cod final akklm

8/2/2019 Cod Final Akklm

1/28

1


2/28

2

CASE STUDY REPORT

ON

CASH ON DELIVERY

WILL IT SUSTAIN ORSINK?


3/28

3

PREPAREDBY

AMEY HALDANKAR 10

KEVIN MENDONCA 64

KUNAL KHANDELWAL 74

LIKHIL GAWRI 75

MAYUR AGRAWAL 79


4/28

4

ACKNOWLEDGEMENT

We hereby acknowledge to all those who have directly or indirectly helped us

drafting the project report. It would have not been possible for us without their

help and Guidance.

We would like to thank Prof. Neville Gomes who gave us the opportunity to do

this project work & we would also like to express our sincere gratitude to Mr.

Rohit Nadikurdu Sr. Business Development Executive for giving us guidance

for completing the project. We are also obliged by people who shared their

experience & recommendations in the form of interviews & questionnaires.


5/28

5

INDEX

Sr no. Topic Page No.

1 Introduction 6

2 Objective and purpose of the project 7

3 Background reading 8

4 Methodology 10

5 Sample Questionnaire 11

6 Analysis 13

7Experts opinion

21

8 Interview 21

9 Implementation of strategies 23

10 Recommendations and conclusion 27

11 Bibliography 28


6/28

6

INTRODUCTION

What is Cash on Delivery?

Cash-on-Delivery (C-o-D) is an alternate method of purchasing goods online other

than Credit/Debit card and Net banking. In the C-o-D payment terms or C-o-D

service, you pay at the time of the actual delivery, rather than paying in advance.

The customer has the advantage of paying at a later stage when the goods are

actually delivered to them.

Collect on delivery (COD) is a financial transaction where

the payment of products and/or services received is done at the time of actual

delivery rather than paid-for in advance. The term is mainly applied to consumer

products purchased from a third party, where payment is made to or collected by

the deliverer from the recipientrather than the sender, in the way that a collect

call is also charged to the recipient instead of the caller. The delivery company in

turn remits the charge for the item itself to the company which shipped it, keeping

only the portion which it charged for the shipping service.This type of transaction

is better known as cash on delivery. However, as other forms of payment became

more common, the word "cash" was replaced with the word "collect" to

incorporate transactions with checks, credit cards or debit cards. Even with this,COD has become much less common now, and most companies will not ship this

way.

Originally, COD delivery was made when a company owns its own transportation

means. That way the delivery person can collect on site. However,

because USPS, UPS, FedEx, OnTrac, and other commercial shipping companies

are often cheaper, most companies use COD to mean that the bill for the product is

delivered with the product, and payment is expected immediately. Because of the

commonality of credit cards and instant payment methods through the Internet,COD purchasing has become obsolete in most cases. However, it remains a

standard method of payment for ordering products and services produced quickly

and near the point of delivery; this is particularly common with the ordering of

food, and it is the standard model for pizza delivery services, though some pizza

restaurants require a credit card number before they will send a delivery, due to


7/28

7

fraud and prank callers. But it helps to establish the credibility of online retailer as

the consumer pays only after taking delivery of ordered item.In some countries this

remains a popular option with internet-based retailers, since it is far easier to set up

for small businesses and does not require the purchaser to have a credit card.

OBJECTIVES

Reasons for launching COD approach.Reasons for the success of COD approach in some online retail shops and

also failure of the same in other .

Identify the problems faced by Indian market. Identify the gap between Indian market and market overseas.To find ways to re-engineer COD approach towards Indian market.

PURPOSE

Is COD adding to higher cost of order fulfillment? Is COD causing risk of fraud by collection agents?Has higher rejection rates affected COD? Is COD locking up working capital? Is COD the cause for the downfall of Indiaplaza.com and rise of

Flipkart.com


8/28

8

Main purpose-to identify the problems, all the possible solutions to re-engineer the Indian e-comm sector?

BACKGROUND READING

We started with this case study with keeping an article in mind from ECONOMIC

TIMES, dated 13th

march, 2012. Cash on delivery is amidst a big storm and has

handicapped the e-comm-sector. Cash on delivery has turned to be very lame

innovation to revive the e-comm sector, instead cash on delivery approach has

back-fired on the e-comm firms and made this payment method unsustainable in

the market due to variety of reasons. The reasons mentioned in ECONOMIC

TIMES were as follows.

