Retailers discouraging cash-on-delivery mode of payment, Retail News, ET Retail

(Representative image)
(Representative image)

New Delhi: A small number of retailers has started to discourage a mainstay of e-commerce in India: cash-on-delivery (COD).

Puma and department store chain Iconic have started offering their online customers an upfront 5% discount if they choose digital modes of payment. Liberty Shoes charges an extra Rs 49 for a customer who prefers to pay at the time of delivery at their doorstep.

These companies have started discouraging the cash-on-delivery option, which currently accounts for about 65% of online purchases in India.

“COD leads to a lot of cancellations at the time of deliveries,” said Pawan Khandelwal, CEO of Iconic, which sells fashion brands including Tommy Hilfiger, Calvin Klein and Bugatti.

According to Vibhor Sahare, cofounder of e-commerce enabler ANS Commerce, between 10% and 30% of COD order are returned by customers compared with 5%-15% for pre-paid orders.

Paytm Mall discontinued the COD purchasing option more than a year ago.

After offering discounts on pre-paid purchases, Puma’s share of digital transactions on its webstore went up to 64% from about 61% prior to that.

“The biggest reason for (encouraging) is that you are completely contactless,” said Abhishek Gangly, MD of Puma India.

COD has been the most popular payment mode among Indian consumers and has helped spawn a formidable e-commerce business in India.

Bain & Co. said in a recent report that the gross merchandise value of India’s e-retailing business is expected to swell to $100-120 billion in 2025 from about $30 billion now.

E-commerce sites including Amazon, Flipkart and 1mg had suspended the COD option for some months from April as part of efforts to create contactless shopping in a bid to curb the spread of Covid-19. However, the sheer popularity of COD prompted them to restore the payment method recently.

The share of COD is at 60%-65% now compared with more than 70% some years ago, according to e-commerce enabler Ace Turtle.

As millions of Indians warm up to mobile digital payments for purchases at pushcart vegetable sellers and legions of kirana stores, retailers think this is the best time to push digital transactions.

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