Whatever due diligence e-commerce firms may conduct, once they bring sellers on their sites, they don’t have much control over what is sold and delivered.
It is a beautiful rock.
Fair, dotted with just about the right amount of colours to show off its geology; the magic that went into its creation when some bit of silicon, a bit of oxygen and the Earth’s crust came together. It sits pretty, gleaming in all its glory, its edges sharp and well-formed. Almost 6cm long, it is a bit bulky. About 2kg perhaps. But boy, if you were to pick it, it fits perfectly in your fist. As if God intended you to have it. And for a moment, just a fleeting moment, it tickles your imagination with the various uses it could be put to.
But then you wouldn’t want to do that. Because this rock is precious. Rs.24,399 to be exact.
It most certainly has travelled thousands of miles to get here—painfully bidding goodbye to its friends and family, facing the vagaries of nature and carefully avoiding any human detection. Humans, you know, with their machines and checks and billion dollar robust systems. But now that it has reached its destination, an address in New Delhi, neatly sealed and concealed in a package, with the solicitude of an e-commerce delivery, its buyer has freaked out.
Her first reaction: “Haaaw, what is this?”
On 27 October, at 11.53pm, the 29-year-old buyer, who spoke on condition of anonymity, placed an order for a Samsung Galaxy Note 3 Neo from flipkart.com.
On 1 November, at about 9.45am, the phone was delivered. Except that there was no phone when she opened the package. It was a rock.
It would be understating it a bit to say that she was shocked. A small family investigation ensued. She wasn’t around when the delivery happened, so who took the package? Her mother. Did the guy who delivered it look suspicious or something? Not really. All her mother recalls is that the guy was wearing a Flipkart T-shirt. He asked her to sign somewhere, she did and off he went. The buyer then reached out to Flipkart customer care and explained what had come to pass. A few apologies and reassurances later, a replacement was ordered. The rock and the package it had arrived in was stored.
What does Flipkart have to say? “With respect to this specific instance, we are investigating the issue and shipping a replacement in the meantime,” said a Flipkart spokesperson.
Now, this is not the first time that a rock has found its way into an e-commerce shipment.
According to online complaint forums, there are complaints about the services of e-commerce firms on a weekly basis.
In March 2013, a Flipkart customer received not one, but a pair of stones, after placing an order for an iPod. Then again, early in 2012, Flipkart had delivered a stone to a customer who had ordered a phone. On October 24 this year, a Snapdeal customer by the name of Laxminarayan Krishnamurthy received a bar of soap instead of the Samsung phone he’d ordered. After complaining on the social media site Facebook, he received a refund from Snapdeal after a week.
“In the said case, we deeply regret the mix up that inconvenienced our customer,” says a Snapdeal spokesperson. “We are investigating the origin of this issue and will get to the root of the cause to rectify this, so that it does not repeat itself in the future.”
To be sure, these instances are extremely rare at Flipkart and Snapdeal and in terms of numbers, these snafus are inconsequential. Flipkart delivered more than 5 million products in September and likely exceeded this number last month.
At Six Sigma levels of quality, a maximum of 17 errors can be made by someone delivering 5 million products. That means Flipkart, going by the evidence on hand, exceeds Six Sigma levels—not something to be sniffed at.
Yet, these snafus are part of a broader problem facing online retailers that is likely to become more troublesome as they add thousands of new sellers over time: ensuring that third-party merchants sell original, first-hand products.
Even globally, online retailers including Amazon, eBay and Alibaba struggle to entirely root out sales of fakes and second-hand products. A French court slapped eBay with a fine of €38.6 million in 2008 for selling fake LVMH bags and clothes. Practically all luxury goods brands have at some point complained of fakes being sold online.
Alibaba had to fire executives in 2011 after it found that these executives had granted special status to more than 2,000 sellers in earlier years, who later cheated customers. In this scandal, the Chinese company also paid more than $2 million to customers from its customer compensation fund, which was set up in 2009 to make amends with shoppers who receive fakes or are not delivered what they were promised.
Though few in number, sales of fakes and comedy-inducing deliveries of stones and soaps can harm the image of online retailers and spread distrust about them. These snafus tend to stick with customers and others who use social media to quickly condemn and criticize sites. For instance, Krishnamurthy’s complaint about getting a soap from Snapdeal was shared by nearly 20,000 people on Facebook.
