Amid Counterfeits And Poor Return Policy, Booming Online Retail Market Faces A Catch-22

A new report by community surveyor LocalCircles showed that almost half of all online shoppers in India, at least once over the last year, got stuck with products they did not order, while almost a third of quick commerce customers are unhappy with return or refund policies.

The survey, which received over one lakh responses from across the country, found that 48% of online shoppers got stuck with the wrong product due to seller and platform terms. Moreover, one in five respondents reported receiving counterfeit products, with the highest incidence observed in categories like shoes, cosmetics, and fragrances.

Online retailers Meesho, Tata Neu, and Ajio were rated least favourably for their return and refund policies. In contrast, Amazon emerged as the most preferred platform for returns and refunds, while BigBasket led in the quick commerce segment.

The Tata Group-owned grocer saw 22% of consumers preferring it for returns and refunds; only 13% preferred Swiggy Ltd.'s Instamart and Zomato Ltd.'s Blinkit. IPO-bound Zepto was preferred by just 6% of the participants for its return policy. Meanwhile, 31% of participants were not happy with the return and refund policies and processes of any quick commerce platform.

The survey also highlighted the issue of limited recourse for consumers who receive counterfeit products. Only one in four consumers could find a direct way to report such incidents on the e-commerce platforms, while 43% found no such reporting mechanism.

As per the survey, a section of the consumers alleged that sellers are taking advantage of products with no return, with some sellers shipping different products by design, knowing that the consumer does not have a return option. This practice, the surveyor said, was seen to be rampant on Meesho and Flipkart.

Currently valued at $70 billion, India's online shopping makes up approximately 7% of the country's total retail market, according to LocalCircles. Bernstein analysts, in a Jan. 7 note, highlighted that the Indian consumer's preference for convenience via online shopping across categories is a secular trend, which it expects to continue growing in 2025 as well.

LocalCircles said that it will escalate the findings of the survey to the Central Consumer Protection Authority, the Department of Consumer Affairs, the Bureau of Indian Standards and the Department for Promotion of Industry and Internal Trade for their respective interventions.