Collection expenses Higher rejection rates Higher cost of order fulfillment Risk of fraud by collection agents Higher lead time Locks up working capital

80% use COD in india as compared to 15% in western markets.

Though some startups like @dial book might have been offering COD

locally before, the big shift happened in April 2010 when countrys leading

e-commerce player Flipkart introduced COD in April 2010 with a cash limit

of Rs 2500/-, followed eight months later by Infibeam (FYI: Indiaplaza

announced COD on 25th March 2010, a few days ahead of Flipkart ).

Going by the stats in India, as much as 60% customers of top 5 e-commerce sitesin India use the option of paying by cash on delivery (COD) and many of these

sites have credited COD for fueling their rapid growth. While COD for obvious

reasons makes a lot of sense for Indian customers and definitely opens a new

market (students etc) to e-commerce it isnt exactly what the doc prescribed or

should prescribe.
http://www.newswiretoday.com/news/69068/http://www.prlog.org/11164116-infibeamcom-launches-cash-on-delivery.htmlhttp://www.indiaplazablog.com/2010/03/cash-on-delivery-pay-at-your-door.htmlhttp://www.indiaplazablog.com/2010/03/cash-on-delivery-pay-at-your-door.htmlhttp://www.indiaplazablog.com/2010/03/cash-on-delivery-pay-at-your-door.htmlhttp://www.indiaplazablog.com/2010/03/cash-on-delivery-pay-at-your-door.htmlhttp://www.prlog.org/11164116-infibeamcom-launches-cash-on-delivery.htmlhttp://www.newswiretoday.com/news/69068/


9/28

9

Here are some of the things wrong with COD:

1. Cost: Nearly all courier companies charge extra for collecting cash. This cost isdivided in two parts

Fixed Cost: Rs 20-150/- ; Variable Cost: 1-3% of the COD Amount. (This ismostly for high price items like mobile phones, laptops etc). If the item is priced

low then the COD charges at times exceed ones margin in the product and if the

item is priced very high then the % COD charge turns out to be in hundreds or

even thousands

2. Delay in payment: Unlike credit card transactions, COD payment generallytakes 1-2 weeks or more to be transferred to your account. This bites your cash

flow especially as the COD amounts start becoming huge.

3. Delay in deliveries: On an average COD deliveries are delayed by 12-36 hourswhen compared to normal deliveries. The reasons for the same are mostly non-

availability of customer or cash and many a times both. Here unlike regulardeliveries the parcel cant be dropped to a neighbors place

4. Higher Returns/Cancellations: Since the customer hasnt paid in advance,they can always cancel/refuse to take the delivery and sight reasons like I found

this phone cheaper locally and have bought it from there or I have changed my

mind, will buy a new laptop later

5. Overheads: Collecting the cash, collating the receipts and maintaining recordsall is a nightmare

With increasingly every online business offering it despite its disadvantages(to

retailers) the situation might just go out of hand and turn into a death spiral (at leastfor some non/less funded businesses that rely heavily on their internal cash flows).

Small startups are the ones that should be really concerned about these issues

instead of blindly aping others and starting COD.


10/28

10

METHODOLOGY

Methodology involves the information gathering process and also what and

how the analysis is done of the gathered information. We collected our

information as follows:

Surveys (questionnaire). Google.

Companys website.

Article from the economic times dated 13 th march 2012.

Interview.

Experts opinion of Rohit Nadikurdu Sr. Business DevelopmentExecutive with FLIPKART.


11/28

11

QUESTIONNAIRE

Questionaire

Name :-

Age :-

1. How often do you shop online?a) Weeklyb) Monthlyc) Yearlyd) Rarely

2. Why do you prefer shopping online?a) Offersb) varietyc) convenienced) availability

3. Which websites you prefer while shopping online?a) Flipkartb) indiaplazac) indiatimesd) ebay

4. Which mode of payment you prefer while online shopping?a) Cash on deliveryb) credit card


12/28

12

5. If cash on delivery, why COD ?

6. If credit cards, why credit cards?

7. How COD has changed your online shopping experience?

8. Have you ever rejected a product that you ordered online?a) Yesb) No

9. If yes, why have you rejected?a) Ordered unintentionallyb) found a better deal elsewherec) didnt find the product worthwhiled) delivery wasnt on time.

