With the entry of JioMart, India’s e-commerce space is all set to witness a lot of action during the coming months. The sector is in the limelight due to (CCI) Competition Commission of India’s investigation about the alleged anti-competitive practices. Plus, the central government is ready to introduce the national e-commerce policy draft with a particular focus on the e-commerce transaction data storage.
The authorities want tech giants to host their servers in India. It is a business opportunity for a few firms, but a headache for online sellers. But, complexities and challenges are nothing new for this sector. Here’re five challenges that e-commerce companies in India are facing since the last few months.
High Cancellation Of Cash On Delivery Orders
Changing the spending related habits of people in countries like India is a farfetched dream. Even in spite of demonetization, and govt initiatives for promoting digital payments, consumers prefer using cash for transactions whenever possible.
Not India, but cash on delivery method remains a hot favourite for customers in the US and the UK as well. Studies conducted in various nations around the world have pointed out that some online shoppers buy only from online portals that offer free-delivery and cash-on-delivery (COD) options.
Unfortunately, the COD payment method hurts online sellers as a considerable percentage of consumers prefer to cancel their order when the product arrives at their door-step. In such cases, besides losing on the sales revenue, the sellers also end up paying the cost of shipping. Such consumers cause massive losses to both small and large sellers. Some sellers have deployed Artificial Intelligence based solutions that analyze the customer’s past transactions and order cancellation history before offering the COD option on the screen.
Put, the COD method results in restricted cash flow, more cost, high returns, and an increase in the number of fraud/theft cases involving cash.
Cannot Tie-up With Sellers Offer Exclusive Deals
As per government policy, online market places cannot join hands with manufacturers and sellers for offering exclusive deals on the platform. Since the introduction of this rule in 2019, online sellers find it difficult to offer cashback, unique services, or even selling products manufactured by firms that are wholly or partially owned by the e-commerce company. There’s a list of do’s and don’ts when it comes to inventory warehousing or logistics aspects as well. Put, suppliers or brands cannot deal with one market place.
On its part, the government claims its policy helps in ensuring the e-commerce portals do not remain in a position to influence prices using their market dominance.
Tax refund complexities arising out of cancellations
The return or cancellation percentage in India is said to be around 15 to 18 percent. About two-thirds of the buyers in India prefer the COD payment method. Thus, the cash reconciliation procedure happens in 7 to 15 days after processing the order. Cancellation of cash on delivery orders results in a significant negative impact on the company’s accounting and cash reconciliation cycles. The firm also needs to seek a tax refund from the government for TCS (tax collected at source) that it pays in advance on such orders.
Using spreadsheets for inventory management
Even in this era of app penetration and cloud-computing, several small and mid-sized entrepreneurs in India rely on spreadsheets when it comes to inventory management. Business owners born before the 1970s prefer to rely on the old-school methods and carry forward the same due to the lack of knowledge in computers and of course, to avoid spending a fortune on new systems.
Using a robust inventory management system is crucial for dealers and manufacturers who sell on multiple platforms. Underselling or overselling of goods can be avoided by syncing inventory across various channels. The feature is available in most of the ERP systems.
Small firms that do not wish to invest in an ERP can consider opting for an accounting system first. Software solutions like Tally ERP 9 Accounting can prove to be of great help for such small and midsized firms. Tally Invoice Customization feature also enables firms to ensure their invoices are in the format prescribed in GST regulations.
Constant changes in the GST and tax procedures puts extra accounting burden
Ecommerce firms are liable to file monthly and annual GST returns after collecting TCS from their suppliers of goods and services. The data submitted by the online seller is sent to the suppliers for cross-checking.
The government is all set to allow online sellers to upload e-invoices on behalf of their vendors, suppliers on the GST network soon.
If you need a software firm that offers something as simple as Tally Invoice Printing Customization, to customized ERP solutions, you should discuss your project with Smart Sight Innovations.