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
ADITI SHRIVASTAVA & HARSIMRAN JULKA
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.