Consumer Issues
7 Tips to take advantage of the e-commerce battle

Ignore the Flipkart bloomer. Get smart and save money by using the internet marketplace. Tips from personal experience

 

The internet is emerging as THE marketplace of the future. Recently, we saw the traditional brick and mortar shopkeepers moaning about the big ‘sale’ on Flipkart and Snapdeal. As I write this, Amazon's mega Diwali sale is yet to reveal its full impact. Yes, many buyers had a poor experience on buying online, but these will only make the services better and not drive people away from the internet.


In terms of sheer convenience and variety of choice, there is nothing like internet. One of the biggest changes most of us have experienced is the way we buy railway tickets. Complaints about ‘tatkal’ notwithstanding, the Indian Railway Catering and Tourism Corp (IRCTC) have done a phenomenal job. Recollect what we used to do before the internet and the benefits are hard to deny. The only fly in the ointment, as far as I am concerned, is the unwarranted and unreasonable ‘surcharge’ that we are forced to cough up for booking rail tickets online. Logically, the Railways save on manpower and physical infrastructure costs when people buy online and they should have been offering a discount compared to the prices at ticket windows. Their monopoly has seemingly made them arrogant and extortive.


The internet is getting rid of intermediation in a rapid manner. It also helps producers reach corners of the world they would never otherwise have reached (Read the classic book on this titled “The Long Tail” by Chris Anderson).

 

Ten years from now, first time air travellers would not even know of something called a ‘travel agent’. In stock markets like ours, jobbers have vanished. Today, the brick and mortar stores have less and less reason to exist. Alibaba, the Chinese online mega-seller is clocking close to a billion dollars in online sales EVERY DAY! Assuming that our economy is around one ninth of China, a company like Alibaba can easily do sales of around $150 million (over Rs900 crore) each day in India.


Given India’s diversity and income disparity, I do not expect the sudden demise of the physical shop. However, as people move up the prosperity curve, there will be a shift to the internet, but I see both co-existing in the long run.

 

A news report said that Amazon is setting up a brick and mortar shop in the US. I fail to see the logic, unless it is a display point for some items.


Today, everything from services (insurance, banking, travel, hotel bookings, movie tickets, rail tickets) to goods (from books to electronic items) are available online. The demographic change also is such that fewer people find time to go out and compare products and prices in different shops or malls. The internet allows me to compare products at peace. When I do go to physical shops selling durable products, I find them to be less than transparent.

 

In most shops, prices are not displayed and in a typical white goods shop, the salesman will whip out an “MRP” list and then ‘work out’ a special discount for you. And you feel nice about it. The Internet has changed all that. Today, I do my homework on the internet before even going to an old-fashioned shop.


I have been using online extensively and would like to share the following tips for taking advantage of the ecommerce boom.


1. Most ‘sales’ like the Flipkart, Snapdeal or Amazon sales, are token ones (a small quantity on offer at deep discounts) and are designed primarily to keep you on the website and get you to click ‘buy’ on something or the other. A ‘discounted’ price may not really be discounted and you could even end up paying a premium. For instance, on the day Flipkart made their big splash, there were enough of items being available at lower prices at physical stores as well as other internet marketplaces. So do not trust one electronic marketplace ever. Keep checking constantly at various sites. There are also some aggregators, which provide comparisons of prices online.


2. Like their offline counterparts, Internet marketplaces often have dubious pricing or ‘hidden’ add-ons. For example, on many travel websites, they sell ‘travel insurance’. By default, they include the charges for this and are less than honest in giving you a choice in the matter. Without legally compelling you to buy it, they try and sneak it past you. Similarly, after you have chosen and done everything, you will find a ‘convenience fee’ slapped on to the ticket. The fares displayed usually tend to exclude this. Again, the best thing to do is to use the power of the internet and compare prices across websites. In case of airlines, the airline sites sell tickets directly too and often without any added convenience fees.


3. It is not that all is rosy when you buy online. To me, where I buy from, becomes important. I like sites, which are known to do background checks on the sellers/ buyers they put up. Some sites offer some products with their ‘assurance’ too. I dislike dealing with unknown or small-time websites since they could be offering fakes or seconds or simply deliver something different.


4. The common grouse against internet marketplaces is that the redress seems tough. When you buy from a physical shop and have a problem, you can fight, argue and get your money back. On an online platform, the seller or manufacturer of the product is far removed and you are transferred from one call centre to another. Here, we need to rely on the reputation of the website and have an action plan to create enough nuisances for them in case of a problem, so that they will provide quick redress.


5. The important thing while buying online is to keep ‘records’. It would mean capturing screenshots of orders, acceptances, money transfers etc. We do not have a cash memo or an invoice to come to our rescue in case of a problem. Usually all orders are recorded by e-mail and it is important to keep these e-mails for redressal.


6. There is also the problem of the subsequent flood of spam. You may consider maintaining a separate mail ID for this purpose. The retailers have scant respect for privacy and you will find that if you shop for something, Google or someone would have tracked you and this information is then liable to be used by spammers. When exploring any market place, it is best to first log out of all your identities, clear the cache and use a high privacy browser option (incognito, as the Google Chrome browser calls it). There are advanced softwares that could help you mask your IP address as well.


