Etailers innovate to lower return rate menace

Etailers have long been victims of high return rates. Its the burden they have to deal with, in the pursuit to increase their precious Gross Merchandise Value and build market share. This leads to heavy cash burns, which does not always sit well with investors.

While a lot of return issues are genuine, most are not. The return rate also varies from category to category. So how do etailers plan on facing up to these problems? Read on to gauge some innovative ideas!

Radio frequency Identification

Ecommerce Marketplace, Luxepolis has resorted to using radio frequency identification technology to weed out fraudulent buyers who claim to receive fake goods.

“We have developed a solution for solving the problem of customers gaming our system. What happens when a customer claims he or she received a fake bag when we actually shipped a genuine authentic bag? We use NFC (near-field communication) enabled tag and reader using secret codes (unique to each product) to establish the authenticity,” said Vijay KG, co-founder of Luxepolis.

No refunds

To overcome buyers using products before returning them, Confidential Couture attaches a security seal and does not entertain refunds.

“Currently we do not do refunds, only exchange of products. In order to ensure that the customer does not use the product before returning it, we have a seal on a prominent place on the product so that it cannot be used without breaking it,” stated Anvita Mehra, co-founder, Confidential Couture.

Visual Check

Popular online jewellery company, Bluestone works closely with its logistics partners who do an initial scan, at the customers home.

“In our business returns are as low as 6% and our logistics partner is asked to do a visual check before taking the product back, following which we do quality assessment in Mumbai,” remarked Arvind Singhal, chief operating officer, Bluestone.

The above are just a few methods etailers are using to reduce return rates. Online sellers also face a tough time from the return policies created by online marketplaces who try to appease customers. This IOS research article outlines the pain points of sellers. As online sellers you are always going to face issues such as returned goods. These simple packaging and shipping tips will help you stay one step ahead.

Mobile drives nearly 50% of Online Sales in India – study reveals

By now, we all are aware that mobile commerce accounts for a major chunk of ecommerce traffic in India. However, every now and then a research report reinforces the growing power of m-commerce, just like the latest study conductedby research firm Forrester.

Online sales through mobile phones to reach $51 billion by 2020

US based research and advisory firm, Forrester revealed that almost 50% of the $12 billion annual online sales in India happens through mobile phones. Whereas, in the US and China, m-commerce’s contribution is 34% and 48%, respectively.

The report also affirmed that m-commerce is expected to cross desktop-based online transactions in 2016 and is set to grow five-fold to $51 billion by 2020.

Factors that contributed to m-commerce’s growth in India

• High penetration of smartphones in tier 2 and 3 cities
• Rising aspirations and value consciousness of buyers

The report stated, “One unique component of India’s e-commerce market is just how quickly it expanded to tier 2 and tier 3 cities across the country. Only 8% of the 1.3 billion populace lives in the top eight tier 1 cities (Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune), where e-commerce penetration is already high. Today, leading online retailers Jabong, Myntra and Amazon report half their revenues from tier 2 and tier 3 cities. While the tier 2 and 3 cities have low PC and broadband penetration, they also have fewer brick-and-mortar stores, giving e-commerce a chance to fill the gap.”

Other findings of the report with respect to the Indian ecommerce market:

• India along with 4 other Asia-Pacific countries, namely China, Japan, South Korea, and Australia will fuel global e-commerce growth
• India is the fastest growing as well as the smallest e-commerce market in the Asia-Pacific region
• Popularity of cash-on-delivery (COD) is a challenge for ecommerce firms
• FDI restrictions in B2C ecommerce is another challenge that will affect the online industry’s growth
• Complicated logistics and last-mile connectivity is a major roadblock

Categorically addressing the COD trend in India, the report said, “While COD assuages consumer concerns about package delivery and product quality, it has significant implications for online retailers: costlier order fulfilment, greater chance of returns (one Ernst & Young study cited return rates averaged at 40% for COD online purchases in the market), and the risk of fraud by cash collection agents.”

Etailers are focusing on improving their mobile platform

Needless to say, ecommerce players including the leaders Flipkart, Snapdeal andAmazon are concentrating on enhancing mobile shopping experience for buyers.

“Starting early 2014, the focus moved entirely towards mobile. We said we will serve all customers, but focus-wise, what we would build for first is the mobile app,” shared Akshay Sahi, Head – Customer Experience, Amazon India.

Right from embedding mobile apps in popular smartphones, introducing mobile wallets for easy payments, creative mobile marketing campaigns, 2016 is witnessing major developments in mobile commerce.

Amazon’s Localized Strategy: Digital Wallet Coming Soon, Customized App Attracts Buyers

Until last week, all major ecommerce players like Paytm, Snapdeal and Flipkarthad their own digital wallets except Amazon India. Although latest news report suggests that this status is all set to change as the US-based etailer is planning to launch an online payment wallet soon.

Acquisitions of wallet firms on the horizon

The news about Amazon’s plan comes just days after the ‘Flipkart Money’announcement. The company is looking to achieve this goal by acquiring wallet companies, just like Snapdeal-Freecharge and Flipkart-FX Mart.

