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How Gati dealt with plummeting Cash-on-Delivery ecommerce sales during demonetization

"Yes, of course November we saw a pretty large dip in the volumes," Dhruv Agarwal, Chief Strategy Officer of Gati Kintetsu during the company's earnings conference call post announcing its results for the September to December quarter. This has typically been the strongest quarter for Gati, given increased ecommerce purchases during the festive season, but this year was different, because the Indian government unexpectedly removed the legal-tender status of Rs 500 and Rs 1000 notes, effectively rendering 83% of the cash in circulation in India worthless. This move is colloquially referred to as demonetization. Cash on delivery is a key component of deliveries in India: it accounts for as much as 60% of ecommerce purchases in the country, and has led to the growth of ecommerce in a market where debit card usage was abysmally low, and credit cards have limited usage. "Actually the volumes did not dip...they did dip to a large extent, but the real metric," Agarwal continued, "was that the returns which is typically 10%-11% shot up to almost 20% during the month of November primarily because packages were already ordered, reached the last mile, but people did not have cash to pay and hence those packages were returned." Gati says it has the capacity to do about 65,000 ecommerce deliveries a day, at does around "close to 57000 deliveries a day on average." During November and December, "almost 70%to 75% of the packages were value below Rs 5000." Cash on delivery orders suffered, margins squeezed On…

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Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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