The five places money quietly leaks in marketplace settlements (and how to find them)
Across hundreds of seller settlement reports, the same five leakage patterns recur — small per order, material in aggregate. A quick taxonomy, with diagnostic questions for each.
When sellers first move from spreadsheet reconciliation to an automated tool, the consistent surprise is not that they discover one big problem — it's that they discover five small ones, each invisible on its own and meaningful in aggregate. Across the settlement reports we've helped reconcile, the same five leakage patterns show up again and again. They are worth knowing about even if you never adopt a tool, because once you know to look for them you can find most of them with directed effort in a spreadsheet.
The first is commission variance from category misclassification. Marketplaces classify products into categories with negotiated commission rates — apparel, electronics, home, etc. — and the rate applied to a given order should match the seller's rate card for that category. Misclassification happens routinely: a seasonal apparel item gets classified as standard apparel and attracts a higher rate; a multi-pack home item gets classified as a single-item category with a different slab. The diagnostic question to ask is: for the top 50 SKUs by order count last month, does the commission rate actually applied per order match the rate card? Above a few thousand orders, this is impractical to answer by hand and very practical to answer by query.
The second is weight-band reclassification on shipping fees. Marketplaces and 3PLs charge shipping by weight slab, and they apply the higher of declared weight and volumetric weight. Volumetric weight is calculated from package dimensions — and a marketplace warehouse may use different dimensional packaging than the seller, pushing the same product into a higher weight band. The diagnostic: for orders where shipping fee exceeds expected, is the fee consistent with a higher weight slab than your declared product weight implies? If yes, you have either a labelling issue, a packaging issue, or a billing issue, and each has a different fix.
The third is silent deductions on returns and RTOs. When an order returns or is RTO'd, several things should happen: the original commission should be reversed (sometimes is, sometimes not, depending on marketplace policy), the reverse shipping fee should be charged at the agreed rate, and any return-handling fee should be applied at the agreed rate. Each of these is a place leakage hides. The diagnostic for return-handling fees: pull the return events from last month's settlement and verify each handling fee against the rate card; for RTO commission, verify whether the original commission was reversed at all.
The fourth is TDS and TCS over-deductions. Section 194-O TDS and Section 52 TCS are deducted at point of marketplace settlement and credited to the seller's tax accounts. The patterns to watch: TDS deducted on returned orders that should have been reversed (the original sale was un-done, so the TDS should be too); TCS deducted at full rate on orders eligible for the reduced 0.5 percent slab; TCS that doesn't reflect in the seller's GSTR-2B (the marketplace has filed late or filed incorrectly). Each is a recoverable amount that the seller can chase with the marketplace and the tax authority, but only if it's been identified.
The fifth is COD shortfalls and remittance delays. COD orders carry a longer remittance cycle, a separate handling fee, and a higher loss probability across the reverse leg. Diagnostic patterns to look for: COD orders aged past the marketplace's stated remittance SLA without remittance; COD orders where the remittance is lower than the expected net of agreed deductions; COD handling fees charged on orders that never collected cash (i.e. RTO'd before delivery). Each of these is a per-order amount in the tens to low hundreds of rupees, and at scale across a typical mid-size seller they add up to material monthly leakage.
There's a meta-point in all five. None of these are dramatic single events. They are slow, distributed, per-order frictions that look like noise at the line level and resolve to pattern only at the aggregate level. The reason they survive year after year in seller settlements is precisely this scale property: the per-order amount is below any human's threshold for caring, the aggregate is below any board's threshold for noticing, and the only way to surface them is through systematic comparison against rate-card expectations across every settled order. That comparison is what reconciliation tools do well and what spreadsheet workflows above a few hundred orders per month structurally cannot do.
If you want to do this exercise once with what you already have, pick the largest of the five for your business — usually commission variance or COD shortfalls depending on category — and dedicate two days to a directed audit of last quarter's settlements against your rate card. The recovered amount almost always pays for the audit, and the experience of seeing the leakage in your own data is what changes the conversation about reconciliation tooling internally. The hardest part of selling reconciliation automation isn't the cost; it's that the leakage is invisible until you look for it.