There are many sellers selling directly using social networks, facebook groups, whatsapp groups, instagram and pinterest etc. Usually shipping cost is more in offline mode as compared to shipping charged by marketplaces to seller when weight is more i.e. above 250 gms bracket. As cost for shipping is more, some sellers are adapting a way to have lower effective shipping cost and overall lower cost for buyer.
An example will give a better picture.
- Product cost be Rs. 300
- Weight is 450 gms.
- Weight bracket 500 gms.
- Shipping Cost Rs. 100
- Cost to Buyer 300+100 i.e. Rs. 400
Sellers are using online marketplaces to ship such products where cost comes less.
- Sellers are creating a product in low commission (6%), low GST rate (0 or 5%) slab
- Product price is kept low around Rs. 80
- Shipping Charge defined is Rs. 0
- Buyer is asked to Pay Rs. 300 to seller directly
- Buyer places an order on marketplace also using Seller’s affiliate link
- Buyer pays online marketplace order amount also i.e. Rs. 80 to marketplace as prepaid order
- For marketplace sale, buyer is charged Rs. 65 Rs. as shipping charges + Rs. 3 (commission charges by marketplace + fixed fee is around) + Rs. ~4 (GST to be paid by Seller)
- Cost to Seller is 65+3+4 i.e. 72
- Buyer paid 300 + 80 i.e. 380
- Seller received 300+80-72 i.e. 308
- Seller ask buyer to rate and review on marketplace
On comparing 2 cases above, Buyer is paying Rs. 20 less now and faster shipping. Seller is getting Rs. 8 more i.e. 308 instead of 300 earlier. Seller is also getting good product rank, more reviews on marketplace.
There is small saving in above case when the weigh bracket is 500 gms. In case the product item is heavier and goes in 1 kg bracket there would be more savings.