There have been many posts on this platform where ecommerce has been sliced, diced,cooked and binned. Some encouraging while a few discouraging. After being in the thick of it I’ve learned a lot from my current rollercoaster ride, scary enough to give a heart attack.
There are a number of problems that are affecting the industry as a whole and threatening its very existence but “Cash on Delivery” is one of the biggest drain on the most important resource “Money”. It is a big issue even now as ecommerce players face a pretty high non – acceptance rates because of which there is cost of restocking, reverse logistics and chances of damage. Reasons for COD RTO range from Logistics to Customer availability to Non Payment but how does someone make the customer also a bit accountable for the order?
There have been solutions like Call verification, Cash before delivery, Part payments but none of them really solve the actual issue and also does not ensure that the customer will accept the COD shipment.
Approx a year back while discussing general issues facing ecommerce with a friend I struck upon an Idea which *I strongly felt* could solve this issue once and for all. The whole idea stemmed from the need that there should be something ecommerce companies can refer to, to check a purchaser’s credentials just like Banks/Financial Institutions do.. a check with CIBIL while granting loans or a credit card. As COD also is something where ecommerce companies start incurring costs when an order is placed, a registry is something just what the doctor ordered.
A simple registry which can record a cod transaction and its completion and award a Customer, negative and positive ratings based on total number of orders accepted. This can help ecommerce companies decide whether a product should be shipped to the customer on COD or charge a COD fee or present a direct online payment option.
The workings has been detailed a bit in this short ppt which was made quite some time back as a business plan but it never got the right support/resources to execute it.
The Idea was taken to a few people/companies but one hijacked it while others did not pay enough attention citing lack of bandwidth etc. The idea did get presented to the industry body IAMAI ecommerce committee through a company where it received quite an encouraging response but then you do make a few wrong decisions with whom you trust the idea with.
The idea has its own share of arguments but medicines are never known to be sweet while a disease can be fatal.
The reason this Idea is being presented to fellow Rodinhoods is to bring in awareness and get support for such an initiative and be a part of it. There is 10x more to it while the above is just the start.
This is my first post on Rodinhoods. Please do give feedback and let me know what you think about it.
Something about myself.
Rochit Jain, currently have setup a small family startup ecommerce biz STYLEOS.com. Before that I’ve worked with digital agencies for 7 years and have hands on almost everything an agency/ecommerce is all about. Passionate and Adept at building and executing product and marketing solutions through innovative use of technology, design.
Just a startup guy without the right resources.
thanks to Alok for creating this platform and fellow rodinhoods who gave it life.
Cheers
MOHAN BVS
Nice Idea, but what about operational cost, what you think how much it costs per verification for an ecom store.
IMHO Until unless all ecomm companies implement this, its not going to workout, since people will find another ecomm company which is happy to deliver the order without verification.
Rochit Jain
The per verification charge maybe around Rs. 3-8 and lower as it is subject to economies of scale.
Yes you have to implment it through a top down approach from IAMAI to make it work just like RBI does. Also the concept revolves around ratings and not barring a customer from making a purchase. The ecom company may choose to have double verification for a user whose rating is in the negative.
Rahul Krishan Ahuja
However, a novel idea. What is the compliance structure that you would imbibe in this?
Specifically, will the user be aware of this?
If not, how will the breaching terms be cancelled?
Will the Ecom portals be ok to share database, which they die for to someone who may have a conflict of interest ( you have your own ecommerce you said ) ?
What guarantees that this database will not be used for your own promotions viz. the legal framework?
Will eCom x & eCom y know that the database is checked with each other?
if yes, why would not eCom x create a marketing plan to personally target Ecom y’s existing client with actual personalized & competitive positioning? How will you stop it or make it NON CONFLICTING to those two or others?
Rochit Jain
Will answer your questions one by one.
1. The website is already sharing data with payment gateways. So its a part of terms of use of the website.
2. No identifiable data will be shared only 1 or 2 parameters that will be given for eg. mobile number
3. A legally binding contract will be framed which details out no use of data for any other activity apart from the registry.
4. Its a registry so all data is for reference and ratings.
5. There is no possibility of knowing that the customer X is a user of ECOM X and Ecom Y.
In short consider this as a payment gateway. Data is already shared with payment gateways to complete transactions but apart from the transaction the data is secure and not shared.