7. The internet has made a huge difference in not just buying but also selling items. To share a personal experience, I wanted to change my car, so I approached several of old school dealers and their quotes ranged between Rs4.50 lakh and Rs5.25 lakh. I put up an ad on OLX and indicated a selling price of Rs6.50 lakh (I checked out online selling prices for cars of a similar profile). On the SAME DAY, I closed the deal at nearly Rs6 lakh. No brokerage was paid.

 

In buying and selling on the internet, however, the important thing for a user is to not forget the principle of ‘CAVEAT EMPTOR.’  


As a consumer, it is undeniable that the convenience of buying from the living room is here to stay and grow. Sooner the producers and other players recognise this and develop active strategies to address this segment, the better for their survival.

User

COMMENTS

N Kanitkar

2 years ago

Agreed that the consumer is king right now. I do not think this scenario is going to last very long. You can already see the dwindling number of e-tailers who deliver what they promise. I have had satisfactory experiences only from Amazon and flipkart (recently). All others like Indiatimes, Rediff etc have issues with their website(take orders without actually confirming availability with vendor, give out a standard 3-5 business days for delivery, follow it up with a delay in delivery and then the consumer either ups the ante or sits around like a bug), delivery procedures etc.
Secondly, the kind of discounts being offered at the moment bite into the profit of these companies to a large extent. The Flipkart billion dollar sale was a sham. No one actually knows what was the worth of goods that Flipkart paid for and how much they spent on delivery. My guess is that they actually ended up losing money but gained traction in SM.

N Kanitkar

2 years ago

Agreed that the consumer is king right now. I do not think this scenario is going to last very long. You can already see the dwindling number of e-tailers who deliver what they promise. I have had satisfactory experiences only from Amazon and flipkart (recently). All others like Indiatimes, Rediff etc have issues with their website(take orders without actually confirming availability with vendor, give out a standard 3-5 business days for delivery, follow it up with a delay in delivery and then the consumer either ups the ante or sits around like a bug), delivery procedures etc.
Secondly, the kind of discounts being offered at the moment bite into the profit of these companies to a large extent. The Flipkart billion dollar sale was a sham. No one actually knows what was the worth of goods that Flipkart paid for and how much they spent on delivery. My guess is that they actually ended up losing money but gained traction in SM.

CBI probing IRDA’s 'soft' handling of Reliance General Insurance
CBI, which has examined IRDA’s former chairman J Hari Narayan and other officials, is looking at the circumstances under which the penalty was ‘brought down’ to Rs20 lakh from a possible Rs17,500 crore, say media reports
 
The Central Bureau of Investigation (CBI) has started a preliminary enquiry to probe if Insurance Regulatory and Development Authority (IRDA) favoured Anil Dhirubhai Ambani (ADA) group unit Reliance General Insurance Co, while levying a penalty of Rs20 lakh for selling a health policy without permission from the regulator.
 
CBI spokesperson Kanchan Prasad told the Times of India that a preliminary enquiry has been registered to probe if there was malafide intent in the decision, which was taken in July 2009. The agency said that unknown officials have been named in the preliminary enquiry, which is the first stage of investigation. CBI, which has examined former IRDA chairman J Hari Narayan and other officers of IRDA, is looking at the circumstances under which the penalty was "brought down" from a possible Rs17,500 crore, the report says.
 
On 23 July 2009, the IRDA penalised Reliance General Insurance for Rs20 lakh. The product filed before IRDA for which the prior clearance of the regulator was obtained was 'Reliance Health Care Policy' and instead, Reliance General Insurance introduced a product named 'Reliance HealthWise policy'. The insurer contended that the change in the name and premium of its product was followed by refund of Rs1.07 crore to various policyholders of the original product. As per the IRDA order, the refund was not supported by any documentary evidence.
 
As per IRDA's revised guidelines in September 2006, insurers were required to obtain fresh clearance if there is any change in the name of product. In 2008, IRDA found that Reliance General had violated its guidelines while selling insurance policy under the name of 'Reliance HealthWise Policy' when it had obtained clearance from IRDA for 'Reliance Health Care Policy'.
 
Speaking with Times of India, J Hari Narayana, the then chairman of IRDA, said, "When we received the reply, we realized that one of the changes had actually benefited the consumers, so we treated it as four violations. In my judgment, I had said that the company had sold close to 3.5 lakh policies, we could treat each policy as a violation and in that case the penalty would be Rs17,500 crore. Since the show cause mentioned Rs25 lakh, I couldn't have gone beyond that level while levying the final penalty."
 
Somewhere in July 2010, Reliance General, which till a year before had lowest premiums among competitors, increased premium for its HealthWise policy by 400% to 500%. (Read: Unhealthy rise in Reliance HealthWise premiums) When Moneylife contacted IRDA, we found that the regulator was not aware about the steep rise. According to industry sources, any increase in premium has to be supported by actuary data needed by IRDA for justifying approval. When we checked with an official from IRDA  about the same, Moneylife was told that the loading has to be specified by the insurance company in the product document that gets approved by IRDA.  
 
