Fuel price hike likely to make e-commerce costly

As fuel price rises for the 10th time in 12 days, top logistics firms increase their freight charges for e-commerce shipments, and sellers contemplate if they wish to pass on the rising freight charges to the consumers.

India’s largest 3PL ecommerce delivery company, Delhivery will increase freight charges by 30% effective April 1 for “Delhivery Air and Surface”. Logistics aggregator Shiprocket, which works with Delhivery, told its clients of the steep increase in the charges from Friday, citing the increasing commercial fuel charges in recent week as the main reason.

This decision comes at a time when petrol prices have crossed Rs 100 mark in several major cities.

Ecom Express has also jumped a similar wagon and increased its pricing.

“The costs have gone up so there is some correction that is needed,” founder TA Krishnan told ET. “We are internally contemplating because even to set up our own infrastructure, the cost of steel has gone up, the rentals have gone up, we are contemplating but we have not formed a decision on this yet.”

Sellers have to pay delivery fees to third-party logistics firms or to Flipkart and Amazon India directly. The ecommerce giants Flipkart and Amazon are the biggest clients of companies like Delhivery and an increase in freight charges will impact their per order income of online vendors. Usually, the independent online sellers pass on at least a part of the price hike to consumers when marketplaces or delivery firms change their various fee components.

“I don’t think the cost would be borne by the platforms, it is likely to be borne by the seller. And the seller will pass it on to the end user,” said Krishnan.

As per industry reports, sellers have not been notified by ecommerce platforms of any hike in freight prices, however they expect to pass on the addition costs to the consumers with increase prices when the cost rises.  

Sellers have historically been passing on the increased charges to the consumer by increasing the prices of their products, and the situation is not different this time around.

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