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Wallets, Big Ecomms Rejoice But Startups Dealing By COD Slow Down

It’s always the small guys that will suffer. Regardless of PM Modi and many praising the move, his surprise lock down on banks, ATMs and the demonetization of the 500 and 1000 rupees notes will affect the companies who are just getting on their feet.

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Photo Credit : http://ste.india.com/;zee news,

It’ll be the smaller, nascent startups that will be affected. Not so much the Flipkarts, the Snapdeals and the Bigbaskets. It’s not even the likes of grocery delivery startups that will be affected. But those that primarily rely only on Cash On Delivery (COD) and not plastic money transactions will be impacted the most by the move.

With fintech taking off in India and the government’s earnest push to make it a (paper) cashless society, we may not need any paper notes at all one day. In fact it’s better for unit economics and much cheaper to transact through non-cash methods for these startups. But because it is uncertain how exactly fiduciary strikes like this will help remove black money from the system and hitherto not even proven to be effective, it would only be fair to say, “Good one, sir, but next time, let us know first”.

Here’s what the bigger ecomm players said:

A Flipkart spokeperson said, "We welcome this bold and historic initiative by the Government of India. This will enable India to move faster towards digital payments and will be a game changer for Flipkart and for the ecommerce industry.

We are no longer accepting Cash-on-Delivery (CoD) payments in Rs. 500 and Rs. 1000 currency notes. In order to enable customers to conserve smaller denomination notes for daily essential use, we are restricting COD on orders below Rs. 1000.”

Kunal Bahl, cofounder and CEO of Snapdeal, which also runs ewallet FreeCharge said, “We welcome the government's bold and courageous move to weed out black money, which will have significant long term benefits for the economy.

Both Snapdeal and FreeCharge are committed to supporting all such initiatives.” he further said, while a Snapdeal spokesperson said, “All Snapdeal users who have already placed Cash on Delivery orders can pay for their deliveries using any currency notes except the Rs. 500 and Rs. 1000 notes discontinued by RBI. Users also have the option to defer the delivery by a few days till new currency notes become easily available.

As an interim measure, we have restricted new COD orders to Rs. 2000 to make it convenient for the buyers and the delivery personnel. The COD limits will be increased gradually over the next few days.”

A spokesperson for LogiNext, a logistics company funded by Paytm, the ewallet which reported 435 per cent increase in traffic after the announcement said,
“This is one of the most awaited initiatives expected of the government to curb the black money and cash transactions in the country. Narrowing down to the logistics industry, it is high time that small and large vendors skip the dependency on cash transactions which has always hampered the proficiency of operations.

We at LogiNext, being a SaaS enterprise will not be affected by this demonetization stint in anyway. All our transactions are either online or through cheques. However, a major chunk of the industry we service are unorganized players, and this move will ensure their digital transformation journey take a kick-start. It will predominantly complement our product and services.”

Vipul Parekh, cofounder, CFO and CMO of Bigbasket, arguably the most successful grocery delivery startup in India reported aas targeting one billion dollars in revenue by next year said,

“It is a welcome step and will help increase transparency, efficiency and decrease losses. It does not impact us in terms of demand and may even stimulate demand in the short term as people move from buying from stores to online.”

Albinder Dhindsa, founder of Grofers, another grocery delivery company backed by Tiger Global and giving stiff competition to Bigbasket said,

“Demonetization of notes does not affect our current users much as less than 20 per cent of our orders are via Cash on Delivery. We are encouraging more people to pay online and get their daily essentials delivered home. This includes our users and also those who do not use our services.

We understand grocery shopping from Kirana shops may be a concern for many as they wouldn't be able to accept cash or card. We do not want people to feel helpless in this scenario. They can switch to Grofers, pay online and get everything conveniently delivered home from the same Kirana stores in their neighbourhood that might be averse to accepting de-monetized notes.”

Raj Pandey, CEO of ZopNow another online grocer that has more than 10 million dollars in funding was the exception saying COD will actually increase for them.

“We build business for the long-term and are not worried about short-term ramifications. Grocery is high repeat use case category of daily essentials. While we do not expect consumers to postpone purchase of daily essentials, we do expect higher than normal returns in short term on COD orders. In the long-term the business will continue to move towards more online payments as it has globally.”

The small startups all hail the move but report they will be affected.

Nishima Aggarwal, cofounder and chief performance officer at CurrencyKart said, "CurrencyKart gives a big thumbs of to our honourable prime minister Narendra Modi, for taking such a bold and big step in the history of Indian Economy. Although the news came in as much of a surprise, at CurrencyKart we have always been pitching total blindfold support to the government to extract black money from the economy.

This sudden order has stirred the ecommerce world totally and its impact on our business is huge since we are dealing into currency totally including the COD orders. We are waiting for further RBI guidelines, which will help us draft a new plan of action from now onwards and guide us though this sudden quake of orders.”

Rohit Khetrapal, cofounder of FindMyStay, a reverse bidding hotel booking platform said, " As the country has gone cashless for the next two days with Prime Minister Narendra Modi's announcement to remove 500 and 1000 rupee notes, it will shift the offline bookings in travel domain to online bookings but leisure travel will be slow over few days because of cash not available in the market that people need for food, transport etc.”

Ritika Nangia, founder of Funcart.in, an online party supplies startup says, "We expect the business to slow down for a few weeks since a lot of orders go as Cash On Delivery (COD), and we are also not accepting COD orders for the next couple of days.

For the long term, CODs will decline faster and this will have a positive impact, since our unit economics comes with prepaid orders.

I feel this is a really good move by Modi govt. and we are completely supportive of it, Cashless Economy is the future of India. "



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