Small sellers fear being elbowed out in e-commerce festive sale
Several small merchants have decided not to actively participate in the ecommerce giants’ flagship events this year citing alleged preference by them toward a few large vendors that account for a majority of their sales.
sellers ET spoke with, these small merchants have not even stocked up as much as they used to in previous years, also because of lower visibility of their products and increased product returns during festive sales.
“We have decided not to go with any brand-driven promotion or marketdriven promotion because we are no longer viable on the marketplace to give such deep-discounting,” said Sashi Somavarapu, founder of Red-Lily. “That is one of the reasons for us to not participate in any of the festive sales on Flipkart, Amazon or any other ecommerce platforms.”
This, even after the Hyderabad-based vendor of baby products and sundry other items clocked Rs 12 crore during last year’s festive season sales across ecommerce platforms.
Both Flipkart and Amazon India have scheduled their flagship sales—Big Billion Days and Great Indian Festival, respectively—to begin on October 10. The festive season for ecommerce companies stretches until the end of the year with multiple smaller sales events. The development mirrors a trend witnessed in the past 8-10 months. Several small sellers have reduced their activity on Flipkart and Amazon India because of the ecommerce companies’ seeming preference to vendors such as RetailNet, Super-ComNet, OmniTech Retail (Flipkart), Cloudtail and Appario (Amazon India), and their own brands.
Flipkart and Amazon India have repeatedly denied any preference for a select few sellers.
Flipkart, which has over 100,000 registered sellers on its platform, did not immediately respond to queries on the development. Amazon India said most of its 400,000 sellers are small and medium enterprises, and that it has an “equal relationship” with all the sellers on the marketplace.
A seller of electronic accessories who registered sales worth about Rs 1 crore during Amazon India’s five-day flagship event last year, too, has decided not to directly participate in this year’s sales, and instead supply products through resellers.
“Amazon has been pushing its own private label products by promoting them even on the checkout page of a consumer who may have selected another seller’s product,” the seller said, requesting to not be identified. “Sales have been stagnant on Amazon since last year, and even though they have actually reduced commission in my category, I have decided to not sell on the platform.”
As per industry estimates, Flipkart and Amazon India each have 30,000-50,000 active sellers on their platforms, which means these sellers have sold at least one product in the past one month. Flipkart and Amazon India each expect to clock $2.5-3 billion in sales during the 30-day period starting October 10, as per industry estimates. Last year, Flipkart registered gross merchandise volume, or gross sales, of Rs 4,300 crore during its five-day Big Billion Days sale (excluding fashion platforms Myntra and Jabong), and Amazon India about Rs 2,500 crore during its Great Indian Festival sale, according to industry estimates.
Analysts tracking the online retail space believe ecommerce platforms prefer selling through select vendors as that allows them better control over quality and deliveries.
“Ecommerce companies tend to push strong sellers during this season mainly to keep more control on quality, stock, as well as the speed of delivery. However, even other sellers who have been able to stock well and source their products will see growth during the sales,” said Sreedhar Prasad, partner and head, consumer markets, KPMG India.
In recent weeks, some online sellers have raised concerns on the issue on Amazon’s social media pages, including sellers whom the company featured in its promotional videos.
One such merchant from Kolkata, who used to earn Rs 7-8 lakh a month selling plants through Amazon India, stopped selling on the platform last month because of declining sales. He blamed this on the sales of poor quality and cheaper items in the category in recent months, and a lack of response from Amazon to complaints on the issue. This person has since returned to his earlier job of web designing.
The All India Online Vendors Association has filed petitions against Flipkart and Amazon India with the Competition Commission of India (CCI) alleging that these platforms give preferential treatment to select sellers, causing small sellers on the platform to lose business.
The competition watchdog will hold a preliminary hearing with the association and Flipkart on October 9, according to Aiova. The antitrust regulator had raised concerns relating to deepdiscounting and preferential treatment to select sellers even as it approved Walmart’s acquisition of a majority stake in Flipkart in August, saying this “may merit examination from competition perspective.”
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