At a time when Amazon India is at loggerheads with the Karnataka’s commercial tax department over its fulfillment service, Bangalore-based e-commerce major Flipkart seems to have launched its own fulfillment service for third party merchants called ‘Flipkart Advantage’ (Hat tip – Deals For Geeks)
There is currently no information on how sellers can opt for this service, although we noticed that Flipkart Advantage badge has started appearing on some of the third party merchant listings.
Similar to Amazon’s fulfillment service, Flipkart mentions that products tagged with the Flipkart advantage badge are quality checked, stocked and shipped by them. These products also comes with the company’s 30 day return policy, as compared to the existing 10 day return policy for third party merchants.
Along with this, these products will also become eligible for faster delivery options like Flipkart’s same day delivery and next-day delivery. Note that Flipkart previously offered these delivery options only for products sold by WS Retail that manages the company’s front end retail operations.
At launch of its same-day delivery service, a Flipkart spokesperson told Medianama that they will eventually open up this service along with its next-day delivery service up for other merchants as well. The company also recently raised a massive $1 billion investment in a round co-led by existing investors Tiger Global & Naspers.
What’s however not clear at the moment is how many fulfillment centers has Flipkart opened up for this service and what is the capacity of these centers. Its also not clear on how much is Flipkart charging sellers for this service. We’ve written to Flipkart for more details on this and will update once we get a response.
Flipkart’s competitor Amazon India currently has three fulfilment centers in India – one each in Bangalore, Mumbai and Chennai. In July this year, it had stated plans of launching four new fulfillment centers in Delhi, Jaipur, Ahmedabad and Tauru (outskirts of Gurgaon) which were expected to be operational by August this year. Update: An Amazon spokesperson has told Medianama that five of its fulfillment centers are operational and the remaining two (Tauru & Ahmedabad) will be operational soon.
In May this year, Snapdeal had also stated that it has opened over 40 fulfillment centers across 15 cities that will take care of warehousing, logistics and liaison with courier companies. Following this, it had extended its same day delivery service ‘Snapdeal Plus’ to sellers in 15 cities across India.
Amazon Tax Case
This development comes at a time when Amazon is battling with the Karnataka’s commercial tax department on whether the seller or Amazon should pay the sales tax for all the orders through its fulfillment service. The tax department claims that Amazon should pay the sales tax for all the orders through its fulfillment service, since it believes that Amazon owns these goods for all “practical” purposes. Amazon however claims that it is just a service provider and doesn’t own goods at any point of sale, due to which it is not liable to pay this tax.
There is also another issue of several merchants stating Amazon’s Bangalore fulfillment center as an additional place of business, which according to the tax authorities is not allowed under the current tax laws.
Following this, the tax department had apparently sent license cancellation notices to third party merchants retailing products across various categories like electronics, apparel, books, toys and other products on Amazon India’s online marketplace, thereby stopping Amazon India from selling products through its Bangalore fulfillment center. More on the tax case and its implications on e-commerce firms including Flipkart now here.
Earlier in the day, Karnataka chief minister Siddaramaiah had reportedly directed the commercial tax department to study the the laws and issues related to e-commerce and recommend necessary changes. He has also apparently asked tax officials to go slow on license cancellation of merchants until there is clarity and necessary changes have been made, as indicated by a Times Of India report.