• Snapdeal takes commission cut to push up falling sales in move to compete with Flipkart and Amazon

    Snapdeal has taken a cut on the commissions it charges sellers, a first by the ecommerce firm as it seeks to shore up sales on the platform that have slowed down after having grown at a scorching pace earlier.

    The New Delhi-based company, in a fierce battle with Amazon and Flipkart for supremacy in the Indian ecommerce space, wants the sellers to pass on the benefits to buyers in the form of lower prices, hoping that would attract more to shop on the portal. “You may gain from the reduced Snapdeal’s marketing fees in achieving more sales, as you will be able to pass on the benefit of reduced marketing fees to the buyer,” Snapdeal wrote in a May 12 email to sellers.

    ET has seen a copy of the email. While this reduction in commission, or marketing fee, is applicable initially to certain categories of products, it could later be extended to more segments, it said. SoftBank, one of the largest investors in Snapdeal, in its earnings presentation earlier this month said the ecommerce firm’s gross merchandise value had grown 90% in 2015-16. That was way too slow though on a higher base than the over fourfold jump reported in the previous fiscal year. “The marketing fee is levied with reference to the services provided by us to the sellers, and is reviewed periodically as per changing market scenarios, and seller requirements,” said a Snapdeal spokesperson. Snapdeal has been putting its thrust on three things: improving delivery and customer experience, increasing the average value of purchase to move towards premium buyers and getting towards profitability, said Anil Kumar, chief executive at RedSeer Consulting, which tracks the ecommerce sector.

    “The company has been sharing the baggage of discounts with sellers in the recent past in order to do so.” While sellers are happy to pass on the benefits of lower prices to consumers, some of them said only select vendors will benefit from the Snapdeal move. The marketing fee is reduced under what is called “eligibility basis seller rating & fulfilment mode”, and many won’t qualify for the lower fee under this, they said. “Through such a policy, Snapdeal reserves the right to reduce commission on any seller or product it wants to.

    A normal seller will not be able to avail of this benefit; hence his product would become uncompetitive. Snapdeal says that only vendors having a specific rating can take part in this,” said a seller requesting anonymity. Marquise Goodwin Womens Jersey

    Share This