Companies

Now, e-tailers face a flurry of product returns from festival sales

K Giriprakash Bengaluru | Updated on January 15, 2018 Published on November 04, 2016

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Some sellers on Flipkart, Amazon see returns as high as 25-40%

After the euphoria of their respective marquee festival sales, Flipkart and Amazon are now seeing a surge in returns that could completely overturn their claims on the total number of products sold.

Once the returns are counted, the total number of unit sales could actually be much lower than what these big e-commerce players have claimed.

Flipkart has said that it sold 15.5 million units during the ‘Big Billion Day’ sale while Amazon claimed that during its ‘Great Indian Festival,’ it outsold its nearest competitor.

For Flipkart especially, the event was crucial as its success will result in higher valuation for the company. Its valuation has been coming down over the last six months and now stands at about $11 billion compared with $15 billion a year ago.

Some of the sellers with Flipkart said returns are as high as 40 per cent after the Big Billion Day.

In the case of Amazon, the returns are about 25 per cent. A seller who did not want to be identified said the returns range between 25 per cent and 40 per cent, depending on the categories.

The cost of returns is 8-9 per cent of the sellers’ overall cost.

Flipkart defends

Flipkart’s Anil Goteti, head of marketplace for Flipkart, countered the claims by saying that in most cases it was in single digits. “Across the board, we have seen returns coming down by about 25 per cent compared with last year,” he said. Goteti said their overall returns are much lower than the industry average. “We have sellers who adhere to our standards but there are always some whose products can be bad and hence returns can shoot up to even 25 per cent.”

Amazon did not respond to queries sent to them in this regard. E-commerce companies have now passed on the cost of returns to the sellers themselves and, hence, a higher return ratio will reduce their total earnings. Flipkart has nearly 1 lakh sellers on its platform while Amazon has 1.2 lakh sellers.

For both companies, the number of sellers from tier-two and -three cities have gone up to about 50 per cent this year. Last year, it was about 40 per cent.

Published on November 04, 2016
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