Amazon pilots cash-on-delivery service in India

Amazon pilots cash-on-delivery service in India

Summary: E-commerce giant is reportedly testing the service with India Post to cater to customers who don't want to make upfront payments, and in a country where 80 percent of online transactions are completed with cash-on-delivery.

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TOPICS: E-Commerce, Amazon, India
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Amazon is reportedly trialing a cash-on-delivery service in India, tapping the country's 150-year-old postal service to fulfil its last-mile service.  

E-commerce
E-commerce is still nascent, but growing, in India where most are afraid or don't have the means to transact online.

Citing sources familiar with the issue, The Economic Times reported that the e-commerce giant had commenced a pilot with India Post to tap the country's young but growing e-commerce market. The postal service operates India's largest distribution network with over 150,000 branches across the country, 89 percent of which are located in rural areas. 

An India Post official, who declined to be named, said in the report: "We are trying to add capabilities like cash on delivery and reverse logistics. Consumers don't want to make an upfront payment. We are developing software to start the cash-on-delivery service with Amazon."

In its response to The Economic Times on the partnership, the U.S. e-commerce giant said: "We continually look for opportunities that will enable us to reach our customers in the remotest parts of India and offer them a convenient, trustworthy and reliable shopping experience."

Amazon currently operates in India through an online marketplace of third-party sellers and vendors, due to the country's restrictions prohibiting the website from selling direct to Indian customers. A check on its India website revealed an FAQ on its cash-on-delivery service, which noted that this option is only available for items tagged "Fulfilled by Amazon" and with the message "Eligible for Cash on Delivery" on the product details page. 

It added that customers who opted for this form of delivery would not have to pay extra charges, though a "convenience fee" of 39 rupees (about 63 US cents) may be charged at later stage. In addition, this service only applies to orders totaling less than 50,000 rupees (US$804.7) and this amount may differ depending on the customer's shipping address. 

Cash-on-delivery is the preferred mode of payment in India, where 80 percent of online transactions are completed via this form of payment. This option, however, does have its drawbacks.

India's largest e-commerce operator, Flipkart, in June said it was stopping cash-on-delivery for orders over US$185 to the state of Uttar Pradesh. Noting the high potential for fraud, Forrester Research's research director Vikram Sehgal pointed to the high return rates--when items are unpaid at time of delivery--for this medium of ordering goods, which ranged between 5 and 25 percent. 

According to The Economic Times, India Post said it was investing 1 billion rupees (US$16.1 million) over the next few years to build out warehouses to fulfill e-commerce deliveries. 

Topics: E-Commerce, Amazon, India

About

Eileen Yu began covering the IT industry when Asynchronous Transfer Mode was still hip and e-commerce was the new buzzword. Currently a freelance blogger and content specialist based in Singapore, she has over 16 years of industry experience with various publications including ZDNet, IDG, and Singapore Press Holdings.

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  • The CoD Bane

    The Cash on Delivery is a much abused system in India. I have seen consumers(teen kids) ordering things from Flipkart hoping that when the goods arrive their parents will need to pay the bills.

    While it's nice to keep the consumer happy and build trust in him to encourage adoption, the ecomm companies should look at other more sustainable ways of increasing the consumption of their products.

    One such way is to develop hassle-free return and refund policy on credit/debit card purchase so consumers have the confidence that their money will be safe even though they might not be satisfied with the product. Such positive experiences in the minds of the consumer slowly would replace the need of CoD and not be a drain on the Ecomm companies.

    On a lighter note, here's a humorous take on the Indian CoD mindset ;)
    http://blog.foundermates.com/indian-e-commerce-consumer/
    Nidhi Kapoor