10.As a customer do you think will COD sustain in future?a) Yesb) no


13/28

13

ANALYSIS

1.

How often do you shop online?

No.

How often do you shop

online?

No. of

People

a) weekly 3

b) monthly 14

c) yearly 6

d) rarely 7Total 30

After the analysis, we found that around 47% of people shop online on a monthly

basis which is very positive as far as Indian online retail sector is concerned.

3

146

7

online shopping

weekly

monthly

yearly

rarely


14/28

14

2.Why do you prefer shopping online?

No.

Why do you prefer

shopping online?

No. of

People

a) Offers 10

b) variety 8

c) convenience 6

d) availability 6

Total 30

After the analysis, we found that people prefer shopping online due to offers and

heavy discounts and also due to variety and this ratio came up to be 60%.

10

8

6

6

prefer shopping

offers

variety

convenience

availability


15/28

15

3.Which websites you prefer while shopping online?

After the analysis, we found that 53% of people use flipkart as online retail store

for their shopping and around 27% of people use indiatimes. But only 6% of

people use indiaplaza which suggests us that they are falling down very badly.

16

2

8

4

websites

flipkart

indiaplaza

indiatimes

ebay

No.

Which websites you

prefer while shopping

online?

No. of

People

a) Flipkart 16

b) Indiaplaza 2

c) Indiatimes 8

d) ebay 4

Total 30


16/28

16

4.Which mode of payment you prefer while online shopping?

After the analysis, we found that 63% of people use COD as a mode of payment

and only 37% of people use credit cards as other medium.

19

11

mode of payment

COD

credit cards

No.

Which mode ofpayment you prefer

while online shopping?

No. ofPeople

a) COD 19

b) Credit cards 11

Total 30


17/28

17

5. If cash on delivery, why COD ?

Cash on delivery is a safe mode of payment as compared to other mode of

payments. It allows them to check the items asked for and also if the goods are

damaged it can be returned immediately. Also after the goods come into theirhands they have to shell out money. And also credit cards which is the alternate

option to COD is very risky in terms of security.

6. If credit cards, why credit cards?

Credit cards gives them about span of 50 days to pay the amount. Also there are

points added into the credit cards which can be used at a later stage.

7. How COD has changed your online shopping experience?

COD has given people the confidence of shopping online. Initially people didnt

use to shop online as compared to what the scenario is now. COD has attracted

people towards the online retail stores and also changed the mindset of the people

who used to only buy goods at the physical stores.


18/28

18

8. Have you ever rejected a product that you ordered online?

After the analysis, we found that 77% of people have not rejected the product as

they had no problems with the entire shopping experience and 23% of them haverejected due to variety of problems.

7

23

rejection of a product

yes

no

No.

Have you ever rejected a

product that you ordered

online?

No. of

People

a) yes 7

b) no 23

Total 30


19/28

19

9. If yes, why have you rejected?

After the analysis, we found that people rejected the product because 57% of

people found a better deal elsewhere and about 43% of people told that delivery

wasnt on time.

0

4

0

3

why rejected

ordered unintentionally

found a better dealelsewhere

didnt find the product

worthwhile

delivery wasnt on time

No.

If yes, why have you

rejected?

No. of

People

a) Ordered unintentionally -

b) Found a better deal elsewhere 4

c) Didnt find the product

worthwhile

-

d) Delivery wasnt on time 3

Total 7


20/28

20

10. As a customer do you think will COD sustain in future?

After the analysis, we found that 60% of people told that COD will sustain in the

Indian market in the future and around 40% told it will sink.

18

12

sustainence of COD

yes

no

No.

As a customer do you think

will COD sustain in future?

No. of

People

a) yes 18

b) no 12

Total 30


21/28

21

Experts opinion

Interview with Rohit Nadikurdu Sr. Business Development Executive,

FLIPKART.

While in conversation we came to know that flipkart is doing very well, much

better than any other ecommerce sites. It was a revolution to find out a lot of facts

which gave us direction.

