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February - 2017 - issue > CXO Insights

Impact of Demonetization on Indian E-commerce Sector

Sushant Singh, Managing - Digital/Product, thesqua.re
Friday, March 3, 2017
Sushant Singh, Managing - Digital/Product, thesqua.re
On evening of 8th November 2016, after leaving from office I did a transaction of rupees 15,000 from ATM to give to my wife for her household works (all 1000 rupees notes). As I reached home all that money became just useless. This was the effect of demonetization on an individual. Even if I try to understand its effect for an e-commerce company it will be really unfair on my part.

An uncalled raid on black money led by Prime Minister Narendra Modi was duly accepted by most of the Indians. However, as cash gets rationed businesses and industry that depend on cash have been directly impacted. A surprise in this list was fast growing e-commerce industry in India and the main reason was over dependence on Cash on Delivery as payment method.

Every e-commerce company either you talk about Amazon or Flipkart or Snapdeal, each of these companies faced a great loss.

Why the Fuss on demonetization?

Indian e-commerce relied heavily on cash on delivery. According to a report by Google and AT Kearney on India’s online retail industry, 57percent of the ecommerce transactions were made via Cash on Delivery (COD). Apart from logistics and ensuring delivery across almost all pin codes in India, the biggest innovation has been COD. COD was truly innovative in multiple ways as:


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