A Finextra member 20 January, 2015, 10:36 0 likes

Thanks for this interesting article. Couple of e-commerce observations which stand out are :

1) Asset inventory model scores over the marketplace model.  

2) COD (Cash on Delivery) mode of payment is a must to grow the market in LDC's and developing economies and for the brand to gain credibility in the customer's mindspace. 

To Amazon's credit, while embracing the marketplace model, they have retained control of logistics, are experimenting with it and trying to make the experience continuously better.  Also, for a sensitive market like India, diferentiating by allowing the flexibility of COD (unheard of in other Amazon markets) has both enabled and endeared the name to (Indian) customers. As an amazon customer in India, I can vouch that their commitments are well kept !

Needles to say, Jeff Bezos and team are making smart inroads (by Truck or toehrwise) in Indian (e-commerce) hinterland ! 

A Finextra member 20 January, 2015, 12:41 0 likes

Cash-on-delivery brings a "peace of mind" factor to some, but is not without issues:

- It does not mitigate risk from dispute between you and the merchant which arising from delivery of defective or mismatched goods. The risk is equal with credit card purchases. Infact, charging to credit card account adds another safety net over the purchase.

- Needless to say, it is inconvinient for high value purchases. Many buyers may not be able to or uncomfortable paying large sums in cash, thus negating its reason to consider it in the first place.

- Robs the buyer the opportunity to avail incentives/benefits provided by the card provided.

A Finextra member 20 January, 2015, 13:26 0 likes

Dear Aditya, thank you for your comments. My replies as below.

- The simple expedient of opening the package at the time of delivery will help ascertain if the goods is mismatched or (apparently) defective. Charging to your CC account renders you vulnerable with no such verification (of goods) possible.

- Agree to your point in principle. But then, how many such purchases will be high value in nature ? Moreover, how do you define high value ?

- True. If one is a slave to loyalty points / bonuses, cash on delivery is absolutely infra dignitation !

Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 20 January, 2015, 16:49 0 likes

@ShoumitB & @AdityaG:

TY for your comments.

1. You're right about COD not helping in the context of merchant disputes re. defective goods. In fact, I've addressed this point in a slightly different version of this post on my company blog: "As for receiving the wrong or defective item, it already happened with one of my three orders. COD can’t eliminate this clear and present danger with the marketplace model. That said, Amazon India’s simple and fair returns policy substantially mitigates this risk." 
2. I've since then heard from a couple of regular customers of Amazon India that Amazon's couriers actually let customers open the carton and inspect the contents before insisting upon the payment. I've never heard of such a practice with COD anywhere. If it's true, it's one more mitigant against this risk. 
3. I've been a heavy user of credit card ever since I got my first credit card in the late 80s. One main reason: Reward points! Cash on Delivery is definitely a problem in that context - or so I thought until today. I received the delivery notification from Flipkart for one of my recent orders earlier today and was thrilled to learn that the company now accepts Card on Delivery! So, I'm back to cards and reward points!
4. Card on Delivery eliminates the problem with Cash on Delivery for high value purchases.

Abhishek Chatterjee - Gartner Inc. - London 25 January, 2015, 15:43 0 likes

by the way what is stopping to pay by card at the point of delivery.. if the delivery boy comes with a swiping machine or a mobile wallet payment receiving machine.. i would see no reason for cash payment. specially current indian govn push to maKe all unbanked population bankable. adoption of smart phone with drive commerce.. 

Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 25 January, 2015, 16:18 0 likes

@AbhishekC:

Nothing. I've referred to the Card on Delivery in #3 & #4 of my last comment. However, this option is not widely available. Far as I know, only Flipkart offers it in my city (Pune, India). Even in the case of Flipkart, the courier who came to deliver my two recent consignments didn't carry the POS 2X in a row and insisted on cash. I steadfastly refused and tweeted to the company to ensure that they honored their promise to accept Card on Delivery. Only then did the courier bring the POS and I could pay by card. Only Flipkart can answer why such a thing happens regularly. 

On another note, banking the unbanked is only one part of the whole picture: I know enough merchants who have bank accounts but are still not able to accept card paymentts. To quote a recent example, a store in my neighborhood used to accept cards until recently but is now unable to do so. Apparently, ever since his POS got upgraded, it no longer works on his old telephone. To make it work, he needs a new telephone, the cost of which he finds prohibitive. Hence, he has stopped accepting cards. Regulation (PIN), TELCO (infra) and other factors pose as severe a hurdle towards fostering a cashless economy as unbankedness or tax evasion motives of the merchant community.

Abhishek Chatterjee - Gartner Inc. - London 25 January, 2015, 16:54 0 likes

Yes.. I think you are right in saying the entry barrier w.r.t. to infra, marchant, service providers and consumers is yet to reach a point where we can begin to move towards Cashless economy.. But if projects like Internet.org (by facebook) or Digital India etc, which trying to reduce the entry barrier to digital adoption are successful.. I think it will happen.. by the way..by reading your blogs and comments.. i know you are a fan of Cash. :)

Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 08 March, 2015, 13:04 0 likes

@AbhishekC: TY for your comment. You couldn't be more wrong about my personal preference: Like I pointed out in another blog post, Cash in Hand Is Worth More Than Card In Bush, "Ever since I got my first credit card in the mid 1980s, I've preferred cards over cash for several reasons (think rewards for one!)." However, you could be very right about the overall market: According to this latest Celent article, "cash is by far the most dominant, as at 50% share, it’s obviously the same size as all the other payment types …combined. So cash isn’t dead, and not even mildly under the weather!"