1. Snapdeal, Flipkart, Amazon fall victim to Rs 500, Rs 1000 note ban; here’s how

Snapdeal, Flipkart, Amazon fall victim to Rs 500, Rs 1000 note ban; here’s how

The demonetisation of R500 and R1,000 notes will aid the e-commerce firms to move towards pre-paid options in a big way, while reducing the cash-on-delivery (CoD) option.

By: | New Delhi | Published: November 10, 2016 6:30 AM

The demonetisation of R500 and R1,000 notes will aid the e-commerce firms to move towards pre-paid options in a big way, while reducing the cash-on-delivery (CoD) option.

Firms like Snapdeal and Flipkart on Wednesday put a cap of R2,000 for new cash-on-delivery orders, while Amazon India completely stopped cash-on-delivery in the aftermath of the development.

“Currently, we have temporarily stopped cash as a payment option for new orders. Customers that had already placed cash on delivery orders before midnight 8/11 can pay for their orders using debit or credit cards or currency of valid denominations. For future orders, we are working on alternatives to make doorstep payments easier for customers by introducing a variety of electronic payment options. We will shortly reintroduce cash payment on delivery and also provide an improved selection of payment methods — both online and at customers’ doorsteps to offer a seamless experience,” Amazon said in a statement. On its part, Snapdeal said that CoD limits will be increased gradually over the next few days. The company is providing its customers, who have a shortage of smaller currency notes, an option to get their delivery deferred by a few days till new currency notes become easily available.

According to KPMG, more than 30 lakh orders are in the pipeline to be delivered on cash-on-delivery from Wednesday. The average order value of the orders is estimated to be around R1,800. Hence, orders worth about R540 crore is yet to be delivered.

Meanwhile, online grocery firm Grofers has devised a new mechanism of payment in addition to existing digital payment options. It is sending a payment link on a customers’ email or in the form of a message to their mobiles. The customers can then click on the link, which directs them to a payment gateway to make the payment. “As our average order value is R1,000, consumers mostly like to pay in cash. Hence, we have devised this new mechanism to ensure consumers continue to shop online,” said Albinder Dhindsa, CEO, Grofers.

Analysts point out that internet firms need to devise a payment mechanism soon. According to industry estimates, on an average 10 lakh orders are dispatched every day by e-commerce firms. Of this, 6 lakh orders fall under CoD. “Unless an immediate wallet pay on delivery model is devised, many of them may get cancelled, or clog the logistics network with significant delays in delivery,” said Sreedhar Prasad, partner, e-commerce and start-ups, KPMG in India.

Meanwhile, digital wallet firms have witnessed a surge in transactions as consumers are using various wallets like Paytm and FreeCharge, besides individual wallets operated by companies. For example, Paytm claims to have reported a 250% increase in overall transaction with transaction value going up by 200%. Likewise, Freecharge claims to have reported 12 times jump in the average wallet balance.

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