Snapdeal, which is fighting hard to catch up with its market rivals, Flipkart and Amazon, has announced cutting down of commission on its sellers.
Softbank, one of the largest investors in Snapdeal, said that as opposed to the company’s growth of 301% in 2014-2015, it has seen a growth of only 90% in 2015-16. This is the reason why Snapdeal chose to ease it out on sellers.
Sellers are expected to pass on this benefit to the buyers, by selling products at a lower price, and this is hoped to attract more shoppers to shop from Snapdeal.
When contacted, a Snapdeal spokesperson said in an emailed response, “Rapid growth year on year, followed by a doubling of business on a much larger base, is an indicator of the pace at which we are growing. Our shipment volumes have grown rapidly and in the period Jan-March 2016, our shipment volume was 1.96 times of the volume in the same period last year. All our growth initiatives are aligned with our vision of having 20 million daily transacting users (DTUs) on our platform by the year 2020.”
Snapdeal, in order to achieve this long term goal, has taken this step at this stage. “The marketing fee is levied with reference to the services provided by us to the sellers, and is reviewed periodically as per changing market scenarios, and seller requirements,” said a Snapdeal spokesperson.
Snapdeal says it puts its trust on three things:
- Improving delivery and customer experience
- Increasing the average value of purchase to move towards premium buyers
- Getting towards profitability
Initially starting with a certain category of products, it aims to extend it to all products. There is a certain “eligibility basis seller rating & fulfillment mode”, under which this commission cut will be applied. So, as of now, not all sellers will be eligible for a commission cut and through such a policy, Snapdeal reserves the right to reduce commission on any seller or product it wants to.
Earlier in February, Snapdeal had closed a $200-million financing round. It got a primary capital infusion worth Rs. 335 crore during the same time, valuing the company at $6.5 billion.