Already ecom companies are sharing huge amount of data with Logistics companies and Payment gateways which can be used for promotion purposes but contracts are put in place to dissuade anyone.
Rahul Krishan Ahuja
Great, Thanks for the answers.
P.S. I would lover to read the compliance / contract copy / legal terms & condition / policy of use.
Gourav Das
Its a great idea that I support because we are building something like this built in our system. Among all other things, we also keep track of CODs separately. Then post a minimum buys, we start calculating COD rating for our users. Basically a simple mathematical formula which is function of COD orders, COD rejection, reason for rejection. But all that is available for consumptions is User Name, COD rating (on scale of 100). Then if the COD rating is below a threshold, our platform hides the COD option for payments for that particular user. ofcourse it is overridable by Sellers selling on our site who provide their own logistics.
You can imagine it taking on a wider scale by providing a subscription based service. For filling up the data you you tie up with E-Com at the start who feeds simple information like customer name, id (like email) and COD accept/reject, reason. Your intelligent algorithm can then calculate the COD scores.
Now for consumptions, other E-com companies can subscribe to this REST based service. They send customer name/id and get back COD ratings, then the E-Com firms can decide on what to do with this ratings.
P.S – We are not the company that hijacked the idea :). You can see what we are doing is pretty basic and “good-enough” for our own consumption
Rochit Jain
Yep. The concept works on the same principle on a industry level
Sarsij Nayanam
I have a gut feeling that this idea would work better, if you adopt a different starting point……let me explain what I intend to say…..
#1. If, I as a customer wish to do the COD shopping, I know it before the world come to know about it. So I am the origin of this data point.
#2. If I have the intent to pay for my COD shipment I have no reservations against sharing this data.
#3. Now, your primary job should be to reach out to these ‘honest’ ‘data points’ and capture them. This would create your first set of ‘reliable’ COD shoppers (with some level of error).
#4. But why would someone offer you the data? I mean, how would he even come to know that you are collecting this data. And what would you do with this piece of data? So, answer to this question lies in creating a online marketplace and aggregate all those sites which has COD offerings. You don’t have to sell anything, just promote the COD sites.
#5. Now, become the lead generator (or advertiser) for those COD companies and in the mean time push the user to provide his contact details. Educate the customer about the COD customer’s ratings and the benefits he might get if offers the data.
#6. As soon as the companies start getting leads from your marketplace (or you become a good advertising platform for them), they would see the value you created for them.
#7. Now implement your processes as you had planned.
The reason why step #1 to #6 are important for you is that your idea needs a lot of market research. And e-commerce as such is not a mature enough market where you can rely on any of the available reports in the market. And hence it needs some first hand experiments to judge the suitability of the idea.
I am emphasizing on market research through first hand experiment is just because I feel that this idea is slightly ahead of the time. It does solve a massive issue for firms, but I am not sure if those firms are ready to outsource their problem with confidence.
One final thought, if you don’t like my suggestions, do let me know. I want to discuss this idea with my group. Rest assured, I will not copy your original idea 🙂
[About me, I am a newbie in the field of entrepreneurship, and I am enthused about e-commerce with a difference (along with many more things). I often scribble my entrepreneurship thoughts here – https://onthejoblearning.wordpress.com ]
Rochit Jain
Sarsij,
The point of view is valid but why go find the ants when the ants are already coming for the sugar. We are not asking permissions from the user for this data. the data is for ecommerce companies solely. Just like how CIBIL works with financial institutions.
Abhishek
Hi Rochit,
Well this is a very innovative idea but let us consider the following:
1. Unlike CIBIL, this proposed COD data will mostly consist of small ticket transactions so we need to look at cost of tracking this data vs proposed benefits to ecommerce companies.
2. What about COD cancellations by customer where the ecommerce company delays the shipment or does not deliver as per the initial promised delivery period? This has happened with me. Do we penalise the customer for this lapse by the ecommerce company?
3. Lastly I feel instead of focusing on COD the ecommerce companies should encourage virtual wallets or virtual cash like Airtel Money etc which would benefit the industry in general.
Regards,
Abhishek
Gourav Das
Along with other data, collect “Reason for cancellation” and then run your algorithm on that data. Algorithm should be function of Order, Cancellation, Reason.
But frankly there should be other things taken to account. Like
1) Does return occur during end of month? Out of cash or saving cash for something more important.
