 "Warming to cashless delivery")
The demonetisation of Rs 500 and Rs 1,000 currency notes a fortnight ago has had an immediate and predictable impact on cash on delivery orders placed by customers of online retailers in India. While the e-commerce bigwigs temporarily limited or disabled the cash order option for buyers and resumed it fully soon afterwards, they have encouraged the unexpected push for customers to shift from making cash on delivery to card or digital payments. This has meant that the companies had to invest afresh on technology, training delivery personnel newly and taking steps to monitor and safeguard against misuse of machines.
While queries on possible measures to tighten security of transactions and prevent fraud did not elicit responses, companies admit scaling up card or digital payments. An Amazon.in spokesperson says that the company has increased the number of mobile point of sale machines for delivery personnel and trained them to help customers use the machines.
A spokesperson for Flipkart says the company added point of sale machines and covered nearly 50 per cent of the pin codes that accept cash on delivery. “We covered 120-plus cities and 3,000 pincodes. Some of the far-flung markets that were also mapped for ‘card on delivery’ are Asansol, Bhuj, Burdwan, Bharuch, Amravati, Guntur, Dibrugarh, Jorhat, Darbhanga, Bhilai, Sambalpur, Siliguri and Bellary.”
Even as e-commerce companies resume cash on delivery services, they claim strong response from customers in adopting electronic payment methods at delivery
Hardeep Singh, chief executive officer of Vulcan Express, Snapdeal’s wholly owned logistics unit, says, “Introducing cards on delivery was always a part of our larger plan to offer customers more payment options at the delivery point. Any investments both on technology and training front were made as part of our overall strategy to make the delivery experience as frictionless as possible for our consumers.”
The prepaid salience for Snapdeal, Singh says, is more than 50 per cent. After demonetisation, Snapdeal has recorded a marginal dip in cash on delivery order volumes. In the Indian e-commerce industry, he adds, Snapdeal is uniquely positioned as the only marketplace to have a fully integrated digital wallet in FreeCharge.
Snapdeal and FreeCharge launched a “wallet on delivery” plan within 24 hours of demonetisation, enabling customers with limited or no access to currency notes to pay using the wallet at the point of delivery. According to Singh, within a week more than 100,000 deliveries were processed using this plan. The company views it as the start of a trend, which combines the “pay on delivery” expectation of some users and the “non-cash” payments preference of all e-commerce companies.
Even as they resume cash on delivery services, companies claim strong response from customers in adopting electronic payment methods at delivery. According to the Amazon.in spokesperson, the company’s electronic payments at the doorstep grew tenfold. “We saw exciting response to our launch of an offer for customers to go cashless where they can top up their Amazon Gift Card balance and enjoy an instant incentive of 15 per cent/maximum Rs 300 cashback at checkout.” The company reintroduced cash on delivery services on November 11, two days after the demonetisation order.
Similarly, Flipkart has ramped up its card on delivery facility and covered a majority of pin codes, also remote towns. To encourage customers to adopt other payment modes, the company has introduced wallet cashbacks which are being actively used by multiple sellers and brands.
Following demonetisation, e-commerce companies anticipate a hit to sales in the short term, but they laud the move. The Flipkart spokesperson says, “We believe this will be a game changer for ecommerce. We saw a huge spike in interest from most banks and digital wallets to collaborate and extend offers to our customers.” “The FreeCharge wallet was launched to make online payments and transactions’ experience more accessible, rewarding and convenient and we have been able to achieve the desired results,” adds Singh of Vulcan Express.
Harminder Sahni, founder and MD of retail consulting firm Wazir Advisors, explains that less cash orders mean fewer complications for the companies, arguing that delivery personnel are adequately equipped with card swipe machines and know-how. “Cash on delivery is not the norm, the norm is no cash actually,” he says, pointing out that companies led by Flipkart were compelled to introduce cash on delivery services because in India people were not willing to pay beforehand.
“It’s not that people were not willing to pay by cards, and there weren’t enough machines. People didn’t want to pay by card. There will be an adverse impact on sales. Besides, there is an added cost which is quite big for companies to offer cash on delivery, and it’s quite complicated,” Sahni says. Once enough new notes are in circulation people would start paying for products bought online in cash again, he reckons.
Demonetisation may not change things drastically in a market like India where adoption of cashless system across strata is a long way off. Sahni stresses, “Online retailers have to offer something in terms of product — and competition between them don’t mean anything — at the end of the day. Eventually, it will be ‘can I get a product that I don’t get elsewhere and can I get it at a better price?’ for the buyer.”
Cash Alternative
- Flipkart has increased point of sale machines to cover more than 120 cities (3,000 pin codes) and started wallet cashbacks
- Snapdeal and FreeCharge launched ‘wallet on delivery’ plan within 24 hours of demonetisation. Within a week of demonetisation, over 100,000 deliveries were processed using this plan
- Amazon launched offer to go cashless and top up gift card balance for 15 per cent/maximum Rs 300 cashback at checkout
- At the end of one week, Snapdeal reported cash on delivery orders declining to 30 per cent of its sales
- Earlier, about 70 per cent of online shoppers were opting for cash, as per industry estimates
