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Cash on delivery

Byravee Iyer  |  Mumbai 

What happens when you are selling more than one book per minute, making you the largest online bookstore in the country? If you are Flipkart.com, you expand by offering new services like cash-on-delivery.

Launched in October 2007, the online book seller so far has clocked sales of 500,000. Chief Executive Officer Sachin Bansal quit his high-paying job at Amazon and along with fellow IITian, Binny Bansal, decided to launch a business of his own. At the time the two were keen on starting a comparative price site, but consequent research showed that the venture lacked scope. So after much deliberation the two scrapped the idea and instead decided to start an e-commerce website. Today, they have 250 people working for them across three cities.

So far, the company has been targeting audiences with credit cards and debit cards. Aware that to increase sales and profitability, they would have to reach out, the two of them decided to start the cash-on-delivery service. With this move, the company hopes students and other individuals who don’t have cards will use its portal to buy books.

Says Sachin Bansal: “Retail spending leans heavily towards cash, and in India the online payment systems are not very mature. This deters people who are more comfortable with paying cash on delivery.”

Indeed, Flipkart.com has hit jackpot. In the last two months alone, the cash-on-delivery model has contributed as much as 30 per cent of its overall sales. Further, the company is hopeful that buyers from new geographies, particularly those in smaller cities and towns, will now add to sales. Industry insiders are optimistic about the cash-on-delivery model and point out that credit card and net banking penetration is very low in the country.

On the front, the company has not changed its approach. When Flipkart.com launched, the founders ensured that whoever buys from them should come back again. This meant that they relied heavily on word-of-mouth . “Even today that’s our plan,” adds the CEO. What helped its cause was on-time delivery, which ensured a big fan base as well as repeat orders.

Flipkart.com has over 4 million titles listed; ranging across categories such as fiction, non-fiction, literature, educational, professional and technical, religion and philosophy, entertainment and so on. The business runs on three major legs: The website where it gets orders, answers queries and so on; then comes the supplier side where it ties up with a host of book distributors; and finally the logistics part of the business comes into play where Flipkart.com proactively works with courier services. Depending on the category, delivery can take anywhere from three days up to three weeks.

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First Published: Mon, July 19 2010. 00:54 IST
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