2) Does the return occur on exclusive products? Viewing exclusive products for first time increase flow of hormones and you feel like “I should have this” and then over period of time (by the time it arrives) you feel like, I don’t need it.
3) What categories of products are returned.
4) Is the user married? Did the user during working hours? May be after consultation with partner they decided that the purchase decision was wrong.
Your point no 3 is very valid. It should be an industry wide drive.
Abhishek
Gaurav, agreed but how would this data capture the fact when cancellation occurred due to delay in shipment from ecommerce company and also would ecommerce companies prefer this kind of data being made available?
Also again what are the incremental costs of tracking all this?
Gourav Das
Its not very simple, E-com companies need to be educated that if they want valid data about CODs, they fill up valid data. The saving grace is that since this does not require identification about the Ecom companies themselves, they can give true data.
About storing data and processing, it would be pretty cheap. 100TB of big data storage comes at dirt cheap prices. So that should not be a problem. About getting Ecom companies to give data it can be something like you give data for x people for your site and you get data back across all other websites participating for any x number of people.
Again my answer might be lame because I haven’t thought deeply about it from a industry perspective. We are just doing it for our own site. But if something centralized like this happens, I will invest my data and time on that.
Dr Saurabh Bhatia
Rochit
have you, while considering all this, taken into account privacy issues of customers?
Have you considered that customers will not like to be labelled good-bad-ugly by your system?
CIBIL is strangest of cases as it was brought in force unbeknownest to common public and they were labelled ‘bad credit’ even before they came to know that a check bounced coz of signature mismatch is also causing their credit to dip. Today, CIBIL is such a big pain in the ass of lot of innocent people, that they have to resort to companies like CreditSudhaar.com to do some “maandvaali” with banks etc to expunge a stupid entry done years ago…
WHile CIBIL has govt support, so it cannot be wished away, there was a similar proposal by Nasscom few years ago to have an IT employee database where they would blacklist employees who jump notice periods or had bad track record. The project never took off due to public hue and cry over their rights…
WHile your COD credit rating system does not impact the society as vastly as the above ideas, people would certainly not like to be labelled bad credits on your consortium publicly.
How about doing a sample survey of 10,000 online customers to ask their opinion before making this idea mature?
Gourav Das
There’s no point of this survey on this specific question. We all know what 100% of the users would say :). But the point is doing what is correct. Users need to be educated that COD is not a substitute of try & buy.
What we should rather survey is that if this becomes mandatory for all websites for COD orders, would they stop buying online?
Dr Saurabh Bhatia
All the best
🙂
Gourav Das
You are wishing the wrong person. I am not involved in the project :). We are just using a variant in our own domain. You should wish the concerned person on the main thread.
Rochit Jain
1. The cost of tracking this data is again in a few rupees. Saves the hundred of rupees spent for sending a COD order to the wrong person. Calculate it. 10% of COD returns will cost approx Rs. 200. So If the charge is even Rs. 5. It will still cost just Rs. 50 for checking all the COD orders. Rs. 5 again is an approximate. The cost of checking will surely be less than that.
2. The customer is penalized primarily for Non acceptance within the delivery timelines. Most of the times the customer orders a product but then changes his mind but does not take the initiative to inform the ecom company to cancel it.
3. Users have a problem with giving money in advance so virtual cash also is a problem.
Rochit Jain
Gaurav,
Valid points.
1. Thats data mining and analytics but still the customer should be liable if he has ordered for it. Ecom companies can give an option to the consumer to give an option of delayed delivery.
2. So again the customer should cancel the order when he changes his mind. We sell here to do business and not charity. In retail you go and purchase and then exchange at max but you have paid for it. COD is a service not luxury.
3. Any product COD ordered is a cost irrespective of the price of the product.
Your point of view is valid to gather insight and create a customized delivery process but still we cant treat everyone differently when what you are making out of it is peanuts. Technology is not the issue but the service/human time cost is.
Rochit Jain
Hi Saurabh,
I understand privacy issues but here we are not declaring aperson unfit we are just saying that this person has returned 10 orders in the past few months so its the ecom companies decision how to go about it.
Would banks like that their loans default.. No right.. So as a ecom company which is a business I would not like to service a customer who is known to be defaulter in cod. CIBIL is a good concept as it makes the customer accountable and makes sure the finance company interests are also taken in account. If there was no cibil you would have to go through tons of data to make sure the person has good ratings or the banks would go bankrupt giving out loans and not making money out of it.