CXOToday has engaged in an exclusive interview with Khanaz K.A., CXO at Simpl
- D2C has emerged as one of the fastest-growing segments within e-commerce led by marketplaces. However, several D2C brands are also building their e-commerce platforms today to establish their brands.
India is witnessing a shift of Direct-to-Consumer (D2C) brands from large e-commerce marketplaces to individual service providers across the value chain. From developing the platform (website and apps) to driving discovery through social media and partnering with Checkout Network providers to provide a seamless checkout experience, D2C brands are coming out of the shadows of large e-commerce marketplaces to establish their own platforms. In fact, according to Kantar, the Indian e-commerce market is projected to grow at a CAGR of 19% between 2022 and 2030, making the landscape ripe with opportunities for D2C brands to flourish.
However, it has become of paramount importance for Direct-to-Consumer (D2C) brands to prioritise delivering the same e-commerce experience on their platforms and instill trust among their customers regarding various aspects such as delivery experience, returns, refunds, and overall reliability. This assumes significance as customers have become accustomed to the convenience offered by e-commerce marketplaces, and it’s imperative to emulate the same on one’s D2C platform to offer a seamless e-commerce experience to consumers while also ensuring they trust the website to deliver on its promises.
This involves focusing on offering a user-friendly interface, seamless checkout process, and post-purchase experience. Simpl has developed and strengthened its artificial intelligence-powered technology platform, which seamlessly facilitates consumers’ checkout journeys and assists brands in improving their businesses. With features like one-login and pre-filled addresses, Simpl enhances customer convenience, resulting in up to a 65% increase in conversion and up to a 32% increase in average order value through an experience powered by Simpl Checkout solutions. This improvement in conversion and average order value leads to an enhancement in Return on Advertisment Spend (ROAS), consequently driving down Customer Acquisition Cost (CAC) and keeping costs in check.
Besides providing a seamless checkout experience, emerging D2C brands face various other challenges that need addressing, such as easy access to credit and a need for more marketing and legal support, among others. Through its D2C Simplified initiative, Simpl is spearheading several community efforts to empower the D2C ecosystem. Over the past year, it has forged partnerships with nearly a dozen companies like Klub, Adyogi, and Zolvit to offer support to the ecosystem.
2. What are the key pain points faced by D2C brands in the country? What role does technology play in reducing their business cost while improving business performance?
D2C brands across diverse sectors encounter unique challenges that shape their journey to success. One of these hurdles involves navigating the complex landscape of product discovery within the digital landscape. Additionally, establishing consumer trust from scratch proves to be a formidable task for these merchants and the lack of standardised user experiences compounds the issue, particularly evident in the crucial checkout phase of a customer journey. Moreover, the return to order (RTO) process emerges as another significant pain point for these brands, requiring careful management and resolution to maintain customer satisfaction and loyalty.
Simpl proactively addresses these challenges through its cutting-edge AI-led offerings. Firstly, by leveraging its vast user base of over 7 million registered users, Simpl offers platform visibility through its mobile app, thereby maximising exposure for merchants. Secondly, the company offers a suite of solutions including Instant Checkout, Simpl Checkout, Early Settlement, and Checkout Suite, which incorporates Simpl Pay After Delivery (SPAD) and RTO Intelligence. These comprehensive offerings aim to enhance conversions, diminish cash-on-delivery transactions, and minimise returns for merchants, all while prioritizing convenience and trust for millions of customers. By providing innovative solutions, Simpl facilitates smoother transactions, thereby fostering growth and efficiency for D2C brands within today’s competitive landscape.
3.How does Simpl’s technological innovation specifically address the RTO pain points for D2C merchants?
Return to Origin (RTO) poses a significant challenge for Direct-to-Consumer (D2C) merchants, particularly within the Indian market, for several compelling reasons. In fact, our estimates suggest that the cumulative annual losses incurred by merchants due to Cash on Delivery (CoD) orders alone amount to a staggering figure ranging between $6-7 billion.
The rise in Cash on Delivery (COD) ordering occurs due to various factors such as customers’ preference for paying upon receiving the product, particularly prevalent in regions with limited access to digital payment options or where trust in online transactions is low. This preference for COD often leads to a subsequent increase in Return to Origin (RTO) occurrences. RTO happens due to variety of factors including incorrect addresses, customer unavailability, or refusal of delivery. These factors not only contribute to the rise in RTO but also have a significant impact on merchants’ bottom lines, as they bear the added shipping and handling expenses associated with returned orders. Moreover, the high prevalence of COD and subsequent RTO also leads to increased logistics costs and other downstream impacts, causing operational inefficiencies for merchants.
Additionally, Simpl’s RTO intelligence which includes address intelligence enables merchants to offer CoD or only prepaid modes of payment to consumers based on their purchase behaviour. This approach significantly reduces returns and fraud, alleviating the financial strain on merchants.
For instance, a couple of our merchants such as Doctor’s Choice, Boult Audio, and The Bear House faced challenges with a high volume of Cash on Delivery (CoD) and Return to Origin (RTO) orders, adversely affecting their business. By leveraging Simpl Checkout’s prepaid recommendation engine, Pay Later, and Pay-in-3 modes, Doctor’s Choice, Bold Audio, and The Bear House have successfully increased their prepaid share by up to 150%, 80%, and 22% respectively, helping build customers’ trust with the platform.
Furthermore, Simpl is has also rolled out several other solutions including Early Settlement for D2C brands to reduce settlement time for CoD orders, thereby helping reduce losses and interest burden. The product aims to reduce the settlement time for cash-on-delivery (CoD) orders by up to 90 per cent and improve daily sales by 40 per cent. This assumes significance as CoD orders, which constitute nearly 60 per cent of all online orders, typically take 15-20 days for settlement at the merchant’s end, thereby blocking cash flow and increasing merchants’ working capital requirements.
- How does ‘Early Settlement’ specifically address the issues faced by merchants in handling cash-on-delivery transactions, and what benefits does it offer to improve their operations?
In the landscape of Indian e-commerce, Cash on Delivery (CoD) stands as the prevailing payment method. However, beneath its widespread adoption lies a formidable challenge for merchants, casting a shadow of financial uncertainty. CoD, though favoured by consumers, presents a risk of considerable losses for merchants. The crux of the matter rests in customers’ ability to cancel or refuse orders upon delivery, initiating the undesirable cycle of return-to-origin (RTO) scenarios. This not only disrupts transactional processes but also imposes a strain on the financial capacities of e-commerce entities. As disclosed in a comprehensive report by Unicommerce, the surge in CoD transactions has contributed to a marginal increase in order returns, rising from 9.8 percent in FY22 to 10.4 percent in FY23. As the e-commerce sphere continues to mature, adeptly navigating the balance between convenience and financial stability becomes increasingly imperative.
To tackle this challenge, Simpl introduced Early Settlement, aimed at reducing the settlement time for Cash on Delivery (CoD) and prepaid orders by up to 90%, and improving daily sales by nearly 40% for merchants. This is significant, as CoD orders, which constitute nearly 60% of all online orders, typically take 15-20 days for settlement at the merchant’s end, thereby blocking cash flow and increasing merchants’ working capital requirements.
Interestingly, among the two dozen early adopters of early settlement, merchants such as Wabi Sabi, Frido, and Italian Colony have witnessed a substantial increase in their sales, experiencing a 40% uplift after expanding their Cash on Delivery (CoD) capacity. Notably, women’s luxury wear brand Wabi Sabi has recorded over a 125% improvement in sales within a month of adopting this early settlement.