A source close to the development revealed, “looking at multiple acquisitions (in online payments). It is a major focus area and the company is trying to figure out what it needs to do.”

Talks with several online payment firms are on and it is believed that Amazon India’s wallet will come into existence after three months.

In February, Amazon had made it apparent that localized India-specific payment solutions feature in the company’s business goals and for the same it acquired Emvantage, a payment gateway company.

Localizing Amazon App bearing fruit

‘Localization’ is the keyword that Amazon’s team is focusing on to win Indian ecommerce market. Be it adopting local lingo in advertisements, thinking aboutpayment solutions suited for Indian buyers or introducing tatkal seller service, the ecommerce leader swears by localized marketing strategy.

One such strategy that’s bearing fruit is customizing technology operations of Amazon App and introducing new features tailor-made for Indian shoppers. The company has given engineers full freedom & resources to modify its app and features.

Some of the key changes that were made to the Amazon App are:

• Reduced app size by more than 60%
• Enabled near-automated sign-ups for first-time mobile users
• Simplified online payment process
• New & improved daily deals and offers
• Removed features that weren’t working

Akshay Sahi, Amazon India’s Customer Experience Head shared, “We realized that our (previous) deals pages aren’t going to work in India, so we took over the deals pages and redesigned it completely, including some of the underlying technologies.”

He added, “In three months, we cut out the features that weren’t working, removed the bloat, cleaned the tech up and brought down the (weight of the app) to less than 9MB from more than 22MB. We are at 9.8MB right now.”

Result? Amazon India’s app downloads, user addition and retention rates scaled up. By simplifying the signing-up, payment process along with reducing app size, Amazon managed to reach out to a large number of buyers who had resisted downloading an app so far. Smart move by Amazon, as the share of Indian m-commerce is only going to increase with time.

Flipkart borrows from HDFC; Morgan Stanley devaluation makes investors wary?

Ecommerce marketplace, Flipkart has recently borrowed close to Rs. 450 croresfrom HDFC bank. In a filing with the Registrar of Companies (RoC), Flipkart has pledged fixed deposits to raise the money. The company has borrowed the money in its attempt to raise capital worth $ 1 billion.

Bankers have said that most companies raise funds through bank loans to meet their working capital needs when they are unable to raise capital from investors.

According to a banker speaking on condition of anonymity, “It is targeted at meeting day-to-day cash demands in order to maintain seamless business operations.”

Flipkart has also pledged its assets worth Rs. 1,400 crores with Deutsche Bank and Kotak Mahindra in the past.

Morgan Stanley’s devaluation not a cause for worry

Recently, investor Morgan Stanley brought down Flipkart’s valuation by 27%. The leading company, which is one of the main investors in Flipkart, revised the value based on market conditions and Flipkart’s performance.

However, start-ups and experts are not too worried about this move, as they don’t believe this will impact the value of the industry as a whole. Most are of the opinion that a company’s valuation is taken from its individual performance and growth. Morgan Stanley’s recent move will not adversely affect start-ups that are trying to raise capital.

“The valuation by Morgan Stanley is perhaps reflective of how investors are increasingly skittish over tech valuations nowadays and focusing more on revenue generation and profitability,” says Swati Bhargava, founder of CashKaro, a cash back company.

Dhruvil Sanghvi, founder and CEO of LogiNext Solutions, a logistics company, feels that companies with a well planned base will be able to survive under tough weather.

He says, “Most start-ups and companies have had ups and downs in their journeys. Over-valuation is usually a result of unrealistic expectations, incorrect market and consumer behaviours predictions or sometimes investor strategies.”

Pankaj Vermani, CEO of Clovia.com, an online lingerie store, feels that this is simply a corrective process that occurs in any industry.

Adidas, Puma take advantage of new ecommerce FDI rule

Global sports brands, Puma and Adidas aim to be among the first major foreign brands to set up their own ecommerce operations in India, after applying to the Department of Industrial Policy & Promotion (DIPP) for the necessary clearance.

Last year, Adidas had spoken of its omni-channel ambitions. Puma is also looking to expand rapidly. It is hoped this will create more job opportunities.

Single brand foreign companies can now sell through:

• Wholesale
• Retail
• e-commerce

“It has been decided that a manufacturer will be permitted to sell its product through wholesale and/or retail, including through e-commerce without government approval,” the DIPP had said.

The new FDI rule allows single-brand overseas players to conduct online selling of their goods for the first time. The rule came into affect in November 2015, as foreign companies requested greater clarity. The new rule will help single brand retailers improve areas such as logistics, replenishing stock and procuring goods.

“Based on the new regulation on single-brand retail, we have sought approval for Puma Sports India to do retail and e-commerce. The same entity was originally allowed to do wholesale of Puma products. It’s a very progressive approach from the government. Once our approval comes through, it will make business much smoother for us,” stated Abhishek Ganguly, managing director of Puma India.