Stung by cancellations and returns that cash on delivery option sometimes, unfortunately ends up in, Indian e-commerce biggie Flipkart has come with a via media plan: part payment option.
The Walmart-owned Flipkart, in an email to sellers, said the idea of part-payment is to encourage pre-paid transactions. Customers can pay the remaining amount in cash or by other online means when a product is delivered. The rate card will remain the same for ‘part payment’ orders, Flipkart wrote to its sellers. The rate card basically comprises fixed fee, commission, shipping fee, and the collection fee.
However, the collection fee would be charged by the seller in two parts from the customer. A part of the collection fee would be charged at a prepaid amount and another would be charged on the postpaid value of the product.
Flipkart, it may be recalled, was the first in India to introduce cash on delivery and no-cost EMI options.
Industry sees CoD as ‘evil’
E-commerce companies have been complaining that the cash on delivery (CoD) option has indeed given room to, ironically, fly-by-night buyers. This has resulted in higher returns and cancellations, which naturally adds up to the expenses of the e-commerce platforms.
A back-of-the-envelope figure from an industry analyst says the returns percentage is as high as 23% when CoD is the option. The cost that the platform incurs on packaging, forwarding, and reverse logistics are a huge drain on the revenue especially when margins are already shrinking.
Sometimes sellers, almost anticipating such a backlash, add this cost on to the product at the first instance itself.
In the event, the move by Flipkart would be a good middle-ground move.
This is a Masterstroke of flipkart. This is a first step in making Ecommerce entirely prepaid like it is in USA, EU and developed nations. This move can lead to 2-3% reduction in prices for consumers as currently losses of such undelivered orders were factored as a cost. https://t.co/oY6oLTigN2July 15, 2020
The All India Online Vendors’ Association (AIOVA), a grouping of e-commerce sellers, said this was a masterstroke of Flipkart. “This is a first step in making India’s e-commerce market entirely prepaid, like in the United States and Europe. It also has potential to reduce costs for consumers.”
This move can lead to 2-3% reduction in prices for consumers as currently losses of such undelivered orders were factored as a cost, AIOVA said and added: “In our experience CoD is not evil, but free CoD or 100% CoD is evil. So even if prepaid customers opt for partial prepaid it will be incentive for them”.
Flipkart recently surpassed 1.5 billion visits per month and reported 45-percent growth in monthly active customers and 30-percent growth in transactions per customer for FY20.
Flipkart said its active customers figure surged 45% in the financial year that ended in March this year, compared to the year before, and these customers are making 30% more transactions. The 13-year-old firm said it recently surpassed 1.5 billion visits per month.
Source: Economic Times
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