Amazon, Flipkart offer sellers nearly the same take rates

Amazon and Flipkart are in a neck-and-neck race when it comes to the take rate they offer to sellers on their respective platforms.

According to analysis done by brokerage firm Jefferies, the difference in effective take rates between the two e-commerce players is less than Rs 50 for low-value items (less than Rs 2,000 in value) and less than 1 per cent of order value when it comes to high-value items (over Rs 10,000). Take rate is the percentage of the value of the transactions the e-commerce platforms facilitate, that they get to keep as revenue.

“We found the commission rates of Flipkart to be generally lower compared to Amazon in the majority of the categories. But Flipkart has a relatively complex commission structure. Most categories have different commission rates based on price slabs. In contrast, Amazon has a simpler and uniform commission structure irrespective of price points, for most categories,” Jefferies said in the research report.

“While commission charges are lower for Flipkart, collection charges of 2 per cent of order value make up for it. In the case of Amazon, if the seller opts for Fulfilment by Amazon (FBA) and has to stock the product for a long period, storage charges can have a high impact on profitability,” it added.

Both platforms have a pricing structure that is broadly split into commission, shipping, service/ collection, and fixed charges. A commission or referral fee is charged for platform use. The fee varies depending on product categories and price points. For example, electronics has as low as 3-5 per cent fees, but eyewear is at 10-16 per cent.

Fulfilment is the process of storing, packing and delivering goods. While Flipkart mandates delivery through its own logistics partner, Amazon has three options: Fulfilment by Amazon (FBA), Easy Ship (ES), Self-Ship. Shipping and closing fees for Amazon vary depending on the fulfilment process.

“Consumer Electronics, especially mobile phones, is the most important category from a GMV perspective, contributing over 40 per cent to the industry in FY20. Mobiles as a category have a 7 per cent take-rate, which is among the lowest, but unit value (or profitability) is very important for the platforms. Against this, low-value categories, such as say FMCG and basic staples, have a take-rate of 15-30 per cent, but costs are also higher due to higher storage or shipping fees that get spread over a relatively smaller denominator i.e. product value,” the report said.

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