Flipkart, Snapdeal and Shopclues agree: Demonetization has been a boon in disguise

About a week after the ban on Rs 500 and Rs 1,000 notes, e-commerce giants Flipkart, Snapdeal, and Shopclues unanimously hailed the government’s decision, because it halted to a great extent, big problem area-Cash on Delivery, forcing more and more people to transact online.

Sachin Bansal from Flipkart, Snapdeal's Kunal Bahl, Sanjay Sethi from Shopclues and Pranay Jivrajka, COO at Ola, all of whom had gathered in the capital city Delhi for an event on digital start-ups said how this move has been positive for their businesses and will be positive for the economy in the long haul.

Discontinuation of higher valuation notes has led to a 15-30% fall in COD orders. Sachin Bansal from Flipkart said,’ This move is forward-looking as we are moving to become data-focused as a company.'

"At some point in time, it was (COD) at 70 % for us and then it came down to 50 per cent. It is now at 30 percent. While it might go up a bit, we expect the ratio to hover around the current level," Kunal Bahl commented.

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Snapdeal, which had acquired Freecharge last year, said that the e-wallet has seen a tremendous increase in transactions and digital payments have made the operations processes smoother for them.

"What is important is that we (in the sector) will have to make digital payments more convenient, secure and rewarding for consumers," he added.

Following the announcement on the evening of November 8, most e-commerce companies had either limited orders or banned COD for some days.

"It would take around 35 to 60 days for things to be normal. For us, tier-II and tier-III areas performed much better than metropolitans, as most of the orders from were paid in advance. Our COD percentage is actually a lot more in metropolitans," said Sanjay Sethi from Shopclues. He mentioned that in the first four days, there was a sale fall of about 15 percent but now it is normalizing.

But why would these giants be so pleased with doing away with COD, which is a boon for consumers? Well, that’s because the cash received on delivery usually takes several extra days to process, therefore reflect on the books. Also, there is the huge problem of customers returning COD orders on account of dissatisfaction with the products delivered and not paying the amount, in which case it’s quite a loss for the company.

COD never made much business sense but while being an innovation in this space, it was mostly a consumer winning over tactic employed by e-commerce players to increase footfalls.