India and Flipkart
are rolling out the red carpet for sellers on their marketplace platforms to ensure attractive discounts during the upcoming festive sales.
The two leading e-commerce companies fear that sales may take a hit as the percentage of discounts as well as the number of discounted products could dip significantly due to a combination of economic slowdown and increased regulatory scrutiny of online firms, sources in the know pointed out.
India and Flipkart
had said earlier this week that there were no signs of a slowdown in e-commerce.
From slashing sellers’ commissions (what sellers pay to e-commerce platforms) to offering complimentary advertisement space to brands and helping with free logistics support for delivery, Flipkart
are trying everything to make a success of the shopping blitz.
Lower discount may impact sales
Cornered by the threat of a government scrutiny if they offer deep discounts, e-commerce companies are likely to play safe this time, an industry executive pointed out. Therefore, discounts this year would mostly be brand and seller-led as e-commerce companies don’t want to be seen violating any rules, he added.
“If a company is selling around 100 million different products and brands during sales, discounts would be hardly on 30 million products. Of that too, a majority of the discounts would be on items which are from private labels owned by these players,’’ another source said.
While earlier deep discounting on products was easier for e-commerce firms, this year is different. Commerce and Consumer Affairs ministries as well as the Competition Commission of India (CCI) have warned these players that if they receive complaints against online marketplaces indulging in predatory pricing, serious action would be taken.
“E-commerce players will have to show exactly who is funding the discounts. So if it is anyone other than the seller, action might be taken against the company,” said a senior official in the Commerce Ministry. Fearing government action, players such as Amazon India
and Flipkart are asking sellers to fuel bigger discounts.
According to sources, both Amazon India
and Flipkart are drastically cutting the commissions they charge sellers in many cases. “We have been told that for select electronics items, the commission would be brought down from 15 per cent to 7 per cent. This is something that has not been offered to us before. The rider is that we would have to increase the discounts by almost 10 per cent,” said one of the largest merchants in Northern India for a host of e-commerce firms.
On fashion category, seller commission is down to even 5 per cent. “This would help in increasing our margins as even if these sales last for five days, the amount of business we do goes up drastically. That covers up for the rest of the year,” said a seller in fashion category.
Many of the large fashion apparel brands, mobile phone makes, white goods companies as well as large appliances and furniture firms are being offered premium advertisement space on the platforms during the sale for free.
“Brands would be given space on premium space on the main page as well as in pop-up advertisements Amazon and Flipkart roll out on other platforms during the sale. Brands have been told to give more discounts on older products and models and some discounts or offers on brand new launches,” added the source.
Also, smaller sellers are being offered free logistics support during sales. Teams of both Amazon and Flipkart are working with smaller merchants, artisans, wholesalers to provide fulfilment services for free. “During off-sale days, such services are chargeable to sellers. But this time, they have offered to do this for free. This would help us in bringing down our sale price,” said a seller who owns a start-up that works with artisans.
What’s on offer?
10% instant discount on Axis Bank debit and credit cards and ICICI Bank credit cards
Consumers can avail of multiple loan options ranging from cardless credit and Flipkart Pay Later to no-cost EMIs on leading bank debit and credit cards
Expanded supply chain in preparation for The Big Billion Days
Up to 40% off on latest smartphones, additional cashback
Up to 75% off on appliances and TVs with no-cost EMI
Up to 90% off on online fashion items