Home Retail Amazon, Flipkart penalize sellers on returns

Amazon, Flipkart penalize sellers on returns

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, and are penalizing sellers if their merchandise is constantly being returned by buyers. The e-commerce majors say that the returns add to operational costs, which they are now transferring back to the seller since these are substandard products.

No more discounts: India's e-tailers run into losses
All big retailers - including Snapdeal, Flipkart and Amazon India - have reported losses in financial year 2014-15

The merchants on the other hand are crying foul. They say that e-marketplaces refuse to share logistics costs so they are not able to determine the exact loss that an e-commerce company has incurred incase of a returned package. They also claim that these companies are not returning commissions to merchants if their products are returned by the buyer.

About 1,000 sellers have formed the eSeller Suraksha Forum to convey their concerns and one vendor has even sent a letter to Amazon founder Jeff Bezos to draw his attention to the problem.

Forum members claim they are being blamed falsely for shipping fake and faulty products.

According to a report in The Economic Times: The three biggest ecommerce companies — Amazon, Flipkart and Snapdeal — function as marketplaces that connect buyers with sellers. They can’t sell directly to customers as India’s overseas investment rules don’t allow this. The rising trend in returns cited by the sellers — the ecommerce companies deny this is happening — comes as marketplaces look to shore up finances after having focused on heavy discounts to win customers. This means online bargains are declining, which seems to be resulting in pain at the business end of the ecommerce retail chain.

Sellers say the return rate has increased by up to 50% in many categories including electronics, mobile phones, mobile accessories, apparel and jewellery since July 2015. This means losses for sellers that are mostly small and medium-sized vendors.