Okay. Now, let’s get back to the rock. How did it get in there? Perhaps there is a clue in logistics. According to people familiar with the matter, this is how Flipkart’s warehousing works: the company receives lakhs of products at its warehouse from its third-party sellers, primarily WS Retail, distributors and others. These products are already packed and sealed. Flipkart then conducts a series of stringent checks based on the product’s description, height, weight and other similar features. Following these checks, products that pass the tests are moved to “storage” and shipped to customers whenever orders are placed.
The people cited above said that while Flipkart gets most of its orders right, a rogue distributor or seller can escape the company’s quality checks. More importantly, Flipkart doesn’t have supervision over products that are delivered from its sellers’ storage locations.
Now, as things stand today, a third-party merchant is, for lack of a better word, a third-party. The same rules that would apply to, say, a Flipkart, don’t apply to it. So for instance, a third-party merchant is free to procure his goods from just about anywhere: authorized distributor, non-authorized distributor and even the open market. There are no fixed standards, again, on warehousing and delivery. Let’s try and understand this from our rock example.
The seller from whom the buyer bought the rock goes by the name of Gizmogear. According to the seller’s description on flipkart.com, Gizmogear started operations in 2008 as a distribution partner for various mobile phones and IT products. The seller claims that it sells only ‘Genuine and Original products’. Gizmogear has a rating of 78% positive, based on 1,198 ratings.
All kosher, except once you glance over the feedback from some of the customers. On 29 October, Priya Nair wrote: “Please DO NOT purchase anything from this seller gizmogear. I ordered a Samsung Neo for 22,399/- IT TURNED OUT TO BE A SCAM. Pieces of tiles in it!!!”
On 27 October, Ravi Vanga wrote: “Please do not buy from this seller. I got the packet with outer flip kart packing ok but inside the cellphone box seal is open and phone is missing in the box.”
So, a quick question here: when and how does an e-commerce player wake up to realize that a third-party vendor has gone rogue? Companies don’t want to answer this in specifics.
The spokesperson from Flipkart says that before approving a seller, the company has a team that visits the location and conducts a quality check on their products. “Customers can leave reviews and ratings on our site for products and sellers,” says the spokesperson. “These ratings can help other customers make informed purchase decisions. If a seller gets multiple low ratings, then that affects their rank on our site as well.”
Does a seller get de-listed? Flipkart says yes.
A spokeswoman for Amazon India says that the company has metrics to record and measure the extent of the problem, thanks to its experience in other markets. “We also have in place a mystery shopping for these sellers on the platform who list, pack and ship products on their own and we scrub our platform periodically to test random sample products and take action on the sellers. There have been several instances of where sellers have been delisted or courier services changed or impacted,” she adds.
Now in theory, these checks should have spotted the exact moment when the rock chucked out the phone and took its place. Perhaps when it was neatly packed inside the Samsung Galaxy Note 3 box. Or when it was stored. Or when it was shipped. Of course, none of that ever happened.
All of this makes one thing clear: whatever due diligence e-commerce firms may conduct, once they bring sellers on their sites, they don’t have much control over what is sold and delivered. Any action they may take against rogue or inefficient sellers is post the event. This is the inherent challenge of being a marketplace.
Which is probably why the mystery of the rock and the soap remains unsolved. How did they get in there? The smart Bansals at Flipkart and Snapdeal—with their state-of-the-art technology and billions of dollars in investment—are at a loss for now. Well, if only rocks and soaps could speak!
Qatar Investment Authority (QIA) has picked up a $150-million stake in
India's e-commerce poster boy Flipkart, which closed a $700-million
fund-raising on Wednesday, sources directly involved with the matter
said.
Amazon raised these demands at a meeting between officials from the
industry ministry and US companies. The meeting was to address the
concerns of USbased MNCs ahead of the first meeting of the
inter-ministerial committee set up to fast-track investment proposals
from the US.
Flipkart India's largest e-tailer which is in the midst of a third
round of fund-raising this year has received an initial investment of
$180 million led by Hong Kong-based investment firm Steadview Capital,
according to two people directly involved in the deal.
In comparison, Amazon Seller Services posted revenues of Rs 169 crore
and Flipkart Internet that manages the portal reported income of Rs 179
crore. A year earlier, eBay's revenue was Rs 81 crore while Flipkart
trailed with Rs 15.4 crore.
Given that 14 days of pre-GOSF which would showcase 14 different e-commerce players offering their best deals, affiliates will turn a channel for product discovery and collating updated deals. "Price wars are likely on key days and it is a big question whether the featured e-commerce players offer their best deals on the day they are featured or on days when their competitors are featured,leading to never-seenbefore discounts.
