E-commerce Taxation

Flipkart’s revised return policy faces threats from merchants

Ecommerce firm ‘Flipkart’ can be in trouble because of its revised return policy. Flipkart was threatened by merchants to either leave or be inactive on the online marketplace, objecting to new conditions imposed by the company on them. Flipkart had earlier announced a revised return policy for buyers on June 6, 2016.


Wherein, it stated that the customer would now return the products within 10 days, along with return shipping, this led to additional operational expenses for sellers. The company had decided to increase the sales commission it levies on merchants, by up to 5% in some categories, as well as charge them a shipping fee, a reverse shipping fee, and a collection fee on every product returned by customers, effective from June 20. According to ET, a trade association, representing online vendors said that merchants have decided to stop selling on flipkart as their cost is going up.


They also said that earlier flipkart used to charge fee of 1% of order only when they were at fault, but now flipkart will deduct shipping charges and collection fees from sellers (in case of returns), which will be huge since return percentage ranges from 8% to 10% (deliveries) in most of the categories. The merchant association also informed that the vendors are not upset with the increase in commission but with the change in return policy. A senior member of the All India Online Vendors Association (AIOVA) said, about 300 of its 1,000 merchants have decided to leave flipkart as their operating cost will become much higher.


According to Flipkart, its new policy will offer predictability and control over payments for sellers. It has advised vendors to ensure effective cataloguing and packaging, and prevent mis-shipments to avoid product returns.     It is a summarization of an article in INC 42. For more information, visit https://inc42.com/buzz/flipkarts-revised-return-policy-faces-threats-from-merchants/



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