Current Situation: In this era of revolution in delivery business whether be it Food Delivery or Groceries delivery business. A major issue that I have noticed is regarding "refunds" and its policies".
Story: A Day or two before I ordered some groceries from an online delivery platform (I wouldn't name them), a product (cup) but when I received the product, the quality was not as expected. So, as usual, I talk to the customer care executive and asked them to return them. But rather the whole amount was refunded. And the product was not taken back. Well, from the customers' point of view it's really nice. But what about from the point of business.
Is the practice of this kind of policy can really grow the business? That's a question to be answered. But the real point is that it's not just the case with a single online delivery business (Food Delivery or Groceries), rather these kinds of policies are seen in the overall business segment.
If this kind of incentives practice is performed for customers acquisition or retention. Customers will be habituated to such incentives. In that case, how can a business ever become cash flow positive?
Are there any tactics through which a business can increase the utility of their customers rather than making customers habituated to such incentives?
I remember myself when earlier Paytm used to give regular large cashback on E-commerce delivery. I used to order mostly from Paytm. But as cashback was stopped by Paytm(E-commerce). I became indifferent. Then, came amazon increasing utility through their one-day delivery (of course, now a day's you can get it by evening provided you are living in metropolitan cities). And since, then I never ordered once from Paytm E-commerce. I was habituated to cashback when it stopped, my business with Paytm(E-commerce) also stopped.
Amazon Tactics: Amazon focuses on different incentives which can retain their customers and sustain the business rather than burning cash on short-term incentives to its customers, unlike Paytm.
Conclusion: Instead of incentivizing the customers through short-term incentives, rather a business shall focus on providing a utility that will become an advantage in the long term. Because in the end, customers are indifferent and bend towards discounts.
Note: Currently, I’m unaware of the fact whether such costs of “refunds” are borne by the Businesses or the restaurant owners.
Until next time,
The Humane Opportunist