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A month later, e-tailersfeel less heat of note ban

The initial impact was as high as 50%, which fell to 30% by October-end. Now, it is down to 20%.

business Updated: Dec 09, 2016 15:10 IST
E-commerce

The online food and delivery business has seen a rise in sales recently(Shutterstock)

NEW DELHI

The situation is getting better for e-commerce companies with the impact of demonetisation is slowly tapering off.

The impact, according to consumer internet advisory firm RedSeer Consultancy, is 15% to 20% for e-tailers, depending on the nature of products the company sells – higher of electronics and lower for apparel.

E-commerce firms and delivery companies have earlier said that the initial impact was as high as 50%, which fell to 30% by October-end.

An official with Ecom Express, which has 12% market share in e-commerce deliveries, said things are slowly getting back to normal. “It is down to 20% now,” the official said.

The e-commerce business in India, unlike any other country, is hugely cash-driven – 75% of the orders are based on cash on delivery (COD).

That’s a huge difference, considering that in the first week when demonetisation was announced, most of the orders on cash-on-delivery got cancelled. “Almost 60% of the deliveries happen through COD, and of these 72% to 75% orders were cancelled, as soon as demonetisation came into the effect,” said a top executive with FarEye, which provides technology to e-commerce and delivery companies to enable faster delivery.

The problem is that cashless payments have not fully replaced cash. According to RedSeer, cashless transactions for e-tailers grew by around 15%.

Kunal Bahl, co-founder and CEO of Snapdeal, said that 35% to 40% of the orders are still on COD.

That might hurt companies, as many customers have still not migrated to an alternate method of payment.

For companies, which have low COD ratio, the impact has been less. “Our COD was already down to 30% before demonetisation… We haven’t felt the impact as much,” said Radhika Aggarwal, co-founder and head of marketing at ShopClues.

“With liquidity crunch, the bottomline of the e-commerce businesses has been affected to a large extent,” said the FarEye executive quoted above.