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Startups to the Rescue as Fakes Return to Bite Luxury Cos

The appetite for high fashion and premium brands has seen varied businesses tapping into the online medium to sell products. But the 15-20% rate of return faced by online marketplaces is a dampener, something that these companies are seeking to overcome through technology.

Online marketplace Luxepolis, which sells products ranging from designer apparel to high-end automobiles is getting around the problem of returns, which sometimes include fakes, with the use of radio frequency identification or RFID technology.

"We have developed a solution for solving the problem of customers gaming our system. What happens when a customer claims he or she received a fake bag when we actually shipped a genuine authentic bag? We use NFC (near-field communication) enabled tag and reader using secret codes (unique to each product) to establish the authenticity," said Vijay KG, cofounder of Luxepolis.

Some companies have also found customers returning products after using them.

"Currently we do not do refunds, only exchange of products. In order to ensure that the customer does not use the product before returning it, we have a seal on a prominent place on the product so that it cannot be used without breaking it," said Anvita Mehra, cofounder of Confidential Couture, which brings sellers and buyers of pre-owned luxury products on a common platform and currently sells 70 products on average ever month. Arvind Singhal, chief operating officer of jewellery portal Bluestone said, "In our business returns are as low as 6% and our logistics partner is asked to do a visual check before taking the product back, following which we do quality assessment in Mumbai."

Solutions for business-to-business returns follow a different model and are easier to carry out than consumer-to-business, said Sujoy Guha, CEO of CriticaLog, which carries out transport of critical logistics solutions for high-value goods and critical spares, among others.

"For business-to-business returns, as in the case of Fossil watches, for which we carry out returns from multi-brand-outlets, we sort the products based on model number and also take down the details of damages, if any. However, C2B is tricky as what is inside the product is difficult to ascertain by the logistics partner," said Guha.

Managing returns can be a major factor in scaling up the online luxury business, said Harish HV, partner-India leadership team at Grant Thornton. "There are pincodes, localities and customers who are blacklisted by companies based on their returns history. Most of the online businesses factor in the cost of returns in their business model, and in case of high-value items it can cost the company more," he said.

This article was published in the Economic Ttimest, to read please click here.