Flipkart tightens return policy, will now be choosy with refunds

NEW DELHI | KOLKATA: Flipkart has tightened return policy for several popular items sold on its platform, a move that will help the company and vendors on board cut operational costs, but may also alienate some of its customers.

The country’s largest ecommerce marketplace no longer offers refunds on popular products such as mobile accessories, personal care appliances, computer and camera accessories, office equipment, and game and smart wearables, apart from big-ticket items such as mobile phones, large appliances and furniture. “Refunds are not offered. All sales are final,” says the return policy on its website for these categories.

While vendors on its platform welcomed the move, some experts said the initiative could impact traffic considering that liberal refunds policy was one of the biggest reasons why ecommerce became a rage in India, along with deep discounts offered by online players.

“Flipkart’s new refund policy… can be best described as penny wise and pound foolish. This may temporarily reduce the burn rate, but will alienate customers in the long term,” said an ecommerce industry executive who tracks Flipkart.




A Flipkart spokesperson, however, said that the company follows a customer-friendly refund policy. “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 the 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,” the person said.

The return policy on the ecommerce firm’s website, though, says if there is any issue with a product it will first help troubleshoot.

“If a defect is determined within the 10-day period following delivery, a replacement of the same model will be provided at no additional cost. Only in cases where the replacement product is not in stock or has been permanently discontinued, a refund for the entire product or part(s) of the product will be provided by the seller,” it says.

A larger window of 30 days is open for exchange of products in select categories such as clothing, footwear, eyewear and fashion accessories.

Ecommerce firms offered full refund and no-questions-asked return policy to tempt Indian buyers into shopping online till early last year.

However, such policies led to high logistics costs for these firms and sellers on their platform.

Flipkart’s rival Amazon India continues to allow refund in several categories including mobile accessories, large appliances, video games, books, software, furniture, sportsfitness-and-outdoor products, clothing, fashion accessories and handbags, according to its return policy on its website.

A tighter return policy will help Flipkart plug one of the biggest money guzzling taps after discounts, experts said.

“This is all about reducing cost of operations and making every sale a final. There is a huge cost attached to return of any product and also in reprocessing or repackaging it for another sale. This is very similar to offline retail where the cost of return is on the customer,” said Devangshu Dutta, chief executive at Third Eyesight, aconsulting firm focused on retail.

Dhruv Goyal, cofounder at online craft brand ExclusiveLane that sells on Flipkart, said, “Marketplaces like Flipkart are working towards reducing the non-genuine customer returns as it has become a major issue these days for brands and sellers as they incur return charges and penalties.

Some changes have already been done and the return policy is likely to be tightened further.”

DROP IN NUMBER OF REQUESTS
An electronics seller on Flipkart said the return policy also makes it clear that a return will be accepted only after detailed validation of the product to ensure that it’s not used and the complete packaging and product literature is included.

“Freight cost is becoming significant and Flipkart wants to improve margins by tightening return period,” the person said.

A person who sells mobile accessories on the platform said he has already noticed a drop in the number of return requests in the last two weeks after the policy changed.

Aspokesperson of All India Online Vendors’ Association (AIOVA), a group of more than 1,500 sellers on various ecommerce platforms, said the move will reduce the cost of selling on Flipkart and cut losses of sellers. “Other marketplaces should follow suit,” the person said.

In June last year, Flipkart had discontinued its ‘no-questions-asked’ return policy, and narrowed the window when a customer can send back a product bought on its website to 10 days from the previous 30 on most top-selling products. The company is aiming to achieve operational profits after it raised Rs 9,000 crore from Tencent, eBay and Microsoft.