Flipkart changes its product return policy; focus on reducing cash burn

Flipkart, the largest domestic e-commerce player, is tightening its product return policy to improve its profitability and optimize the biggest cash burning machine in the industry i.e. logistics nightmare with returns. The company will stop giving 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.

Although the step is expected to reduce the operational costs for both ecommerce and vendors, it is highly likely that a good chunk of customer will desert the firm since they won’t have the flexibility of returning the products. Domestic consumers are inclined towards buying stuff from physical stores. Thus, the online ecommerce firms doled no-question-asked return policy to shift the buying behavior. Therefore, the sudden change will alienate segment of customers.

Devangshu Dutta, CEO Third Eyesight, a retail consulting firm, said that “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. 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 in reprocessing or repackaging it for another sale. This is very like offline retail where the cost of return is on the customer”.