Cash on Delivery or CoD is one of the biggest bottlenecks for the ecommerce industry in India. 20% of all CoD orders are returned and this causes huge losses for the sellers, since they are required to pay for the same.
Now, in order to kill the practice of CoD for ever, Walmart-owned Flipkart has introduced the part-payment option for buyers.
But there is a catch here!
Flipkart’s Part Payment Option Launched
As per Entrackr, Flipkart has informed all sellers about a new payment method called Part Payment.
Under this, users can now make a partial payment at the time of purchase of an item and then pay the rest of the amount online or while the product is being delivered.
As per the experts, the idea behind this part payment option is to end the practice of CoD in India, and encourage more and more pre-paid payments for the products, just like in US and European ecommerce market.
The All India Online Vendor Association (AIOVA) has welcomed this move, as it will bring down the CoD and in turn, bring down returns as well. As per them, the overall price of an average product can now come down.
In a statement, AIOVA said, “The introduction of part payment options can lead to a 2-3% reduction in prices for consumers as currently losses of such undelivered orders were factored as a cost,”
But.. There Is A Catch: You May End Up Paying More
Although the elements of fixed fee of the product, commission, shipping fee would be same and copy the existing payment structure.
But when it comes to collection fees, the buyer may end up paying more with partial payment mode.
For example, a buyer buys a product for Rs 5000, and makes a partial payment of Rs 2000 at the time of the order, and pays Rs 3000 at the time of the delivery.
Now, in the first instance, he will pay 2% collection fee to the seller on Rs 2000, that is Rs 40.
But at the time of the final payment of Rs 3000, the buyer will again pay 2% collection fees to the seller, that is Rs 60.
It would be interesting to observe, how the buyers respond to this new method of payment by Flipkart.
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