What next, after returns and refunds?

We order fresh vegetables often via BigBasket’s BB Daily which allows us to place the order by night so that it can be delivered along with the milk in the morning. So, my wife and I decide on the food for the next day, consider the vegetables needed, and place the order by 9:30 pm or so on most days.

On some days, the vegetables delivered may be short of the weight that we have ordered. My wife can note this instinctively but we have a kitchen-counter weighing scale to check this accurately too. A few grams here and there are fine, but when we need 500 gms of carrot and we get only 350-400 gms, or when we order ‘1 piece’ cabbage that is mentioned as ‘approx. 500 g to 800 g’ and it turns out to be about 475 gms, we face a conundrum.

The quantity is too less to cook something out of it for the number of people at home (or for the number it was planned for). This kind of a situation would never happen if we buy vegetables the old-fashioned way – by going to the nearby vegetable vendor (or the one who comes home with a pushcart) because we are able to see what we need, including the necessary quantity as it is being weighed, and buy.

But in the e-commerce model, we take for granted the product listing details and trust them to be adequate.

So what happens when the quantity is less than what is claimed in the product listing? Most e-commerce firms have made it very simple, and I have written about it earlier: Can a piece of code trust you?

The crux: we raise a complaint on the app, and in most cases, with or without further proof sought (in the form of a photo of the weight as weighed on a scale), money is refunded either partly or fully.

So, money isn’t an issue at all, usually. And that’s the interesting conundrum!

As my wife put it eloquently one day when the quantity of cabbage she had ordered was less than what she wanted to do with it, “We cannot add the refunded money to make up for the lack of cabbage, right?”.

To be fair, Big Basket, or any vendor, is responsible, legally, only for the amount/value of what was promised and not delivered. So, most start-ups, funded up to their neck with VC/private equity money, have taken to returns and refunds as the cost of doing business. The sheer amount of time, effort, and cost involved in the back-and-forth around confirming customer complaints before a refund or return can be initiated is perhaps not worth the start-up’s time or money, particularly during the pre-profitability, business-building stage.

And delivering only the smaller quantity of vegetables, alone, doesn’t make any sense for the vendor since they would spend more money on that lone delivery than what they can simply refund digitally.

So we get no-questions-asked refunds.

But we cannot cook money; definitely not the ones that are refunded to the bank account digitally 🙂 So, we are usually forced to order a much smaller quantity of the same vegetable through a quick-delivery service like Blinkit or BB Now, or I walk up to the nearby vegetable vendor to buy the same.

An extension of this conundrum was what we faced on the night of 31st December 2022.

We had relatives from Australia and they totally loved the Corner House ice creams we had ordered on the 30th night, so they wanted to order again on the 31st night. We had ordered 9 sundaes including 2 Cafe Caramel Sundaes – and only one Cafe Caramel Sundae arrived! Can’t blame Zomato for this – Corner House folks perhaps forgot to pack the 2nd one, despite us having paid for it and it is listed in the bill clearly. NYE… understandable.

But one person’s item not arriving presents an awkward scenario: everyone tries to pool in some of their ice creams, someone offers to sacrifice their ice cream, and some suggest we all keep it in the freezer and wait for the missing ice cream to arrive, and so on.

So I start chatting with Zomato to see if we can get the missing item. All the Zomato support person would say is this, “I request you to leave a review on Corner House on the app”. After hearing this for 5 minutes repeatedly, I was offered a refund for the missing product. I didn’t want it and insisted on getting the missing item delivered. No luck – they initiated a refund on their own and closed the chat!

Even if it wasn’t Zomato’s mistake at all (after an infamous episode from Madurai where a delivery person ate food from the pack, Zomato—and Swiggy—started asking restaurants to seal the pack and hand over only sealed packs to the delivery people), their responsibility ends with the monetary value of the missing item being refunded.

Like in the previous example involving vegetables, with 9 people and 8 ice creams, the 9th person cannot eat the refund 🙂

For Zomato, getting another delivery person to fetch the one sundae again from Corner House and having that delivered alone doesn’t make any sense – it’s far simpler, and cheaper, to just offer a refund.

I did complain about that experience on Twitter, and deleted it after realizing it was pointless. And Zomato sent me a surprise pack the next day—January 1, 2023—a hand-written apology and a gift hamper.

They did not have to do this and it may be easier to link it to the number of online followers of people who complain vocally, but no brand can scale such post-complaint efforts to all customers – it has to be selective, based on assorted criteria where the brand stands to lose more (if they do not), gain more (if they do), etc.

That’s what this post is about, though – money can’t buy everything. In other words, ‘refunds’ are not the end of a complaint. Refunds merely close the legal, monetary responsibility of the seller to the buyer. In some/many cases, the money we get back doesn’t qualify as a great user experience though they, at the very least, offer us the comfort that the vendor can be trusted at least to the fact that we won’t lose money.

