Opinion: How digitization has changed the Indian online shopper

To put it simply, in a short span of ten years, India’s e-commerce growth has seen giddy days, where in addition to entrepreneurs, consumers have also evolved and how!

From the first-time users who were wooed by the online convenience and discounts; to the shoppers looking at saving some cash; to the forced shoppers who switched to online because of the government’s “shock and awe” treatment (Read Demonetization), e-commerce has created an online shopping arena, where millions of consumers no longer just ‘go’ shopping, but literally ‘are’ shopping.

Advances in technology, logistics, payments, demand for convenience and trust has further given way to consumers, who want more choices when it comes to shopping online, more control over when their purchases will be delivered, a secure payment channel, a convenient returns process and most importantly an integrated buying experience that has the best of both worlds.

But was this process of turning traditional (offline) consumers into an online one natural?

Well, definitely not.

For the Indian startups, the road to becoming the Amazon or Alibaba of India has proved more arduous and expensive than investors and entrepreneurs had ever imagined.

Cash on Delivery - An E-commerce Enabler? 

The first and the foremost has been Cash-on-Delivery (CoD) services, which has proved to be a blessing in disguise for the majority of e-commerce players.

In fact, India is one of the few markets where e-commerce is conducted more through CoD than online payments.

Even our neighbor (China's) booming e-commerce economy is ruled by Alibaba’s payment wallet Alipay and Tencent’s WeChat Payment.

It’s even safe to say that India is the only country where online success depends on the ability to pull off offline transactions.

Remember the emergence of e-commerce in India and the early nervousness of making payments online?

That was the reason why even the poster-boy of India’s e-commerce, Flipkart, began COD in 2010, after transacting through e-payments with its customers since 2007.

It paid off; the growth was phenomenal. CoD brought the company customers from rural areas and contributed to 30 percent of its sales in just two months of adopting COD.

COD brought trust but created an opex challenge

It brought the much-needed trust factor for the customers, who were just not ready to share their card details online.

Moreover, back then, there weren’t many consumers using cards for payment. But where consumers were rejoicing, extra charges on CoD transactions for logistics was troubling marketplaces and sellers alike.

However, the problem with the COD transactions, which still dominate the e-commerce payments, is that it adds a layer to the supply chain, because of cash handling.

Courier companies, on their part, generally hold the money for two weeks. This means that the e-commerce company has to restock inventory before the cash from its last sale has arrived.

The biggest hit comes from the much higher return rate—40 percent of all transactions, apparently —by consumers who simply changed their mind or could not be reached at home.

These goods cycle back into inventory after weeks and carry a high cost of restocking and re-listing, and sometimes have to be written off altogether.

The fundamentals, however, are starting to move in the right direction, thanks to some collective measures.

Demonetisation helped digital adoption

First, the government seems to be taking charge. Until a year ago, the penetration of digital payments in India was rather low.

This changed dramatically on 8th November last year.

Where the number of debit card transactions rose to 1 billion, and mobile wallet companies like Paytm, Mobikwik, Freecharge, among others, saw rapid adoption.

In fact, data from the Reserve Bank of India states that transactions via digital wallets in 2015 have grown to 153 million in October and December, compared to 65.9 million in the same period in 2014.

This extended an opportunity for the companies to innovate and bring in ease for not only consumers but enterprises as well.

Over one year, various instruments of money have emerged, giving way for consumers to pay in modes other than cash and cards.

In fact, mobile penetration has been the catalyst that has helped a significant number of us to go digital.

Several innovations for on-field delivery has also contributed to more convenience.

With its chip and swipe point-of-sale devices, the solutions allow field sales officers in e-commerce companies to plug these devices into their smartphone and let consumers swipe a card and complete the sale on the go.

These integrated solutions not only reduce the operational challenges of exact change and cash reconciliation but also saves companies from the security risks of cash handling and fraudulent notes that COD creates.

Latest SMS Pay options will help e-commerce

Then there is a 'SMS Pay' option, which comes to play when an item is out for delivery and e-commerce company decides to request a payment on the day of the delivery.

The solution is most useful when the customer is unavailable at the delivery location.

In most cases, there is already someone designated to collect the item on delivery (like a watchman or a maid at home) but nobody is authorized to make the payment for cash-on-delivery.

In such cases, with a single click, a payment request link is sent to the customer’s mobile number and email address.

Once the item is safely delivered, the customer can opt to pay through SMS Pay.

Payment solutions today also come with highly customized features that tie into the company’s back-end systems and provides the delivery boys with a more effective delivery and tracking system.

Payment apps are customized to the extent of telling a delivery boy what all goods need to be delivered at which location, at what time and how much payment needs to be collected.

These solutions not only increase the efficiency of tracking, delivery, and overall operations but also help enterprises to keep track of any data in real time.

Thus for e-commerce companies, scrambling to woo today’s changing consumers, the opportunity lies in coming up with some or all the ways mentioned above to extend the best of both worlds.

As consumers shift from price to convenience, it’s your turn to take a plunge from discount-driven strategy to the brand-building one.

(The author is co-founder and CTO of Ezetap Mobile Solutions Pvt Ltd. Views are personal.)