Ecommerce companies may be growing at an explosive pace, but their overdependence on cash-on-delivery mode of payment remains worrisome, particularly since online retail ventures in India are not yet profitable.
Cash-on-delivery,customers pay for products at the time of receiving them, still accounts for up to 60% of transactions, according to a study by Internet and Mobile Association of India and audit firm KPMG. This, despite sales at some of these ventures expanding at over 500% annually.
Flipkart, considered the biggest ecommerce venture in India, is targeting to cross $1 billion (over Rs 6,100 crore) in sales by 2015.
Snapdeal has grown around 500% between 2012 and 2013 and is set to cross $500 million (over Rs 3,000 crore) in revenue this fiscal. Collectively, online retail firms have raised almost $1.4 billion (over Rs 8,500 crore) since 2011.
Clearly, the growing customer base for ecommerce companies has not translated into higher adoption of payments through credit or debit cards. Also, the additional processes required for cash-on-delivery orders, their longer payment cycle, higher instances of returns and associated costs are hurting margins
Cash-on-delivery,customers pay for products at the time of receiving them, still accounts for up to 60% of transactions, according to a study by Internet and Mobile Association of India and audit firm KPMG. This, despite sales at some of these ventures expanding at over 500% annually.
Flipkart, considered the biggest ecommerce venture in India, is targeting to cross $1 billion (over Rs 6,100 crore) in sales by 2015.
Snapdeal has grown around 500% between 2012 and 2013 and is set to cross $500 million (over Rs 3,000 crore) in revenue this fiscal. Collectively, online retail firms have raised almost $1.4 billion (over Rs 8,500 crore) since 2011.
Clearly, the growing customer base for ecommerce companies has not translated into higher adoption of payments through credit or debit cards. Also, the additional processes required for cash-on-delivery orders, their longer payment cycle, higher instances of returns and associated costs are hurting margins
Nice post! This transaction in which payment for a good is made at the time of delivery. If the purchaser does not make payment when the good is delivered, then the good will be returned and the deposit will forfeit immediately. For pay on delivery deposit payment, we strictly accept for cash bank-in or Internet online transfer only.
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