Flipkart is a company which totally relays on cash on delivery approach for their

transaction. He states that it is not as complicated as the economic times stated. In

fact he contradicts the economics times and says that cash on delivery approach is

something to stay in the market. He proved them wrong by sharing the figures with

us. He says the rejection rates for COD are not as stated in the paper at least for mycompany he exclaimed. Flipkart in the last 5 months has a rejection rate of 5%

which is very negligible, the economics stated that the COD system will block the

working capital where he claims that it is not the case he says the credit card

company to clear the payments will take 2 weeks while if it is cod its hardly one

day. Now this is just because of the distribution system they have claimed they

have an SOP (Standard operating procedure) which works like this once a payment

is received it is collected at the end of the day in the office and the second day the

amount is deposited in the bank. This helps them to maintain their operating capitalfor day-to-day expenses. He also claimed there is an online fee for every

transaction so this reduces the profit margin as things are already discounted. He

claims that Indian customer will take time to shop online using credit card but that

will happen some years down the line. He gave us figures said that 70% of the

shopping is cash on delivery and about 10% is credit card and the remaining 20%

is either through net banking or through debit cards.

Interview

Taken of 10 people 5 regular shoppers and 5 non regular shoppers

Regular shoppers


22/28

22

People who often shop online say its convenient shopping online. They shop for

books, clothes, accessories, electronics etc, mainly as there are a lot of options

available. Prices are competitive and you get discounts on most of the goods

claims one of the interviewee. People claim that if shopping online, credit cards are

one of the best option as there are many benefits. First one gets a credit of 50 days,that is the best part so u dont have to pay for it at one go, but can buy what one

wants and manage your finances in the same way. One of them said that now a

days banks have aggressive reward point system so why not use them, these point

system will help us to buy more items once we got enough so its a win -win

situation.

When asked if cash on delivery approach is something you prefer. They exclaimed

that, they initially started off with cash of delivery but now are very comfortable

with the credit card system. There are many reasons some of which we have to be

there when they get goods they will not get it according our convenience and as

they want the cash they will not even drop at the neighbors so this is a better option

as now.

Irregular shoppers

We also interviewed a few people who are not very regular in shopping online so

the views like we like to shop in person it is difficult to identify how it will look

that is in apparel. And if we shop online we have to shop through our credit cards

and we dont have credit cards some said we have credit cards but is it safe to use

it online. When asked about cash on delivery we got answers from a few like it is

good that is one option I like, but another contradicted it saying we have to be

home for it and they dont give us a time they will come. Some stated cash on

delivery is a very good option they were like I dont have a credit card now and

would not like using one so this is ideal for me its fast and very convenient.

Analysis

From this interview we came to know that if people who are used to shopping

online will always use a credit card, but if you are starting the cash on delivery

system is ideal as it gives u a level of security .


23/28

23

Implementation of strategies

SWOT FOR FLIPKART

Strengths:-

Distribution system very good and product delivery very fast. Has its own ware house like now other ecommerce site which makes the

delivery and product availability better.

Has a very good collection system for its cash on delivery. Very wellorganized and well defined.

Give extended warranty for products Has a 24hrs customer care system Has over 100,000 items online 30 days return if not happy with the item or if defective 11.5 million books collection the highest collection worldwide Has its blog where it reviews new products

Weakness:-

Overcome the smallest of weakness like overhead charge, refusal rate, Rejection rates Less of brand awareness Add on social network sites


24/28

24

Opportunities:-

Allied Services: Mobile Downloads (ringtone, wallpapers or picturesdownload)

Private labels ex: Amazon Kindle E-bay business model in electronicsno capital requirement, no inventory,

no investment

Software & Utility Applications Cloud Computing

Threats:-

High competition/Price competition from Electronic Ecommerce playersEbay, FutureBazzar, Infibeam, Indiatimes, Yehbhi.com, IndiaPlaza etc.

Amazons jungle.com Online security - a online security scandal could be disastrous to the

company.


25/28

25

SWOT FOR INDIAPLAZA

Strengts :-

Very old in the ecomm sector might have a customer base Introduced in 1999 One of the first in india

Weak ness:-

No 24 hrs help line Customer queries are replied via e-mails but complaints are not replied No 30 days return Companys goodwill is on a stake.

Opportunities:-

Allied Services: Mobile Downloads (ringtone, wallpapers or picturesdownload)

Private labels ex: Amazon Kindle E-bay business model in electronicsno capital requirement, no inventory,

no investment Software & Utility Applications

Threats :-

High competition/Price competition from Electronic Ecommerce playersEbay, FutureBazzar, Infibeam, Indiatimes, Yehbhi.com, IndiaPlaza etc.

