The Case for

This is a Whitepaper outlining a risk engine that can help e-commerce companies in India, new and old, reduce the cost of doing business while continuing to grow at the rapid pace that they are growing today. Create a platform to exchange information to help each and in the process push the industry ahead. Co-opetition sometimes is useful!

If you ask any COO or Ops person at an e-comm company as to what they have to look out for while doing business, they will immediately suggest Cash on Delivery as the biggest pain point. Apart from the likes of credit card fraud, having multiple accounts to process more CoD transactions and multiple returns, and false claims to be the other top contenders.

The case for the Customer Order Data xChange or CODx is clear

Think of a CIBIL for e-comm customers, a platform that would allow e-commerce businesses share data on abusive users who have a bad history of placing COD orders, to begin with, to potentially weed them out, and allow or incentivise legitimate ones to make the first transaction easily without much thought.

What would this solve?

Today a whole group of users transact on many different websites try to defraud the website, increase costs for e-comm businesses, clog up the operations of logistics companies because all businesses work in silos. There is no disincentive for these users to transact with caution or behave ethically.

The cost the business bears for an undelivered order is 2x the cost of a regular delivery and we’re not counting a lost sale! That means the cost of an undelivered order is a negative contributor to the Total Revenue.

CODx would then become the deterrent from misuse and offer the “convenience” only to legitimate users

Of course the CODx would only be a scoring system that gets returned when the API gets pinged. The action would be the prerogative of the e-comm company. Before accepting the order, the business could choose to service a user with a low score.

A lot could happen from here :

a. E-commerce companies can grey out the CoD option for a customer with a high risk profile and deter them from transacting instead of inconveniencing the whole universe of users, including first time shoppers

b. Offer users and applications the power to have more complete spending patterns of a shopper, potentially helping businesses to provide more targetted offers

c. Allows banks & credit card companies a source to generate leads for banking products

d. Reduces returns and business costs for small businesses where these costs really matter

e. Offers the opportunity for a new revenue stream for businesses that contribute more than they take

What would be required to make this a success is?

a. A not for profit concern that builds out a central system that becomes the neutral party offering such a service that all stakeholders in the ecosystem can get behind

b. E-commerce companies would need to step up to embrace the free sharing of this data based on a unique identifier: Mobile Number is today the most universal

c. Logistics companies must be set up to support this process by sharing logable delivery information via an API integrated into their mobile apps, maybe start with daily updates using a CSV upload

d. Regular collective decisions by the stakeholders to discuss & identify the factors that contribute to proper policing & implementation of the guidelines of CODx

The path to creating a CODx system that can police itself and offer support to all businesses today is a herculean task for sure but baby steps towards building of this system would be in the right direction that could make Indian e-commerce a more mature industry that can also come together to support progress.

This is an opinion piece from my understanding of the e-comm ecosystem and would welcome thoughts, comments & suggestions on how this could be improved. If someone wants to discuss in detail, I’m reachable on @vvarunkumar via Twitter

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