Online retailing, which started with a poor performance in India, has now rapidly captured a strong foothold in the market. The Indian e-commerce market will grow at an impressive growth rate of 47 percent to over Rs 46,000 crore in the 2011 calendar year, said a report.
Reason for slow growth initially
At one point, the reason for slow growth of online retailing in its initial days would be because of the under-developed nature of the Indian payment system. To catch the market beyond the audience who owned credit/ debit cards, online retailers have now introduced Cash on Delivery (CoD) program. Through Cash on Delivery (CoD), the customer pays for what he/ she purchased once the items are delivered.
Implementing cash on delivery strategy
Naaptol, one of the leading online retailers, offers a unique comprehensive product research engine where the customer can decide what brand he wants to purchase as per his requirement. Naaptol’s business strategy is based on web which is the comprehensive mix of online and offline retailers. As per Manu Agarwal, CEO, Naaptol, “Indians are wary of online transactions and prefer safer mode of payments. Also majority of consumers in India especially from Tier II and Tier III cities do not have credit cards for shopping online and such markets can only be explored with the model of cash on delivery only.”
Some other online retailers such as Snapdeal, there are cash on delivery option available only for select deals on their website. Sandeep Komaravelly, marketing head, Snapdeal.com said, “Our marketing mix comprises of channels which are across the online and the offline mediums. We invest in channels which give us the maximum return on investment (RoI) in terms of brand awareness. We believe in performance oriented marketing campaigns.”
Need of strong backend support
Cash on delivery option also indicates the confidence of the online retailer which they have on their entire supply chain apparatus. The flawless working of the COD payment option depends a lot on the working of the entire backend as a well-oiled machine. Speaking on the same, Agarwal said, “We have strong logistics in place and have tie-ups with various logistics partners like Bluedart, AFL and First Flight and also with the distributors across India for the order fulfillment and delivery of the product to the customer.” Explaining further he said, “Our system Process Flow Mapping for every logistic enables speedy distribution across 3,000 towns and more.” Naaptol’s platform is seamlessly integrated with a technology infrastructure with complete IPR. All this has been supported by company’s four state of the art call centers with the customer relationship management (CRM) strategy as a focal point.
Supply chain issues and customer satisfaction
Issues during the delivery of products are quite common. Sometimes the problem happens from the suppliers end in terms of the product features etc., or from the distributors’ end, as sometimes the product gets broken / cracked during the delivery. “In order to support the customer satisfaction, we have a separate consumer complaint management centre in place which comprises of over 100 professionals, who register customer complaints on regular basis, look in to the product’s issue, get it back to the supplier, and then replace it with the new one,” said Agarwal. However, the company also has a reverse logistics tool in place; therefore in some cases it even refunds back the money so as to enhance the customers’ satisfaction.
On issues like return or non –acceptance, Mukesh Batra of Myntra .com says, “ The return is 7 to 8 percent which we build in in the product, so it doesn’t bother us much, as otherwise COD is giving us 40 per cent sale”.
Future growth potential
Concluding at the end, Komaravelly says that though various e-retailers are implementing cash on delivery as a mode of payment for their services, the result - whether it will be a big contributor to the online sales, is something that will be known in months to come.
For Agarwal, it’s the CRM that is the key to a successful business. Naaptol believes that though technology evolutes every day, whereas, customer satisfaction remains the key for every successful business. So in the coming years when online shopping will become popular across the different bends of the country, the CRM tool will become more consolidated in order to deliver the best services to the customers.