkart on May 27, making his portfolio inactive and resulting in a loss of around ₹85,000. He now prefers platforms like Amazon and Meesho for higher margins.
Flipkart’s Response
In response to the backlash, Flipkart has maintained that the new rate card policy aims to optimize growth avenues for sellers while enhancing settlement transparency. A Flipkart spokesperson said, “The policy was introduced recently, and we are working closely with our sellers to drive a better understanding of the new policy and make necessary improvements. Since implementing the changes in the last couple of weeks, we have seen an increase in business transactions and a rise in active sellers.”
Flipkart’s blog also highlights additional features introduced through the policy. These include streamlined fee structures, enhanced settlement clarity, and improved shipping options. There are additional incentives like a reduction in Fulfillment by Flipkart (FBF) rates and the introduction of express air delivery options to empower sellers to streamline operations and provide expedited shipping services.
What’s Next for Sellers?
The discontent among sellers has not gone unnoticed. E-commerce and sellers’ associations have put Flipkart on notice, indicating that if the issues remain unresolved, they may need to explore other avenues. Abhishek Singh, chief advisor of The Entrepreneur Association of India, stated, “This is a regulatory issue and can happen with any e-commerce platform.”
With festive sales, including Flipkart’s Big Billion Days, Amazon’s Great Indian Festival, Myntra’s Big Fashion Festival, and Meesho’s Mega Blockbuster Sale, just around the corner, the timing of these changes couldn’t be worse for many sellers. Many are holding onto hope that Flipkart will address their concerns before these critical sales periods. However, they are also preparing to adapt and explore other platforms if these issues persist.
A Final Word
As the debate unfolds, all eyes will be on how Flipkart navigates these shopkeepers’ worries and whether a compromise can be struck. For now, the new rate card policy remains a contentious issue, with many sellers anxiously awaiting further developments.
For now, the sellers’ plight underscores the delicate balance between platform policies and vendor satisfaction in the fast-paced world of e-commerce. With large sales events looming, Flipkart’s next steps will be crucial.
Mehek