Walmart-owned e-commerce company Flipkart has rolled out a new payment method that will allow customers to partially pay for a product at the time of ordering and the rest during delivery, in a bid to help reduce returns and cancellations.
Customer cancellations and returns have been major issues with the cash on delivery (COD) model, the preferred payment method for e-commerce transactions in India.
“When a customer pays an amount at the time of purchase, the chances of customer cancellations and returns gets automatically diminished,” Flipkart said in an email to sellers on the rollout of Part Payment, or Partial Payment, as it calls the payment method.
The commissions paid to sellers will, however, remain the same for part payments, it said.
“This move can lead to 2-3% reduction in prices for consumers as, currently, losses of such undelivered orders were factored as a cost,” a spokesperson from AIOVA said.
Flipkart introduced the COD payment method in 2010 to bring e-commerce to the masses as online transactions were still unpopular in India.
The move was considered pivotal for online commerce in the country and set the benchmark for payments in India’s burgeoning online ecosystem.
Since then however, the costs associated with COD have pushed ecommerce players to use various other payment methods to wean Indian consumers away from cash.