E-Tail­ers Hit by Bar­rage of Buyer Brick­bats

De­layed ship­ments and de­fec­tive prod­ucts, be­sides or­ders can­celled by sell­ers who run out of stock, leave many on­line shop­pers dis­ap­pointed

The Economic Times - - Companies -


Find­ing cus­tomers has been the easy part but it’s keep­ing them happy that is prov­ing to be a chal­lenge for In­dia’s on­line re­tail­ers fac­ing a bar­rage of crit­i­cism from dis­grun­tled buy­ers. De­layed ship­ments, de­fec­tive prod­ucts and or­ders can­celled by sell­ers who run out of stock are test­ing the pa­tience of ea­ger on­line shop­pers — an es­ti­mated 30 mil­lion this year — tak­ing ad­van­tage of the con­ve­nience and dis­counts of­fered by these por­tals. The on­line re­tail in­dus­try is fore­cast by Crisil to grow four-fold to .` 50,000 crore within three years, pre­sent­ing a big bo­nanza for the likes of Flip­kart and Snapdeal, but they are also strug­gling to cope with the prob­lem of man­ag­ing rapid growth. “Why was my or­der ac­cepted if there was no stock and why do I have to wait for two weeks to get the money back? That’s a long wait,” said Del­hibased Neil D’Souza, who bought five dif­fer­ent pieces of ap­parel from Flip­kart, In­dia’s largest on­line re­tailer. A day af­ter the 24-year-old placed the or­der, he was told that one of the items was out of stock and that the money would be re­turned in two weeks. Flip­kart de­clined to com­ment for this story.

While cop­ing with scale is an is­sue, the main prob­lem is the so­called mar­ket­place model that on­line re­tail­ers have been forced to adopt to com­ply with for­eign in­vest­ment reg­u­la­tions that pre­vent com­pa­nies with over­seas in­vestors from own­ing in­ven­tory. As a re­sult, they have to rely on thou­sands of mer­chants over whom they have limited con­trol. Be­sides, they also have to con­tend with Ama­zon, which has both the ex­pe­ri­ence and the money to give In­dia-based play­ers a run for their money. “Be­cause of so many sell­ers and so many courier com­pa­nies, there is bound to be sig­nif­i­cant in­con­sis­tency and in­for­ma­tion mis­match,” said Ro­hit Bansal, co-founder of Snap- deal, who es­ti­mates that his com­pany will spend about .` 450 crore this year on tech­nol­ogy to im­prove back­end de­liv­ery ser­vices. On Tues­day, the com­pany an­nounced launch of 40 new ful­fil­ment cen­tres to en­sure same-day de­liv­ery of prod­ucts sold by nearly 30,000 sell­ers on its mar­ket­place. Bansal whose com­pany re­ceived in­vest­ment of $100 mil­lion (.`590 crore) from a group of in­vestors, in­clud­ing Premji In­vest, the fam­ily of­fice of bil­lion­aire Wipro chair­man Azim Premji, ex­pects to host 1-lakh sell­ers on the mar­ket­place by next year. Sev­eral other mar­ket­places, in­clud­ing fur­ni­ture por­tals Pep­per­Fry and FabFurnish as well as Shop­Clues, too, face sim­i­lar com­plaints as the rapid growth in In­dia’s on­line re­tail in­dus­try places enor­mous strain on ser­vices at the back-end. Ex­perts said the break­neck pace of growth — will fur­ther strain re­sources of In­dia’s on­line re­tail­ers who lack the ex­pe­ri­ence that Ama- zon can draw upon. “There is an open stam­pede for sell­ers in the mar­ket by ecom­merce play­ers and it is get­ting very chaotic from the con­sumer’s point of view,” said Arvind Sing­hal, chair­man of Technopak Ad­vi­sors, a re­tail ad­vi­sory firm.

Ebay, for in­stance, added 30,000 sell­ers in nine years of its ex­is­tence in In­dia, which Snapdeal has done in two years. Shop­Clues claims to have added more than 50,000 sell­ers, while Flip­kart, which adopted the mar­ket­place model last year has about 4,000 sell­ers.

And cus­tomers are also vent­ing their frus­tra­tion on on­line fo­rums. “Nearly half the com­plaints against on­line mar­ket­places re­late to wrong or faulty prod­ucts, and about a quar­ter are for de­layed re­funds,” said Vishrut Cha­lasani of Akosha, an on­line con­sumer fo­rum.

On the other hand, many sell­ers com­plain they re­ceive lit­tle help af­ter sign­ing up on a mar­ket­place. “Some on­line mar­ket­places re- quest only a sam­ple of a prod­uct from a seller. Af­ter the first check, the sell­ers are on their own,” said Ak­shay Sandu, co-founder of Tipsy Toes Shoes, who sells on Flip­kart and Ama­zon.

Spe­cialised por­tals such as Pep­per­Fry are also be­set by a lack of suf­fi­cient lo­gis­tics sup­port. “Large and bulky items are al­ways dif­fi­cult to ship,” said Am­ba­reesh Murty, chief ex­ec­u­tive of Pep­per­Fry, who ex­pects the com­pany to in­vest in de­vel­op­ing last-mile lo­gis­tics.

Lo­gis­tics ser­vice providers are of the view that there is need for greater in­te­gra­tion to han­dle ris­ing de­mand for quick de­liv­ery, han­dling cash pay­ments and col­lect­ing re­turned prod­ucts. “It can be a nightmare for a non-ex­pert in lo­gis­tics to pick up hun­dreds of items from dif­fer­ent sell­ers and ship them the same day,” said San­jiv Kathuria, CEO and co-founder, DTDC Dot­Zot.

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