E-com firms brace for life beyond cash-on-delivery
NEW DELHI/NOIDA: From revolutionising e-commerce, the cashon-delivery (COD) method of payment is expected to go down by 50% following Prime Minister Narendra Modi’s announcement, which makes `500 and `1,000 notes “illegal” from Wednesday.
At its peak, COD amounted to over 70% of all e-commerce transactions, but has seen a fall of 55% to 60% lately.
It will fall further – down to 20-30%, according to Naveen Surya, chairman, payments council of India, in the coming year – also due to the ban on high-value notes. The change is apparent as people have taken to digital payment to pay telephone bills, taxi and autorickshaw fares and for buying daily necessities.
“Within hours of the Prime Minister’s announcement, we registered a 200% hike in the number of app downloads and 250% surge in the number of overall transactions. We registered 1,000% growth in money added to the Wallet and 400% growth in the transaction value of payments,” Madhur Deora, chief financial officer of Paytm, said.
COD might not be favourable for long. “It will go down very fast… In the next six to KUNAL BAHL,
Co-founder and CEO of Snapdeal 12 months, I think COD can go down by half,” said Kunal Bahl, co-founder and CEO of Snapdeal.
ShopClues, which has a large number of its transactions coming from small towns and villages, has stopped COD over `1,000. That will impact e-commerce sales for the time being.
“We expect some kind of temporary disruption… For people who cannot give `100 notes, we are sending them an online link to make electronic payment,” said Radhika Aggarwal, cofounder of ShopClues, whose COD is already down to 30%.
Paytm has discontinued COD. “Keeping in the spirit of the moment, we are temporarily disabling COD orders to avoid inconvenience to our consumers at the time of delivery,” said Saurabh Vashishtha, vice-president of Paytm.
Flipkart, too, has urged its customer to move to alternative modes of payments. “This will enable India to move faster towards digital payments… we are restricting COD on orders below `1,000,” said a Flipkart spokesperson.
Even eateries and online grocery store owners in Noida are witnessing a steep decline in cash-on-delivery payments.
“Currently, we are facing a lot of problems as the banks and ATMs are closed and we take payment only on delivery. We are fully supportive of the move and the digital turn in making payments,” said Sanjay Goel, CEO of Freshfalsabzi.com, an online grocery store, said.
The shift from COD to other electronic modes of payments will have its own benefits, including more efficiency, reducing returns, bringing in better accounting, and more serious buyers into the system in the longer run.
It will go down very fast… In the next six to 12 months, I think COD can go down by half.