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I’ve been buying stuff online since circa 1998 but a few recent events have taken the edge off my enthusiasm for ecommerce:

  • Driven by VCs braying for profits, many Indian ecommerce players have moved from the traditional inventory model to the asset-light marketplace alternative. Thanks to my exposure to this model via eBay India several years ago, I’m convinced that it poses an intrinsic delivery risk for customers.
  • Online credit card payments have become very painful as a result of overzealous security measures like two factor authentication and Mobile OTP.

As a result, I’ve become somewhat partial to brick-and-mortar stores during the past 2-3 years.

shopping-cart-520x245However, a combination of stock outs and store closures drove me back to ecommerce recently (See Retail Is Barking Up The Wrong Tree Against Ecommerce for more on that).

This coincided with the entry of Amazon to India. My consistently good experience with the ecommerce giant in Germany, UK and USA for over 10 years prompted me to check out Amazon India. I quickly noticed that, while Amazon stocks its own inventory in its overseas operations, it adopted the marketplace model from Day One in India.

I’ve been cagey about online marketplaces ever since my bad experience with eBay India.

But I found out that, while the items on Amazon India were listed under the name of third party sellers, Amazon handled the logistics by itself. This was reassuring since many of the ills of the marketplace model could be traced back to the sad state of logistics in India (See Will The Sad State Of Logistics Hurt Indian eCommerce? for more on this topic).

cod-fiThen there was Cash on Delivery, a payment type not offered by Amazon in any other country where I’ve ordered from it.

Accounting for over 60% of ecommerce volume in India, COD eliminates the friction of using credit cards online. Moreover, by letting me pay only upon receipt of goods, COD kept me insulated from disputes, if any, between the merchant and Amazon that came in the way of fulfillment of my order. Even in the worst case, if I didn’t get my order, I didn’t pay.

So, despite its marketplace risk, I took shelter in COD and went ahead and placed three orders on Amazon India.

I’m not regretting my decision.

I got all my consignments on time or slightly earlier than the promised 4-6 business days. This is not surprising considering COD would put a natural pressure on merchants to deliver earlier so that they can collect their money faster.

Interestingly, none of my consignments reached before 3 business days. This is a smart way of ensuring that customers will fork out the additional charges for expedited delivery – INR 99 for 1 day or INR 49 for 2 days.

As for receiving the wrong or defective item, it already happened with one of my three orders. COD can’t eliminate this clear and present danger with the marketplace model. That said, Amazon India’s simple and fair returns policy substantially mitigates this risk.

Ketharaman Swaminathan On January - 9 - 2015

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  • Raghunath Iyer

    Indian eCommerce regulations with arcane tax codes force the operators into adopting a “market place” model.

    • sketharaman

      @RaghunathI: TY for your comment. If that be the case, then they’ve gone from the frying pan to the fire: Going by warehouse closures faced by Amazon and Flipkart and Service Tax notice received by UBER, Indian regulations and tax codes are arguably even more arcane for the marketplace model! But, I won’t blame the government for that: By its very nature, aggregation is an ambiguous business model and aggregators seem to be operating on the fringes of the law in many countries.

  • sketharaman

    UPDATE DATED 11-FEB-2016: While ordering for pizzas on Pizza Hut’s mobile app, I found it excruciatingly difficult to enter the delivery address. After I typed the first 3 characters of the building on the first line of the app’s form, the app went into a tizzy to display all likely building names from which I had to select one. I couldn’t find my building on the list. Likewise, after entering the first 3 characters of the street. Eventually I was forced to selecting whatever option was displayed, most of which didn’t match my address. No way I was going to pay by credit / debit card when I wasn’t sure whether my goods would be delivered to me at all. So I selected Cash on Delivery. Just struck me that this is yet another reason for people to opt for COD despite having cards.

  • sketharaman
  • sketharaman

    UPDATE DATED 16-JUL-2016:

    Looks like I’m not the only one going back to cash! See tweet below.

  • sketharaman
  • sketharaman
  • sketharaman

    UPDATE DATED 28-JAN-2017:

    If you pay by Card, you’ll need to chase the ecommerce / courier company for delivery and the refund should the consignment get delivered wrongly. If you pay by COD, the ecommerce / courier company will need to chase you for delivery and payment. Yet another reason why people choose COD for ecommerce despite using cards heavily otherwise. See tweet below from @ChetanDNaik.

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