‘Losing money’ was a prominent worry for buyers in the e-commerce space when the sector was new in India in the late 2000s. Flipkart has done extensive market/category education advertising to build trust in e-commerce at a mass level and most e-commerce brands built on that foundation.

But the massive funding jamboree ensured that customers may not lose money on e-commerce – only the e-commerce vendors would, as part of a strategy to pamper and acquire customers (and not necessarily retain) 🙂

Take the mattress segment in India, for instance. Every second mattress start-up promises the same thing these days: vacuum-sealed, orthopedic mattress delivered to your home, 100-day trial, satisfaction guaranteed else your money back.

After living with a normal spring mattress for decades, we moved to this new-age mattress in January 2022 with a Wakefit 8-incher. I was worried it would be too soft, but it was a pleasant surprise – perfect amount of firmness while also being plush enough. 12 months later, I see no reason for a refund or a return, long after the 100-day trial is over.

Buoyed by this purchase, I followed it up with a Wakefit 6-incher for another bed in the home in December 2022. It arrived on time, as expected, but the height and width were not as per the listing – 78″ X 60″.

So I complained to Wakefit and they said they’d send a replacement. The next day, a replacement arrived, and they took the older mattress with them. This had a different issue – the width and height were fine, but the depth was barely 4.5 inches (instead of 6 inches), unlike the earlier 8-incher that was a solid 8+!

I complained again and Wakefit said they’d send another replacement for the replacement. That arrived 2 days later and had the same issue – less than 6 inches and the corners were far worse.

So I finally returned the product and sought a refund – this was done promptly. In fact, all through the process of getting and returning products, Wakefit’s customer care was extremely prompt in responding.

I then ordered the same queen-size, 6-inch, 78″ X 60″ mattress on Sleephead. It arrived after a week and had bigger issues – it was lumpy and the height was not 6 inches either! When I complained, they sought photo proof of what I was alleging and I sent them all the photos they wanted. After another week, they refunded the money.

Finally, after hearing good things about it, I ordered a Sleepycat mattress for the same specs. It arrived after a week and this was visibly different, with a ribbed bottom, and the dimensions were as promised. The mattress’s firmness too is perfect.

The connecting link between these purchases was how they were delivered: in a box, vacuum-packed. We unwrap it ourselves at home and it takes a few minutes to get to the full shape and size. For context, I have written about how this process of vacuum-sealing revolutionized the mattress industry completely. It’s a fascinating case study.

So, at the time of delivery, we don’t really know whether the mattress would get to the promised size and depth. Wakefit’s 8-incher did, for us, but the 6-incher, did not, despite 3 products being sent/replaced! Sleepyhead experience was far worse. Sleepycat survived. I got the money back on both Wakefit and Sleepyhead, but there was something else I lost for over 25 days till Sleepycat made it good – a new, empty bed from Urban Ladder that we had ordered for this room in late November 2022. It was entirely unusable for a month thanks to the incessant mattress trials!

True – I got my money back after the poor product (and not service) experience, but money coming back seems merely like tablestakes now, when refunds and returns have been normalized and standardized.

Can brands afford what Zomato did post the 31st night experience – go beyond a mere refund of the product’s value alone and aim for changing the negative experience into a positive one (for which money alone may not work)?

From a revenue management perspective, that seems preposterous. What business would spend more than the product to make a customer/customers happy in terms of sentiment/satisfaction? The product has to satisfy, if it doesn’t, and it falls short, all we can get is the money we spent. That’s the end of the transaction.

But if you think about it, even the money-back/refund seemed preposterous before extremely well-funded startups stuffed with money made returns and refunds a norm. In the offline world, we had to literally wrangle with a shop vendor for returns or refunds, but online, we take it totally for granted!

So what’s stopping the same VCs and private equity funders from signing cheques to startups that promise, “Satisfaction guaranteed. If not, product price + 25% extra!”?

The answer is common sense, of course 🙂 But just because it hasn’t been done (or probably done in very small areas – like real estate, where the builders are sometimes asked to pay for delays, generally through a court order, along with interest) before, doesn’t mean it cannot be tried now to gain a competitive advantage.

After all, a claim like that could be taken as a fantastic sign of the brand’s confidence in the product quality – something a customer could be totally sure of.

Imagine a Wakefit refunding the product price + 15% of the product’s value or Rs. 1,000 for every day we did not have a mattress in the cot as a result!

The next obvious concern about such schemes could be, “they could be gamed!”.

Of course. Any such scheme is bound to be gamed by enterprising Indians. Even refunds are gamed heavily with assorted tactics, but it looks like most startups have found it far more financially prudent to simply pay off than spend time and effort in contesting claims, mainly because of the stage of business they are in and the amount of funding they have to prove their market worthiness within a specific period of time.

The same logic could apply to this updated refund scheme too.

Let’s see which product category bites this bullet first 🙂

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