Paytm Mall makes changes in seller policy; merchants concerned

The competition in the e-commerce is fiercest during the festive season, what with all the BBDs, and Maha Cashbacks. After Flipkart and Amazon, Paytm Mall seems to be the distant third in this race.

After reporting its enormous losses for FY18 this week, Paytm Mall has also announced the tweaks it has made in its seller policy.

As per the new policy, the company over the platform will limit the number of claims allowed to a seller against product returns.

Further, if a product is returned due to the fault of the seller (non-delivery, defective or inappropriate product), the company will charge the seller with the respective marketing fee, payment collection fee, courier charges, seller proceeds, fulfillment charges, apart from logistics cost, which is 25 per cent more than the original forward logistics charges.

Sellers have major concerns regarding their business on Paytm mall, as according to them, the company has been changing its sellers policy every now and then from the past few months.

With these changes, the sellers sometimes end up paying as high as 40 per cent of the product price as penalties, while their profit margin on a product is as low as 4 per cent.

The company, however, defends itself claiming that there is no additional charge, just a rephrasing of the original policy by leveraging the technological advancements whereby they can identify the cause of return in a more accurate manner.

Overall, this creates a negative environment among the sellers on the platform as they fear being burdened by unnecessary charges, that might not be genuinely their concern and harm their business.

While Amazon and Flipkart also charge their seller for returns, their recent policy changes in around March and April this year (respectively) came up as a relief to most sellers, rather than as a matter of concern.

Amazon decreased its referral fee in over 30 categories while increasing it in 20 others. It also made changes in weight handling fees to lower the seller’s business cost wherever possible and fixed the closing fee as well.

Meanwhile, Flipkart as a counter to the move, lowered its commission for the lower priced products (below Rs 300) to keep up with the competition.

Paytm Mall’s seller policy change, on the other hand, seems to be in favour of the company more than the sellers, and a move to control its own losses, rather than building a platform for mutual benefit.

The e-commerce platform had seen a 131X increase in losses in FY18, where the figure went up to Rs 1787 crore from being Rs 13.63 crore in FY17.

This development was first reported by ET.