Just as you are done reading the online transition and chapter one of Vedika’s business journey, allow us to encapsulate another chapter of her business, an untold story. Vedika and Decor Wise’s journey in handing the Indian shopper’s most beloved payment method, Cash on Delivery.
The transition of Vedika’s traditionally offline store, Decor Wise, wasn’t as tricky as she thought. She found a secure payment gateway for her website, no-code payment solution to accept payments from social media, and was progressively executing a higher number of orders by the day.
The festive season was just around the corner and she was hoping to increase the efficiency of her online store while keeping profitability high.
Decor Wise’s popularity grew by leaps and bounds over time, and Vedika wanted to target Tier 2 and 3 cities in different states like Karnataka, Maharashtra, Rajasthan, and others next.
Life was good. Or, so she thought.
At the crossroads
The festive season was incoming- the best season of the year for e-commerce businesses, and she had to prepare well. While Vedika was ecstatic that plenty of customers were interested in what she was offering, there was a pattern that she was beginning to notice.
“Hey, great collections, Vedika. But do you guys offer CoD?”
This was a common ask from most visitors, especially during the festive season. She found herself at the crossroads, yet again. While online payments were a smooth and hassle-free payment option, the Indian shopper’s psyche hardly budged from their favourite payment mode- liquid cash.
It was only the initial stage of thought and she mulled over it, as she should- why should sellers offer Cash on Delivery? It’s extra work, not to mention the extra money!
A few days passed, and a few more.
Weighing the odds
As she sat in her picturesque office, she began weighing the pros and cons of offering cash on delivery as a payment method. The festive season would set in soon and she had to make a decision.
She pictured herself in the shoes of a website visitor who would ideally be impressed with her product offerings. She also considered that her business was still in the growth stage, waiting to fully sink its claws in the non-metropolitan cities. These were the places that actively preferred cash as a payment option.
She realized that offering cash on delivery was the way to start her efforts for the festive season.
And, so she did. Just a month short of the festive season, Vedika began offering cash on delivery on Decor Wise. Unsurprisingly, new customers began thronging to her website and the old customers found a reason to come back. It all looked rosy until she began looking at her return rates.
While she was getting a ~30% bump in sales, she realized that at least one in three of these CoD orders were returned to the warehouse. This meant that her RTO losses went for a toss- taking up at least 30% of her operation costs.
Apprehensive about these return rates, Vedika began jotting down a few ways in which she was losing money in shipping these orders:
- Forward & reverse logistics cost that she spent in shipping these items back and forth
- Blocked inventory because of the uncertainty of these orders (Items stuck in transit)
- Physical quality check and re-packaging of returned items
- Increased probability of damage to fragile items, and hence more money spent in shipping them
- Operations and cash handling cost in processing these orders
She also found a few patterns that were common to these cancellations and returns:
- Customer error (Intent is there but incomplete address, phone number, etc)
- Orders from transitory addresses (hotels, friend’s place, etc)
- Price-sensitive intent (Reorder because of the drop in price)
- Impulse buy but without paying (there is no downside to refusing delivery)
- Intent to commit fraud (Habitual fraudsters)
- Placing an order without any genuine intent
Worth a try, isn’t it?
Vedika began experimenting with temporary solutions under her friend’s advice. Some of the solutions included blacklisting customers, halting cash on delivery in certain areas and a few more.
She also found that these ‘temporary’ solutions did more harm than good. Methods like blacklisting meant that many genuine orders are lost in the process, not to mention customer dissatisfaction when they hit a dead-end on a static solution.
Solving the RTO problem by manually scanning every order didn’t work either due to the sheer scale of the problem and the evolving nature of fraud techniques.
As she stared back at her methods, she couldn’t help but worry about how she would handle this situation.
Was there a way out? Or, was this just the cost of doing business?
Taking the leap
Not long after her fervent search queries on Google, temporary ways to mitigate returns, and connecting with other e-commerce businessowners to dig deeper into this problem, she found what she was looking for– India’s first solution for e-commerce businesses to slash their RTO rates, Razorpay Thirdwatch.
“Hah”, she thought to herself. “Looks convincing, but is it really?”
While she deliberated over the thought and visited the Razorpay Thirdwatch website, she saw the four golden words that would fuel her new journey: one-month free trial.
“Thank God! Now I can check if this actually adds value to my business.”
Though the solution looked unfamiliar, it only took 10 minutes for her to get started, and that was a comforting thought. Thus began her journey towards profitability.
Vedika was able to handle CoD orders easier than ever, and how! Within less than a month of usage, Vedika was able to unlock the following advantages and drive her festive sales through the roof:
- Keeping her RTO losses at bay by profiling risky orders and flagging them as ‘red’ before shipping them
- Converting these risky CoD orders to prepaid orders by sending Payment Links via PrePay CoD
- Tracking and notification about fraudulent buyers who were placing disingenuous orders
- Monitoring fraudulent orders, RTO and other order analytics on one powerful dashboard
- Helping her identify non-deliverable addresses that were risky to be shipped or prone to cancellation using Artificial Intelligence
- Automating actions on risky orders so she doesn’t need to waste her precious time and resources in manually taking actions
- Offering Cash on Delivery safely to all customers without the risk of cancellation and RTO
- Last but not least, customizing Thirdwatch and setting rules using Machine Learning to suit her business needs
Decor Wise: After Thirdwatch
Fast forward to a month later, Decor Wise has expanded to 5 more cities and is lauded for its handling of the festive demand.
She remembered herself at the crossroads, contemplating whether to offer Cash on Delivery at all to her customers. In retrospect, it all seemed mildly silly now, considering that CoD is still preferred by 70% of Indian shoppers.
Cash on Delivery was an essential option to boost Vedika’s small business, increase her audience size and develop trust between her company and the shoppers. While it did come with its fair share of disadvantages, she did have to make the crucial decision of continuing to offer CoD, albeit without the consequences.
Thanks to Razorpay Thirdwatch, Decor Wise now has 30% of its customer base from Tier 2 and 3 cities in India and sales have zoomed with the festive season. Vedika was also able to successfully reduce RTO losses by over 70% without employing extra resources, wasting precious time or using complicated software to do so.
Vedika is once again, well on her way to #UnlockGrowth for her e-commerce business this festive season with Razorpay Thirdwatch!
But, the story’s still not over.
Will she continue to use Razorpay Thirdwatch even after the festive season?
Find out more about her and Arjun’s journey in scaling their business. Stay tuned to this space for the next chapter about Vedika’s next adventure on improving business efficiency and managing working capital with ease.