Flipkart to charge higher commission from apparel vendors

Flipkart to charge higher commission from apparel vendors
Photo Credit: Photo Credit: Reuters
4 Mar, 2019

Online retailer Flipkart has increased the commission it charges sellers of apparel and accessories on its platform in a move likely aimed at boosting revenue and increasing the sales of its own private labels.

Flipkart, majority-owned by Walmart Inc., increased the commission to 23% from 20% for smartwatch vendors and to 16% from 15% for sellers of western wear such as jeans and shirts, The Economic Times reported, citing sellers it didn’t identify. The changes came into effect on March 1.

Flipkart didn’t respond to TechCircle’s queries on the changes in the commission structure till the time of publishing this article.

To be sure, marketplaces periodically revise commission structures for different categories to promote sales in these categories. Recently, Flipkart rival Amazon India had reduced the commission on sports goods to promote sales.

Flipkart, along with units Myntra and Jabong, is the leader in India’s online fashion market. Flipkart, Myntra and Jabong all sell several products under private labels, which offer higher margin than those of third-party sellers. A higher commission on third-party sellers typically helps push sale of private labels.

The All India Online Vendors Association, a lobby group of sellers, opposed the latest changes. “Platforms need to propose any changes with proper consultation and time window. Flipkart should reverse these changes or roll out unconditional incentives to negate the effect of such changes,” a member of the group said in the report.

The vendor body has previously said that controlling commissions violates the norms issued by the Department for Promotion of Industries and Internal Trade in December. According to the norms, e-commerce marketplaces cannot directly or indirectly influence the sale price of goods or services and are required to maintain a level-playing field for all sellers on the platform.