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Friends. In “understanding the commission calculation offered by E-Commerce platform”, there is one more topic which is “commission calculated by different platform”.
Yes. There are different platforms, that we saw in the previous sessions. There are different categories on different platforms. And there are several various categories in e-commerce. A category is set depending on your product, and after setting the category, the commission is calculated. Some products will have a higher commission rate, while some will have a lower rate. So, you have to pay the commission charge to that specific platform according to your product category.
Therefore, I am requesting you to understand first of all in which category does your product belongs? and analyze which platform will be most suitable, for your product, that will bring a good profitable business.
Let’s understand this practically, that according to the product category how do we have to pay many other commissions for our product. “Let’s see practically”. How “commission plans are different for different categories” and different platforms. There will be some “fixed commissions” while some will be “percentage wise commission”.
So come, let’s have a look at this practically. Previously we saw an example of amazon’s website. In today’s session, I would like to show you Flipkart’s website.
Well, friends. This is Flipkart’s website which is “Flipkart seller hub”. Do visit this website once. Here I am adding “books” in the “product category” as an example. And here I have added the “selling price” as “500”. For you, I am going to change the cost to “250”. Okay. So as soon as I, lower the cost or increase it, let's say I am increasing it to “2000” for now, you will see here on the right-hand side all the calculations have changed.
As you keep filling in the credentials here like, the volume and weight of the package, then what is the shipping type? Are you shipping this product locally or nationally or in any particular zone? So as soon as you add the information, like the selling price of the product, product category, type of shipment that you are using, what is the volume and weight? According to that, here on the right side, as we set the selling price of “2000” from which the commission, that is being charged by Flipkart is “200”, then “collection fee is 40”, “fixed fee is 47”, they are charging the “shipping fee of 141” and the “GST is 77.04 (77 point zero four)” depending on this price and category. (I hope you are following).
Let me tell you one more thing. When you choose Flipkart’s platform for your product, here you can see the option of “seller type”. Right now, this shows “bronze seller”. If I change it to “silver seller”, you can notice here that the “shipping fee” has changed. And the same way when I change it from silver to “gold seller”, the “shipping fee” changes again. You can notice this clearly. So, when you make any changes in the fees or product here, accordingly you will be able to analyze, “how much are you making?”
Here I have invested “2000”. So, I have set the selling price “2000”. After deducting the commission and all the other charges, the profit you are making is 1528.24. Yes, so this is the profit and how much you are earning. You are paying around 500 rupees to Flipkart. Why? Because there is the shipment charge, handling charge, product category charge as well as marketing charge, all of which are provided by this platform. Okay.
Look, friends. There are many other websites for calculations.
Let me show you one website. There is one more website which is “brown tape”. Don’t forget to check this website also. This is an “e-commerce seller fees calculator”. Yes, as we saw for Flipkart, in the same way here it shows the calculations for different platforms like “Snapdeal, Amazon, Paytm, shopclues and eBay”.
To calculate here you have to fill up the blanks, so here we have added the “MRP is 2000”, then the “selling price is 1000”, the “GST is 18%”. GST may vary depending on the product and services. So, please check out the GST standards once. Then here you have to “choose a category”. For example, I am selecting “apparels and accessories”, then “choose package type”. So here you can see various package types according to the weight like 1 KG, 5 KG etcetera. So, I am selecting 1 KG here.
Now as soon as I click on the “calculate” button, the commission is automatically calculated for various platforms. Let me zoom this a bit. So, as we saw, the “selling price” was “1000”, from which the “market pace commission” is charging “15%” that is “150”. Then they are charging for “GST”, “marketplace payment fee”, and a few other commissions are charged. After all the commission charges and payment fees, the “net in hand” that you are getting is “60%”. And the “deduction” is “40%”. Here I am showing you in percentage, so that you can understand the calculations easily.
So, Flipkart is deducting a total of “40%” charge, then here you can see “Snapdeal” is charging “42%”, while “amazon” is charging only “30%”, then “Paytm” is charging “40%”, “shopclues” is charging “38%”, and lastly “eBay” is charging “33%”. So, the platform that is deducting the minimum amount of commission is “amazon” and “eBay”.
Now, if we look in descending order then starting from minimum deduction, the first one is “amazon”, then “eBay, shopclues, Paytm, Flipkart and Snapdeal”.
