Flipkart, the Walmart-owned, Indian company is one of those companies which will look to target a certain audience with a certain range of products. The company has done this over the time of its existence. It has offered a great personalized experience to each consumer and so has Amazon India. However, there is a sense of loyalty when it comes to people choosing Flipkart or Amazon. There are people who only order from one of those and most of it has to do with their first time experience.
However, this might have changed over the years as consumers are getting smarter by the day. There are customers who check the price of the product they want on both the platforms and then order it from the one which offers a better discount. Discounts are what has got the e-commerce companies in trouble. The new FDI policy was drafted to cut the deep discounts offered by these players which were killing the competition in one way or the other.
That said, a month has passed since the FDI policy has taken effect and it hasn’t changed much. The discounts are still on and there are certain ways the e-commerce players are able to wrap their heads around the policy. They have found a way out and it is by adding more and more sellers to their platform.
Flipkart recently took a huge step which has affected its apparels sector. The company increased the commission on a host of products and it did the same differently. The smartwatch sector was the worst hit as the commission was increased from 20% to 23%. This caused an inherent increase in the price by 15%. The western clothing brands also saw a hike in commission from 15% to 16% and due to this, the price went up by 6.67%.
These numbers were communicated to the sellers via email and the sellers were asked to notify the vendors about the same. However, there is a certain rule as to how the changes should take place. The sellers should be notified about the changes in commission 15 or 30 days prior. If that is not the case then there are different punishments.
All India Online Vendors Association (AIOVA) has sighted that these changes should be made with proper consultation and there should be a certain time frame for the same. Thus, AIOVA has asked Flipkart to rethink and take back its decision. Apart from this, it has also asked Flipkart to pay unconditional incentives for the effect of those changes.
Flipkart is doing this to increase its revenue via its second largest revenue generator in apparels. Apparels is its second most profitable sector, coming second only to smartphones. It is also the largest sector when it comes to volumes.