One of the major operational costs for e-commerce portals is logistics. In order to lower down its operations burn rate, Flipkart has revised or rather tighten its return and exchange policy for most items on the platform.
While the move will surely make the vendors happy who are on-board with the company as it cuts operational costs, but on the other hand, this move may also alienate some of its customers.
Flipkart, which is one of the largest e-commerce portal in India, is now no longer offering refunds on several popular product categories, including mobile phones, large appliances, furniture, mobile accessories, personal care appliances, computer and camera accessories, office equipment, game and smart wearables.
The company’s return policy for these categories mentions that “Refunds are not offered. All sales are final”. This is a bold and surprising move as the company was thriving because of its return policy and massive discounts. Customers were inclined towards online portal compared to offline stores because it was easy to return purchased products.
While most consulting firms are criticising this move, claimed that the policy may make its vendors happy and temporarily reduce burn rate, it is not good for a long run. However, a Flipkart spokesperson claimed that the company follows a customer-friendly refunds policy, saying:
Our customers can request for refunds through the self-service option on over 1,150 product categories of the 1,800 available, which constitutes about two-thirds of all categories on Flipkart. In fact, Flipkart processes about 25,000 refunds on a daily basis, 60% of which are instant, where customers don’t have to wait to get their money back.
For several product categories, the return policy says that the company will organise a troubleshoot in case a products is defective, and “…if it remains unsolved then only it can be replaced or exchanged within a duration of 10 days”.
All India Online Vendors’ Association (AIOVA), a group of more than 1,500 sellers on various ecommerce platforms, have welcomed this move from Flipkart. They said that it will reduce the cost of selling on Flipkart and cut losses of sellers. They are also urging other marketplaces to follow the suit.
Till 2016, e-commercer firms in India were offering full refunds with no-questions-asked return policy and that too with a window of 30 days. That is no longer the case. In June 2016, Flipkart discontinued its no-questions-asked return policy and also narrowed down the window to return goods to just 10 days from previous 30 days window.
The claim for such change in policy is that a tighter return policy will help Flipkart plug one of the biggest money-guzzling taps after discounts. Return policy, which made more sense from a customer point-of-view, incurs higher logistical cost to these firms and criticism from their sellers for spoiling customers.