Flipkart introduces ‘Part Payment’ to reduce product returns, but cash may still be king

Flipkart said it has launched the new payment feature for a few categories to begin with.

"Quite often with categories that are laden with heavy transportation, cancellation costs cause cash flow crunch for sellers operating in those categories.

Additionally, consumers too are increasingly willing to solidify and commit to their purchasing decisions given the assurance of quality of products. Keeping these insights in focus, we recently rolled out the part-payment structure that is currently enabled for categories such as furniture, electronics and mobiles.

We are seeing good traction in the uptake of the part-payment model in the pin-codes it has been introduced and will evaluate the expansion of the construct to other categories based on the adoption," Flipkart said in a statement to CNBC TV 18.

So far, customers could either opt for a prepaid payment of the full amount of the order value, or opt for post-paid cash on delivery. The third option is payment in instalments.

However, Flipkart did not respond to specific queries on whether there would be any incentives for customers to opt for the part payment over cash on delivery. Flipkart also did not comment on whether the feature would pull several customers who were making full prepaid payments to make partial prepaid payments.

Analysts also said that it would be a challenge to wean customers away from cash on delivery (COD) method.

“Its a good start towards prepaid orders but it has to be backed up with cost benefits to customers against COD which they can clearly differentiate especially in metro areas. COD still remains the preferred mode of payment for new buyers,  so it will remain for some time," said Satish Meena, senior forecast analyst at Forrester Research.

Flipkart was among the early players to allow 'cash on delivery, especially to encourage first time online-shoppers.

Despite companies pushing for digital payments over the last few years, cash on delivery still makes up the majority of online orders, seller associations said.

"At Flipkart, we continue to innovate and evolve to solve for Indian consumer’s needs. The launch of COD construct by us was one such pioneering move in our journey to bring our customers the most affordable and beneficial purchasing experience on our platform. We are equally trying to ensure that our seller partners are able to benefit from access to consumers across India, at the same time maintain profitable and robust business pipeline," Flipkart said.