Walmart-owned e-commerce major Flipkart has introduced a new settlement-based pricing policy that prevents sellers from setting the listing price of their products on the platform.
Several sellers Moneycontrol spoke to alleged that the move is in violation of Indian foreign direct investment (FDI) norms, and opens the door to anti-competitive pricing if implemented.
To be sure, it remains to be seen if Flipkart will actually violate FDI norms with these changes.
As part of the new policy, Flipkart allows sellers to determine a ‘bank settlement price’ for their products. The final listing price is then determined by the platform, after levying discounts, taxes, and other fees.
“If they choose to, Flipkart can now engage in unfair pricing by listing similar products from various sellers at different prices. Moreover, maintaining price parity across other e-commerce platforms has also become challenging,” said a Flipkart seller who did not want to be named.
Sellers also said that the move has reduced their flexibility to alter prices in response to daily demand fluctuations.
“They (Flipkart) have started a new mechanism where we have to give our bank settlement input, which would then automatically determine the selling price. We got ourselves removed from this since it was not efficient,” said another Flipkart seller.
Sellers can, however, opt out of the policy if they choose to.
Confirming the policy change, a Flipkart spokesperson said that the move was aimed at increasing profitability of sellers, and the initial reception of the initiative has been positive.
“As a marketplace platform, sellers set the prices of their products on Flipkart…By enabling sellers to see the settlement price, it has provided them visibility and clarity on their earnings, which has been well received by them,” the Flipkart spokesperson said in response to Moneycontrol’s queries.
“We’ve seen that order cancellations and returns tend to be influenced by frequent price fluctuations which reduce profitability for sellers and lower customer experience. Our efforts aim to reduce these adverse effects by setting some guardrails that positively serve the interest of both sellers and customers,” the spokesperson added.
Outlook Business was the first to report about the development.
Sellers have also alleged that the company’s new pricing model violates FDI norms, which bar marketplaces like Flipkart from practices like holding inventory and influencing the prices of products listed on their platforms.
This comes at a time when e-commerce firms in India are facing increasing scrutiny over pricing and anti-competitive prices. A CCI probe in September last year found that Amazon and Walmart’s Flipkart violated local competition lawsby giving preference to select sellers on their shopping websites.
In fact, even food delivery players Swiggy and Zomato were found to have breached competition laws, with their business practices favouring restaurant chains listed on their platforms.
In parallel, Flipkart is facing increasing competition from its peers Meesho and Amazon, as well as emerging quick commerce players like Blinkit, Zepto and Instamart.
Despite this, Flipkart currently leads the e-commerce space in India with a market share of 48 percent, analysts at Bernstein said in a recent note. Flipkart’s gross merchandise value (GMV) stood at around $29 billion in FY23, comfortably ahead of Meesho’s GMV of over $5 billion.
Flipkart Internet, the marketplace arm of Flipkart, witnessed a 21 percent year-over-year revenue growth in FY23-24, reaching Rs 17,907.3 crore and the company’s losses declined by 41 percent to Rs 2,358 crore, signalling improved financial performance on the back of a rise in revenues from the advertising business, as per documents sourced from Tofler.
