Tuesday, December 20, 2011

Gharpay.in : Helping e-commerce Vendors with Cash On Delivery (CoD)


What is India’s favorite payment method? Cash, of course. In fact 80% of Indian e-commerce is driven by the cash-on-delivery (COD) model. A big proportion of the country’s consuming population has the money and a wishlist to buy products through the internet but do not have the means to strike the transaction. Hyderabad-based start-up Gharpay handles CoD for retailers (mostly online but also some offline). It essentially offers a cash payment collection network from the customer’s doorstep to retailers.



Users buying, say, a mobile handset from an e-commerce site, choose the CoD option. Once the transaction is confirmed, a Gharpay executive arrives to collect the cash. He has the invoice printed out and collects the amount. The mobile arrives later, either by the delivery employees of the e-commerce site or courier executives. The typical amount collected by a Gharpay agent is Rs 1,800. Gharpay is not a logistics provider and hence does not bring you the handset before collecting cash.

“The reactions to our start-up range from astonishment to surprise to delight in the fact that finally somebody is doing what we do. Online companies are delighted we are addressing their problem with offline payments,” says Arpit Mohan, co-founder and CTO, Gharpay.

In October 2010, ex-BITS Pilani students Arpit Mohan and Abhishek Nayak (now CEO) were discussing the sudden growth of e-commerce in India when they came across the issues in payments. Considering that there are just 200 million plastic cards in India today, they wondered what happens to those customers who don’t have credit cards. Mohan and Nayak hired a payment executive and set up Gharpay in Hyderabad in January 2011. “The company literally started on a motorbike,” says Mohan.

Three months later, more batch mates from BITS-Pilani, joined the firm. Gharpay began by delivering tickets and collecting cash for Redbus.in, a fast rising online bus ticketing provider. In March, Gharpay started exploring offline retail market for CoD and soon bagged Chennai-based Nathella Jewelry as a client.

Gharpay today collects cash from customers at their doorstep in 550 postal codes across 7 cities in India and they’re practically the only organized player in the fray servicing cash payments, in a Rs.50000 crore e-commerce market that’s struggling to get people to pay online. The offline market includes attractive segments like cash payments for classifieds (QuackQuack, a matrimonial classifieds player, is a Gharpay customer), insurance, magazine subscriptions, educational material, etc.

The main issue for an e-commerce company is keeping track of the package. Until it is shipped, you have visibility but after that, there is no information coming forth. But the quality of courier companies is improving day by day as they address the challenges facing e-commerce in India. With there being no legal limit on how much cash can be collected, Gharpay’s cash collectors often find themselves ferrying large amounts of money. “We once had an NRI buying a tour package for Rs.1.8 lakhs and preferring to pay by cash. For sums larger than Rs.25000, we ensure that we collect a copy of the person’s PAN card. We handle at least one such transaction every day”, says Arpit.

Broach the topic of ambition and their self-assuredness wafts like a breath of fresh air. “We want to be the largest player in the payments market and today, cash is the biggest thing. Tomorrow, if cards become larger, we’ll probably go after that in some way. But right now, cash it is”, says Abhishek. “China has over 2.2 billion plastic cards for payment while India has about 100 million which work online. But even in China, 50-60% of them are still paying offline.”

In a market where the confidence that goods bought online will be delivered is increasing rapidly, cash transactions are seen as the bridge to the next level of trust. Under such circumstances, Gharpay is a startup to watch out for. The opportunity is large, the team is strong, the problem is interesting and the execution seems to have taken off.