E-commerce cash-on-delivery orders down by up to 30 per cent

It has been estimated that cost to these e-retailers for returns of orders placed through CoD are at about Rs 20 in urban areas and about Rs 75 in non-urban locations.

By: ENS Economic Bureau | New Delhi | Published: November 17, 2016 1:40 am

Cash-on-delivery (CoD) orders of major online retailers in India fell by 15-30 per cent in the days following the announcement by Prime Minister Narendra Modi to discontinue old Rs 500 and Rs 1,000 currency notes, despite these companies making attempts to protect their businesses from the denominations that ceased to be legal tenders.

At an event here organised by the Digital India Foundation, which has been founded by BJP’s head of IT cell Arvind Gupta, several e-commerce majors such as Flipkart, Snapdeal, and Shopclues said that not only did sales through the cash-on-delivery mode drop after the announcement, cancellations of previous such orders was also seen.

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Some of these companies had also stopped taking CoD orders, or put restrictions on them. “There was a drop in sales when the announcement was made. There were cancellations of CoD orders but it’s recovering now,” said Flipkart co-founder Sachin Bansal. Similarly, Snapdeal’s CEO Kunal Bahl said that before the announcement CoD orders comprised 50 per cent of all goods sold on the platform, and have come down to 30 per cent. “At some point in time, it was at 70 per cent and then it came down to 50 per cent. After the announcement, it is now at about 30 per cent. While it might go up a bit, we expect the ratio to hover around the current level,” he said.

Eighteen months ago, Snapdeal acquired mobile wallet company Freecharge, and Bahl said it has seen a strong growth in transactions through digital payments. Volumes have grown significantly for Freecharge too.

Shopclues co-founder Sanjay Sethi also said in the first four days following the discontinuation of older denominations, a fall of about 15 per cent was witnessed in CoD orders.

Even before the withdrawal of the old currency notes that led to a cash crunch forcing online orders to be paid for online, e-commerce companies have been pushing for digital modes of payments such as credit cards, debit cards, electronic wallets, etc primarily due to the cost of return on CoD orders being higher. It has been estimated that cost to these e-retailers for returns of orders placed through CoD are at about Rs 20 in urban areas and about Rs 75 in non-urban locations.

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