Having been a customer with most Indian e-commerce (startups) companies and experiencing first hand the overall customer experience which includes the product and service, I believe the companies will continue to make loss.
One of the main reasons people prefer online shopping is the convenience, (of course discounts being the most important most times). But this convenience is short lived in most experiences. A defective / damaged product, the return process involving contacting the customer care. E-commerce companies do provide return / exchange facilities, but this in most cases is not a win-win for either the customer or the company.
The companies need to pay a lot of attention to customer experience and quality assurance. This will go a long way in reducing their losses.
Apart from discounts, returns / refund is the second most important thing contributing to losses.
Most times a customer purchases online simply because of the convenience, a little quality assurance can go a long way in improving the overall customer experience. You may not give a huge discount but the fact that the product was as described, and worked for you.
A strict quality contract with sellers is very much needed, because it looks like the sellers are taking this whole e-commerce system for granted. A stricter fine system and removal of sellers would go a long way.
A return / refund usually means that there is additional cost involved for the companies to process it.
So what can they do?
For starters, how about handling returns right at the time of delivery (atleast for certain products). In most cases we want to open / try the product immediately and a return request placed immediately. What e-commerce companies can do is have the delivery person take a return immediately if needed be. A 5 min wait here can avoid another persons trip later for collecting the return.
