From now, it's going to be speed

Quickness in delivery will make or break an e-commerce retailer

After cash on delivery (CoD), what? Many e-commerce websites in India are grappling with precisely this question two years after Flipkart offered that game-changing option to its buyers. Now, CoD is like a hygiene factor in the business. You either do it or you are not there at all.

Consider the stakes. Global e-commerce sales for 2013 are expected to rise 19.4 per cent over 2012 to $963 billion, according to eMarketer. Consumers will be purchasing everything from Rs 200 shampoo bottles to Rs 5,000 handbags - maybe even Rs 80 lakh homes - online. And the speed of ordering and delivery is what is going to move consumer decision. Yes, whether you can reach that shiny new package at the customer's doorstep within, say, 24 hours.
 

Amazon (Amazon Prime), eBay (eBay Now) and a few other retailers already offer same-day delivery for certain categories of products, and in some parts of the US. Google joined the gang earlier this year with its Google Shopping Express, which initially provided same-day delivery of food and grocery products bought online by consumers in San Francisco and suburbs located south of the city. Online reports suggest Google is already planning to expand into neighbourhoods it had left out in the first round. The company says the delivery service has been doing well enough and the kinks have been worked out for it to consider expanding "a little more". Besides local merchants, even big retailers such as Target and Walgreens are said to be enlisted in Google's delivery service.

Of course, for Google the imperative was quite different from the others. At the time of launch, it said, the delivery service is part of the internet search leader's effort to increase people's reliance on the internet, so it will have more opportunities to show online ads, which generate most of its revenue. But for the other retailers, the speed of delivery will likely be the make or break factor. Just look at the kind of things they are working on to show how serious they are. eBay Now has just introduced an iPhone app that allows for orders to be placed and delivered in an hour for a flat $5 fee. Of course, it is doing this on a small scale and working with a select set of suppliers. But it is obvious that from now, the differentiator may not necessarily be the product or the service on offer, or even the discount that you promise, but the speed at which you can execute that order.

I don't know if any of the Indian e-commerce companies are working on something like what an Amazon or an eBay is doing; most likely they are - they have shown remarkable agility in picking up signals from the market, identifying the open spaces and moving in quickly.

Take CoD. For e-commerce players like Flipkart, CoD was a leap of faith - literally as well as figuratively. India is primarily a cash-driven economy - plastic card penetration is extremely low in India (less than one per cent). So if these companies wanted to initiate customers to the convenience of e-buying, they had to do it. Most importantly, because customers wanted it. It really didn't matter if the customer is using CoD because he\she mistrusts e-commerce start-ups, or whether he\she mistrusts online transactions per se, or he\she just doesn't have the cards. The bottom line is there is customer behaviour that you can influence, and behaviour that you cannot. So as a business, e-commerce firms had to adapt to it sustainably, if only to help customers shop in the easiest possible fashion.

And then, every player in the business cottoned on to the idea. As a next step, many e-commerce companies began experimenting with a free return policy. Having a solid return policy inspires confidence in buyers and shows the e-commerce firm is committed to customer service. The thinking is that even if a customer is unhappy with the product you've sent him\her in that nicely-branded box, handling the return professionally will ensure his\her continued patronage.

While consumers are sure to love this development - the accent on speed - real threat, again, will be the corner store. See, it has done this all along - that is, reach all that you have ordered on the phone the same day itself and accepted the payment after delivery. In fact, one argument that you will hear during any argument on traditional versus internet commerce is that your friendly neighbourhood store will give you credit, that is, you can pay off at the end/beginning of the month; something you don't get when you buy online. Plus, this speed will come at a price - eBay's Now, for instance, attracts a $5 premium.

Surely, the guys out there are working on the math. And if internet retailers are picking up cues from the brick-and-mortar guys, the corner stores will pick up signals from those selling on the net.