Flipkart pilots zero commissions programme for sellers on its platform

Flipkart is piloting a programme to stop charging commissions on products sold from select sellers on its platform. It will instead look at earning revenues through sellers bidding for advertising slots for their products on the online marketplace, which is used by over 50 million users across the country.

The project, spearheaded by Sachin Bansal, co-founder of Flipkart has been piloted with around 350 reputed sellers on the platform, a person familiar with the development said.

Flipkart is mirroring Chinese e-commerce player Alibaba's strategy of using its platform to allow its vendors to advertise for their products and generate revenue, while moving away from commissions for goods sold on its site. It owns AdlQuity, a real-time bidding platform for mobile, which it acquired in early 2015, that allows vendors to bid real time for ad slots on the mobile smartphone app. The platform allows vendors to deliver ads in multiple formats include video and commits to track user behaviour and engagement, thereby making campaigns more effective.

The zero commission plan is to incentivise more merchants to join its 80,000 network of sellers, creating more competition and choice for consumers within its platform, the person said.

Flipkart is driving sales on its mobile app, used by over 50 million users every month, which helps it to capture shopping behaviour of users more accurately than on the desktop.

"Flipkart is a marketplace which helps sellers connect with customers from across the country. Flipkart's commission structure is designed to benefit sellers whilst offering them the bestselling experience," a Flipkart spokesperson said in an email response. " We are continuously working towards offering sellers transparency, a better cost structure and growth opportunities to expand their reach."

Flipkart's wholesale arm posted a revenue of Rs 9,351.7 crore for the year ending March 2015, up from Rs 2,846 crore in the previous fiscal, according to a filing with the Registrar of Companies. Revenues of the retail arm, which could be as much as 15-20 per cent larger than the wholesale unit have not been reported.

Advertising and logistics are two key focus areas for Flipkart as investors put pressure on the company to turn profitable. The company recently revealed to Business Standard that it will open its platform to third party vendors - both online and offline - to enable end-to-end logistics.

Flipkart's logistics play which is being fronted by co-founder Binny Bansal, is expected to be a game changer since the express delivery space in India is largely underserved. A pilot to enable third parties to deliver via Flipkart will be launched in the first quarter of 2016.