The real reason for the drastic action seems to be poor underwriting when the company started mediclaim policies in 2007 with aggressive pricing of Rs999 'Gold Plan' for Rs1 lakh sum insured for age up to 35. The intention at that time was market penetration in the younger segment with hopes of few claims. After three years of being unable to sustain low premiums, the company in 2010 jacked up premium by 400% to 500%. A hefty increase in mediclaim premium was seen to be a desperate measure from Reliance General Insurance to cover up for losses due to bad underwriting. 
 
In the past, there have been cases where IRDA's acceptance of group insurance loading was overruled by consumer courts.

User

Sensex, Nifty may try to rally – Monday closing report

Nifty will move higher as long as it closes above 7,895

 

Market opened weak today and after hitting the day’s low in initial trade, it started moving upwards gradually. A little before 2.00 pm today, the indices made a sharp move into the positive and continued edging higher. On Friday we had mentioned  that the S&P BSE Sensex and CNX Nifty have turned directionless and the Nifty may rally if closes above 7890.


The Sensex opened at 26,275 while Nifty opened at 7,831. After hitting the day’s low at 26,093 and 7,796, the indices started making a gradual up-move. In the last hour of the session, the benchmarks hit the day’s high at 26,443 and 7,901 and ended the day close to these levels. Sensex closed at 26,384 (up 87 points or 0.33%) while Nifty closed at 7,884 (up 24 points or 0.31%). NSE recorded a volume of 68.12 crore shares. India VIX rose 1.19% to close at 14.5000.


Among the other indices on the NSE, the top five gainers were PSU Bank (1.67%), Bank Nifty (1.45%), Metal (1.30%), Finance (1.18%) and IT (1.11%), while the top five losers were Realty (1.68%), Pharma (1.39%), FMCG (0.74%), Consumption (0.36%) and Media (0.30%).


Of the 50 stocks on the Nifty, 28 ended in the green. The top five gainers were Tata Power (2.72%), NMDC (2.40%), IndusInd Bank (2.09%), Tata Steel (2.00%) and PNB (1.90%).

 

The top five losers were M&M (3.80%), DLF (3.54%), Cipla (2.69%), Dr Reddy (1.96%) and Sun Pharma (1.83%).


Of the 1,585 companies on the NSE, 797 companies closed in the green, 724 companies closed in the red and 64 companies closed flat.


After the weak IIP data for August 2014 which was released on Friday during after market hours, the market today awaited combined consumer price indices (CPI) for urban and rural India for September 2014.


Reserve Bank of India Governor Raghuram Rajan reportedly said at an event on Saturday, that the rupee is not overvalued at this point in time and that the Indian economy is in the "beginning phases of a recovery which I hope will strengthen over time.”


With Sintex's September 2014 results being declared today the stock was pulled to end the day as the top gainer (19.70%) in the ‘A’ group on the BSE. While the consolidated net sales grew by 25% to Rs1,673.10 crore on a year on year basis, its net profit grew by 47% to Rs107.40 crore.


Rasoya Proteins (4.87%) was the top loser in the ‘A’ group on the BSE. The stock continued hitting a new 52-week low today as well.


Tata Power (2.90%) was the top gainer in the Sensex 30 pack. In response to the clarification sought by BSE in regard to news articles appearing in media, titled "Tatas, ICICI Venture may Team up for Power Play." The company replied saying, "Please note that the Company continues to look at various such options to improve stakeholders value and a proposal similar to one that appeared is at a consideration stage, where no binding agreements or any commitments have been made by the company. The contents appearing in the newspaper reports are largely speculative. The company remains fully committed to comply with the disclosure requirements under the Listing Agreement."


Cipla (2.68%) was among the top two losers aimongthe Sensex 30 stocks. The company was recently in the news for its announcement of a collaboration with Israel's Teva Pharmaceuticals for sales and distribution of the latter's drugs in South Africa. The agreement is between Medpro Pharmaceuticals, a subsidiary of Cipla Medpro, and Teva Pharmaceuticals pty, an affiliate of Teva Pharmaceuticals Industries.


US indices closed in the red on Friday.


Except for Hang Seng (0.24%) all the other trading Asian indices closed in the red today.

 

Taiwan Weighted (2.84%) was the top loser.


China's exports and imports rose faster than expected in September, today's data showed. Exports rose 15.3% in September, compared to a year earlier, according to data from the General Administration of Customs. September's export growth exceeded August's 9.4% growth. Imports rose 7% in September, from a year earlier, following a 2.4% decline in August. Increased imports saw China's trade surplus narrow in September to $31 billion from $49.8 billion in August.


European indices were trading in the green, while US Futures were trading marginally higher.


IMF meetings in Washington this weekend showed differing opinions over how much more stimulus the euro-area economy needs from the European Central Bank. While Draghi repeated he’s ready to expand the Central Bank’s balance sheet by as much as 1 trillion euros ($1.3 trillion), Bundesbank head Jens Weidmann said a target value isn’t set in stone.

User

COMMENTS

webkitendfullscreen

2 years ago

An error in above report. NIFTY ended UP 24 points, not down as mentioned. Makes a big difference :)

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