COD Wars in India: Cash on Delivery E-commerce

Times of India reports that city-based Gurudatt Nadiger started selling containers, vessels and other home requirements on major e-commerce platforms this February. After five months and over 15,000 units sold, Nadiger realized that he had lost more than he had gained, particularly when product after sold product was returned to him.

"If a consumer orders a product and then returns it, I have to pay for the logistics for both ways, plus commission, plus tax. For a product costing as less as Rs 200, if the customer returns it, we incur Rs 80-100 on all this," he said. Cancellations and returns are a big problem that all online sellers face. The risk is especially high in sales made through cash on delivery (COD) mode of payment, which has been one of the defining pillars of India's e-commerce boom. 

While the number of mobile wallet users is estimated to jump five-fold from the current 3 crore to 15 crore by 2019, COD still accounts for 60% of all e-commerce orders, according to financial advisory firm Motilal Oswal. "In COD, a customer is not committed to the purchase, but the seller still ships the product. Consumers today are not willing to wait longer than two days and might buy the product elsewhere and reject the delivery," Nadiger said.

E-tailers are subject to the terms of the digital marketplace on which their goods are sold. Digital marketplaces such as Flipkart and Amazon are working very hard to attract the maximum number of e-tailers to their marketplaces. But e-tailers should read the small print in the terms and conditions.


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