(06:53)
So, from here, you can simply understand the commission calculation for different categories on different platforms in e-commerce. The calculation depends on various categories such as the calculation for marketplace commission, then the calculation for marketing and handling, also a special calculation for price of the product, then shipment calculation like if you want to use COD, or pay via any credit card? So, there are many things involved in the sales of any particular product. This means you have to pay some charges for one particular product on that particular platform. Now, why do they charge us? Obviously, because that’s how they run their business.
Here they have clearly stated, all the factors for amazon selling fees such as “product category, product sub-category, the selling price of your product, fulfillment mode” which means what is the shipping mode that you are using? Are you using Amazon’s service which is “Amazon FBA”? or are you shipping from your own warehouse? Then “source and destination locations of the order”. Are they local, zonal or national?”. Next is “weight and dimension of the product, storage duration, shipping type, and return type”. Then the “referral fee” and “closing fee” are calculated. And after calculating all these things, you get this ratio. Yes, you will get this ratio where amazon is charging 30% commission which is the least in comparison with all the other platforms. Okay.
So, this is a calculator through which you can properly analyze and select the best platform, to sell your product and calculate the profit you will get from that particular platform. There is no doubt that “Amazon” is best, but if your product falls under some special category for example, I would like to show you the website of “Pepperfry” where you can notice that, the pricing structure here is a bit different. Here you can see “component, percentage, and value”. For example, let’s say you have sold a product costing 100 rupees. So here, the “shipping and handling” charge is “8% of 100” that is “8 rupees”. Then the “platform fee” is “10%” that is “10 rupees”. The “marketing charges” are “15%” that comes to “15 rupees”. The “commission” is “33 rupees”, while we have to pay the “service tax” of “15%”. Overall, this means you are selling the product for 100 rupees from which, after the deductions you are getting “62” rupees.
“Pepperfry” is a very good website, friends, which comes under the broad category of furniture. If your product falls under the furniture category then Pepperfry is the best example for you.
If your product falls under any other category, I would like to give you an example of that as well. Come, let’s go back to our slide. Here I want to show some more examples like, “Zomato” and “Swiggy”. If your product falls under the category of food, then you can launch your product, through “Zomato” and “Swiggy”. What are the commission charges for Zomato and swiggy? So, “20 to 25%”.
Let me show you an article in “Times of India” that says, “food delivery companies asked to cut offers and commissions”.
So, right now, according to TOI, that is Times of India, typically, the online platforms are charging 20 to 25% of order value. This means that when you sell an item of any cost here, 20 to 25% of that cost is deducted as the commission. If you want to look at the details on their website, you will have to register first. Therefore, I have researched this value directly for you. So, Zomato and Swiggy will charge 20 to 25% commission.
If your product category falls under any service like “ola or uber”, then, “according to The Hindu newspaper, India will allow app-based taxi aggregators, such as Uber Technologies and ola to charge up to 20% commission on ride fares”.
Well, yes, if you belong to the service category, don’t forget to check out this article of “The Hindu” that says “India to allow uber and rivals to charge 20% commission”. This means if you belong to the service category of uber or ola, then according to the guideline, which is “the final guidelines say, drivers should receive 80% of the ride fare, with the taxi companies receiving the remaining 20%”. So, what is the charge you have to pay to ola and uber? 20%. Yes, you have to pay 20% charges. (Understood?)
Now if I failed to mention any product or category here, due to some reasons because there are numerous various platforms out there friends. There are many platforms. How can you check that? Go to google and type “platform for business or seller”. You can enter the name of any platform that you like. “Ola, uber, Pepperfry, Amazon, Flipkart”.
You just have to write the name of the platform and then type “for business or seller”. As soon as you search this, you will be redirected to their website where you can check the commission calculation, based on different product categories, then do they have any recent offers? Well in most cases friends, the registration is free on every platform. So, register and check their internal website, where you can see the breakup of all the charges that you need to pay. Just go through all the terms and conditions once, and choose a platform that suits you best. I hope that I have cleared almost all of the important doubts today.
Still, if you have any queries or comments, click the discussion button below the video and post there. This way, you will be able to connect to fellow learners and discuss the course. Also, Our Team will try to solve your query.
So, see you with the next topic in our next session. Happy learning and see you soon.
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