Psst. Psst. Investors & Sellers, till when will you be paying for our COD orders & lifestyle?

If you thought all the investment being pumped into the Indian e-commerce industry right now, is going towards discounts, then you could not be more wrong. Discounts are just a small part of it. Some would say “we are investing in building infrastructure” to which I say “ok, sure, I believe you”.

A major chunk of this leftover investment or “infrastructure” investment is going towards two heads:

  1. Salaries
  2. Logistics

Overpaying people is not creating infrastructure, it is spoiling the market for new startups like mine :p Counter argument would be, its a barrier to entry and  we are a good company our people are talented, they deserve it. Am sure they are (talented) they do (deserve it). But when you say all of them deserve double of what they should be earning, I believe you, totally.

In truth, it not only upsets the market balances, when the funds run out, will you be offering everyone a salary cut to stay afloat? How many will stick? Who will pay them equivalent even if they want to switch. Overpaying hampers personal growth of true talent. What is left to strive for, for them? When you start at the top, you can only go down.

Coming to logistics, all COD orders are funded by these angels on earth called Investors. I can 100% agree that some component of cost of COD that marketplaces bear is built into the logistics cost that is charged to the item seller. BUT, keeping in mind the return rates of COD orders and amount of bogus & “accidental” COD orders, it cannot even be a break-even proposition. As mentioned earlier courier companies charge Rs. 30-60/- for as a COD service charge per shipment, assuming marketplaces give them humugus volumes, I doubt any carrier would give them this service for free.

Though Amazon is one marketplace I have seen actively trying to prevent duplicate orders by giving buyers a message, but when a buyer still places order like this (screenshot below), what are they to do. As a seller, once the order is in, we HAVE to fulfill it, no matter what, we cannot cancel it and we WILL be charged the logistics cost even though we know these duplicate COD orders WILL return. But only option we have is pre-fulfilment cancellation which attracts penalties, monetary and rating both which may ultimately lead to suspended store. So, I prefer to get these sent and bear it as a cost of business.

am1 am2

This is only one side of the story. Every marketplace has a different way of doing this. So, I can safely derive that all this money is coming from BOTH sellers & investors. For one, they just cook numbers for the other they just enforce numbers. I will also cover how sellers are FORCED to use marketplace service and pay nonsensical charges. And the only function of seller support is to create a wall between company and sellers by giving incredibly dumb responses excluding Amazon’s world class seller support.

So, as per popular opinion, I don’t think any bubble is going to burst but market is due for ‘correction’ and normalization.

Thoughts? Questions?

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2 Comments

  • Sounder

    August 21, 2016

    Good Read, Only way is to make COD as optional service in Marketplaces where sellers are allowed to choose them.

    Indian E-Commerce Industry needs a change

    Reply
  • Shakti

    August 22, 2016

    Rightly said…nice article

    Reply

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