Amazon may enter Indian Market Online security - a online security scandal could be disastrous to the

company.


26/28

26

RECOMMENDATIONS

For the ecommerce sector :-

The ecommerce sector is a growing sector and it cannot be neglected because all

major business are going online. The most important recommendation is that,

while launching a ecommerce website one should be sure that there is enough

research done. The penetration of the audience should very well defined as you

cannot target the whole audience and first make sure your distribution is good and

then all will fall inplace. Its the same approach that flipkart has undertaken and

due to which it is flourishing day by day.

For indiaplaza:-

India plaza is one of the oldest ecommerce website in India, but it is not known.

Thus they need to reposition themselves as a brand via aggressive marketing

techniques. The brand awareness of India plaza is very bad there are 1 out of every

100 who know about the site. So first India plaza must create an awareness so that

people are more aware about it, then even the 1 person who knows about it has abad preview about the site, so India plaza must revive itself as being a normal

ecommerce site to a good one for which it has to start creating experiences and

good ones. They can start of by resolving problems they have they should start

replace their email query solving method to helpline, like flipkart. They should

think about the customer and then about selling their products.


27/28

27

CONCLUSION

We come to a conclusion that the ecommerce sector will not be let down by cash

on delivery. Yes it will sustain main reason being that the Indian customer is still

very conservative. Customers are still not comfortable to share their information

online. They still think the banking information can be misused which could

happen and this will only change if customers will get used to shopping online. It

will only be possible if customers get the trust that yes this is safe.

The main reason why flipkart is doing well is that they have realized this and used

this, to capture audience in their adds where they state

JO DIKHTA HAI WOHI BIKTA HAI.

So the cash on delivery is the initial phase of the big start once this phase has

captured all the audience then is the time we can say that cash on delivery is now

getting redundant. Till then cash on delivery is to stay and educate the Indian

customer.

Myntra founder Mukesh Bansal claimed that the cost incurred by his firm is

lower than his profit margin and hence he is able to make it work "We do not

want to incentivize paying online because we believe that cash is a big part of

the Indian economy and the consumer mindset, and so we are working

towards making cash on delivery more efficient."


28/28

BIBLIOGRAPHY:

http://trak.in/tags/business/2012/03/13/cash-delivery-brakes-indian-e-commerce-

story/

http://www.flipkart.com/s/help/payments

http://www.flipkart.com

http://articles.economictimes.indiatimes.com/2012-03-

13/news/31159922_1_online-retailers-online-transactions-cash

http://mayank.name/2011/12/18/cod-an-unnecessary-evil/
http://trak.in/tags/business/2012/03/13/cash-delivery-brakes-indian-e-commerce-story/http://trak.in/tags/business/2012/03/13/cash-delivery-brakes-indian-e-commerce-story/http://trak.in/tags/business/2012/03/13/cash-delivery-brakes-indian-e-commerce-story/http://www.flipkart.com/s/help/paymentshttp://www.flipkart.com/s/help/paymentshttp://www.flipkart.com/http://www.flipkart.com/http://articles.economictimes.indiatimes.com/2012-03-13/news/31159922_1_online-retailers-online-transactions-cashhttp://articles.economictimes.indiatimes.com/2012-03-13/news/31159922_1_online-retailers-online-transactions-cashhttp://articles.economictimes.indiatimes.com/2012-03-13/news/31159922_1_online-retailers-online-transactions-cashhttp://mayank.name/2011/12/18/cod-an-unnecessary-evil/http://mayank.name/2011/12/18/cod-an-unnecessary-evil/http://mayank.name/2011/12/18/cod-an-unnecessary-evil/http://articles.economictimes.indiatimes.com/2012-03-13/news/31159922_1_online-retailers-online-transactions-cashhttp://articles.economictimes.indiatimes.com/2012-03-13/news/31159922_1_online-retailers-online-transactions-cashhttp://www.flipkart.com/http://www.flipkart.com/s/help/paymentshttp://trak.in/tags/business/2012/03/13/cash-delivery-brakes-indian-e-commerce-story/http://trak.in/tags/business/2012/03/13/cash-delivery-brakes-indian-e-commerce-story/

cod final akklm

Documents