Demonetization – a term that now seems to define this year for most of us. 2016 will be remembered as the year of Demonetization. It can safely be said that every single person in the country was affected directly or indirectly by this sudden move by the Govt. In spite of the apparent inconvenience, this move has generally been hailed by most people as an important effort in the fight against corruption, black money and related ills.
While several sectors have been impacted by this move at least in the short term, a few sectors have felt the pinch harder. These include B2C E-commerce, real estate, retail sectors which were mostly dependent on cash transactions bore the brunt.
COD or cash on delivery is a sort of necessary evil in the world of e-commerce. Why do we say that? Well because the dependence on COD has been histrorically high due to various reasons like convenience, familiarity, lack of trust in online payments, low penetration of Credit/Debit Card users etc. For the Seller, compared with digital payment modes, COD has had its own disadvantages, such as longer Cash-to-Cash cycle, higher risk, fear of theft or fraud and so forth. So, if were to examine the entire gamut of demonetization implications, it can be said that the long-term prospects look good. With online payments becoming the norm, the entire ecommerce industry will reap the benefits of a cashless economy.
While E-commerce is still coping with the after-effects of demonetization because 70-90% of the transactions pre-demonitization were on COD, e-commerce players have also been very proactive in offering options of different payment methods. For retailers on online platforms like Wydr, the spectrum of payment methods now includes NEFT/RTGS, Net Banking or Credit/Debit Cards, Online Credit etc with more options on the way. Sellers will also benefit from this, as the Buyer base grows with payment options available.
One early trend on the demand side is that as retailers are unable to pay cash to their offline wholesale suppliers, they are evincing interest in buying from online wholesale market places like Wydr. The bouquet of other services provided by Wydr will also entice the buyer to remain on the app and to become a repeat buyer.
While demonetization has caused a lot of disruption in people’s lives, the move is being considered very positive for the medium & long term growth of the economy. In conjunction with GST to be rolled out in 2017, it seems that a strong foundation for economic growth is being laid. The impact of demonetization would be lower inflation, lower interest rates all of which which spell great news for Buyers, while GST is going to result in better inventory management, easy compliance to tax norms etc.
In conclusion we can say that in the short term things are a little uncertain but it is expected that e-commerce will bounce back to even higher than earlier levels over the next few months and that digital payments shall be much preferred for online whole-selling.