What is Settlement?
Definition
Settlement is the periodic payment made by an e-commerce marketplace to its sellers after deducting all applicable fees, commissions, shipping charges, GST, TDS, and other deductions for orders that have been successfully delivered during a specific period.
Detailed Explanation
When a customer places an order on a marketplace, the payment goes to the marketplace first. The marketplace then processes this payment, deducts all applicable charges, and transfers the remaining amount to the seller's bank account. This transfer is called a settlement.
Settlement Cycle
Different marketplaces have different settlement cycles:
- Meesho: Weekly settlements for most sellers
- Flipkart: Weekly or bi-weekly settlements depending on seller tier
- Amazon: Typically bi-weekly settlements
- Myntra: Weekly or bi-weekly settlements
Settlement Report
Each settlement comes with a detailed report that includes:
- Order IDs included in the settlement
- Selling price for each order
- Commission deducted
- Shipping charges deducted
- GST on fees
- TDS deducted (if applicable)
- Net settlement amount credited to the seller's bank account
Important: Settlement Amount ≠ Selling Price
The settlement amount is significantly less than the total selling price of products because of multiple deductions. Understanding this difference is critical for accurate profit calculation.