With festivals almost knocking on the doors, e-commerce giants are experimenting with sellers to work around the restrictions on deep discounting by DIPP (Department of Industrial Policy and Promotion) to battle it out this festive season. The restrictions came alongside FDI in e-commerce marketplace early this year, under which no company can get more than 25 per cent of sales from a single seller and nor can they affect the prices directly and discounting has been outlawed. This move led the online marketplaces place importance on sellers on their platforms with the upcoming Flipkart’s Big Billion Day, Snapdeal Diwali Dhamaka Sale and Amazon’s Great Indian Festive Sale during Diwali.
Rooting for sellers
For instance, Amazon recently introduced automated returns to ease the refund and return process for sellers. It opened six new fulfillment centers before the festival. “We announced investment in six new fulfilment centres this year expanding our footprint to 27 fulfilment centres across states with a storage capacity of 7.5 million cubic feet in preparedness for the upcoming festive season. We are also working towards expanding our last-mile delivery footprint further to empower sellers to serve customers nationally at lower costs,” says Gopal Pillai, Director & GM, Seller Services, Amazon India.
They also launched Amazon Connect, an integrated platform for their sellers to “interact closely with Amazon.in’s senior leadership, better understand the company’s seller-centric products and services, get a sneak peek into upcoming innovations and understand emerging trends in e-commerce.” Pillai insists that with the upcoming festive season, this platform will enable sellers to grow profitably on Amazon. “All our efforts are headed in the direction of supporting our sellers in the best possible way this festive season and help them boost their revenues,” he shares.
Flipkart, on the other hand, has disbursed loans amounting to Rs125 crore to more than 800 sellers in a year through Flipkart Growth Capital, according to media reports. For this initiative, it has partnered with eight financial institutions to offer collateral-free loans with interest rates starting at 11.40 per cent. Mobile, electronics, fashion and fashion accessories are the few categories that witnessed the highest adoption for the programme. The Bangalore-based e-commerce giant is estimating this to hit the Rs 200 crore mark by the end of this festive season based on media reports. It will also launch promotional offers with its lenders for the festive season in the following two months. Mails and calls to this homegrown e-commerce giant on the same went unanswered.
Meanwhile according to media reports, Snapdeal has lined up collateral free loans worth Rs 1000 crore for its sellers to enable them to stock up for the Diwali spike in sales. The festive season loans would be disbursed through its on-going programme, Capital Assist, which is now managed by FreeCharge and is available to all sellers and merchants on Snapdeal, Shopo and FreeCharge. Also it has added six new mega logistics hubs in Delhi-NCR, Lucknow, Hyderabad and Kolkata. “The new warehouses are located in cities where demand is growing exponentially and will allow our sellers to hold inventory closer to their customers. These facilities will help us deliver even faster in a cost-effective manner to these cities and to surrounding areas,” says Jayant Sood, Chief Customer Experience Officer, Snapdeal. This was supplemented by their recent announcement of next-day delivery available for over 5 million products across India.
Working around discounts
How are they going to work around deep discounting, one of their primal weapon to woo audiences during festive seasons? It has been reported Amazon has decided to cut the commission it gets from some large and preferred sellers by 30-50 per cent on the condition that the saving is passed on to consumers. “We lowered the rates for certain categories earlier this year. We think these revised rates can significantly help sellers to perform even better and succeed in their business. In addition, we continue to innovate and offer best in classes services such as Fulfilment by Amazon, Easy Ship, Seller Flex, etc. to help them with fulfilment/logistics so that they can focus on their business. Sellers have seen success on our platform over the last three years and continue to do so. We started with 100 sellers three years ago and now we have over 1 lakh sellers on our platform growing at 250 per cent YoY and adding over 137,000 products per day,” Pillai seems confident of their strategy. It’s also mentioned in the reports that non-preferred sellers may have to personally bear the discount, although the online marketplaces will help liquidate their old stock through promotions and prominent displays.
Also ahead of Onam festival, Amazon India has gone a step ahead and has set up Onam Store on its website. According to media reports, it has encouraged merchants to participate in the event by configuring discounts on various products across categories including apparel, home, large appliances and jewellery. The company has asked sellers to give discounts as much as 50-60 per cent on items like furniture, power banks, small appliances and speakers, among others.
When it comes to the other two, Snapdeal and Flipkart have reported to come up with a similar strategy where they plan to offer credit to sellers, equivalent to the discount offered. The fact that the above companies have witnessed a slowdown in sales in the first two quarters of this year mainly due to a fund crunch has propelled them to be more aggressive and innovative for the festive season which will be a litmus test post Diwali.