Like Amazon, Flipkart cuts commission on low-cost items to benefit sellers

Two months after rival Amazon reduced the commission it charges sellers for some fast-growing but low-priced categories, Walmart-backed Flipkart too has adjusted its rate card to pass on more benefit to sellers.

Flipkart slashed its commission on products such as sunglasses, laptop bags and mobile holders, among others. The biggest changes were seen in laptop bags, where the company reduced rates from 13 per cent to 4 per cent, and in mobile holders from 30 per cent to 17 per cent.

The company communicated that the change in its commission structure would be effective August 17. Flipkart also reduced the fixed fee it charges on every order, reducing it from Rs 20 for products priced between Rs 500 and Rs 1,000 to Rs 15, and from Rs 40 to Rs 30 for products costing above Rs 1,000.

This comes ahead of the festive season where both Flipkart and Amazon conduct mega sales, which they say serve as a great exercise to get first-time customers to shop on their platforms. 

Amazon had adjusted its seller commissions in June, again targeting low-cost items, which was seen as a move to help it tap customers beyond the top 100 million. While both platforms now claim they have over 100 million consumers on their platforms, experts and industry analysts say only a small base of 20-30 million people shop online regularly.

With increased scrutiny on discounting practices of e-commerce websites, both Flipkart and Amazon artificially control the price of items they sell through the cost of shipping and commissions. Reduction in commissions is one of the ways these platforms push sellers to pass on benefits to customers in order to get them to shop for deals online.