Cash On Delivery key to the growth of eCommerce in India

Most e-commerce companies think ‘cash on delivery’ of products bought online holds the key to growth. However, there are others who beg to differ and still bet big on the conventional way of online payment.

Customers demand physical interface of products to avoid after-sales hassles, say the proponents of cash on delivery. “Buyers look for the brick-and-mortar model for product viability and that is a better option for sellers as well. Both interface is required because it would have a greater value for pure play by these companies,” Franchise India president, Gaurav Marya said on the sidelines of e-Retail Congress 2012 here. He said to be pure e-retail players, companies have to accept following realities :

– There are around 670 cities from where regular buyers shop online.
– On further filtering, only 230 cities have active buyers.

According to the founder and CEO of 99labels, Ishita Swarup, there are people who are starting an e-retail company with just Rs 20,000 as capital investment and are surviving in this industry. “Companies are making buying as flexible as possible with ‘cash on delivery’ offers to customers,” she said, adding that this would ensure industry growth.

She said that in China, 80 per cent of the companies in e-retailing are surviving because of such methods. However, she also added that there are some problems in India where some customers who do not stick to their commitments and do not accept the delivery. “Around 30 per cent of e-commerce companies are experiencing such problems and we have to find solutions for that. But, with technology in place, we have solutions to block such people and do not accept their purchases if they continue to do such things every time,” Swarup said.

However, there are some who disagree that the cash on delivery method would help this industry grow. Founder of Pepperfry, Ambareesh Murthy, said, “There are regular buyers who are comfortable buying products making payments online. Cash on delivery only will make purchasing online insignificant. Future of online retailing will not depend on cash on delivery and some of the products like furniture cannot be made cash on delivery products.”

Indian eRetail Report 2012 released by Franchise India on published some key facts and figures :

e-Commerce market in India was estimated to be at Rs 46,520 crore in 2011 compared with Rs 8,146 crore in 2007
– The e-retailing market was the third-highest revenue generator at Rs 2,700 crore in 2011 compared with only Rs 978 crore in 2007
Online travel industry was the highest revenue generator at Rs 37,890 crore in 2011 compared with Rs 6,250 crore in 2007.

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One comment

  1. 1

    Nice write up! Whatever the stats say, I believe the $10 billion e-commerce market has grown tremendously because of COD as a preferable option for consumers.

    For instance last week when mistakenly bank blocked my my credit card, I immediately switched to rediff, ordered my fav SARSO Alovera Gel & paid Cash on delivery. It was quick and easy rather than keep arguing with bank officials to resolve the problem soon!

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