E-commerce players willing to sacrifice margins to boost sales

Ahead of the festive season e-tailers in India are willing to let go of significant margins across categories to bring prices down and boost sales. An economic slowdown is affecting consumer spends. While e-tailers do offer such incentives during the festive season, the quantum of waiver is perhaps the highest this time. E-tailers are offering waivers in some of the largest categories by gross sales, like fashion and accessories and consumer electronics. Commission typically differs within sub-segments of fashion or consumer electronics. For select apparels, a 15 per cent commission is being offered to be reduced to ten per cent, which is a cut of over 30 per cent. These waivers used to be mainly for devices like mobiles. Now commission waivers of as much as 50 per cent are seen in segments like power banks, chargers and cables.

E-commerce companies are working on the assumption that if they charge sellers a lower commission, the sellers can pass that on to consumers. It usually helps as sellers’ volumes go up. Also the overall volume of advance orders to manufacture some of the private labels of these e-tailers is less than that of last year.

Flipkart and Amazon operate as marketplaces in India and earn commissions that are in the 15 per cent to 30 per cent range, based on product categories and tier of sellers.