E-commerce players who stopped accepting orders made through cash on delivery (CoD) on Wednesday collectively have 1.6-2 million shipments stuck in the pipeline which were ordered through this payment route, as per industry sources.
The government’s move to ban Rs 500 and 1,000 currency notes has caused short-term glitches for these local e-tailers, who depend heavily on CODs for fulfilling orders.While Amazon has temporarily disabled the COD option, Flipkart said it has restricted COD orders below Rs 1,000 and urged people to pay online. Snapdeal has restricted COD orders below Rs 2,000. These companies have stopped accepting Rs 500 and Rs 1,000 notes.
“During peak festive sale, online retailers were clocking about 3 million shipments per day which have slowed down after Diwali. Estimates suggest 70%-80% of these orders were made through COD. Some players are trying to use mobile swipe machines to collect payments for COD orders but the conversion rate traditionally has been low,” a person tracking the industry said.
E-tailers expect return of goods to rise as people are keeping cash for other daily needs. “Once liquidity is back, it will hopefully be stable by next week,” a merchant said. All India Online Vendors Association said Flipkart has agreed to not charge return shipping fee from sellers during this period.
“There might be a short term impact on e-commerce transactions given the dependence on cash on delivery as a preferred mode of payment, but in the longer term we don’t foresee any material change in consumer spending,” said Ananth Narayanan, CEO, Myntra.
COD orders have been an India specific phenomenon with at least 60% of leading etailers getting their orders through this payment option. RedSeer Consulting, a research and advisory firm said nearly 70% of customers buying goods online pay through the COD mode -with maximum orders coming from Tier 1 and Tier 2 cities.
Source: Times of India
