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Cash on Delivery- Why it's a Big Deal in Indian e-Commerce Scenario?

09 February, 2016


The Impact of COD on online Retailers- an Unsolved Puzzle in eCommerce sector in India


Cancellations and returns burning a hole in e-commerce vendors pockets.

COD have been a prominent factor in designing and shaping what e-commerce markets looks like all over India and across the globe.


The cash payments have been most effective for e-commerce players globally however in emerging markets like India it has been one of the driving factors. 



COD: A necessary evil
[Why you should Start Selling Online?]



Many others like China has also seen COD as a major e-commerce driver but it has effectively overcomes the threat to a larger extent by shifting to more and more mobile wallet users. Developed economies have already done this and been able to reduce the harm done by CODs through more use of digital wallets.


If we talk about Indian e-commerce market more than 60% online shoppers choose Cash on delivery payment mode. This is whopping figure for any industry.


With the fact that COD has helped e-commerce grow in India so that even those who are skeptical about online payment or do not use plastic money can also shop online, but the uglier side remains veiled up till it really starts hurting bad. The stinking side of COD is the loss which vendors selling online have to bear.


The shoppers refuse to accept deliveries or cancelled after shipping or return the goods, in all these cases the packaging, shipping and logistics costs were already incurred. Who is supposed to bear it other than the vendors selling o the marketplaces. It is sending the vendors into losses while selling online.



Why shoppers prefer COD over any other mode of payment?





1. Security




Shoppers new or old to online shopping unanimously feel more secure while they shop with COD payment mode as compared to online payments. They feel more empowered as to accept or reject the order depending on the quality of the product they are shopping for is same as they saw in the picture. 


They are not sure how their products will actually look when it arrives and how they have seen it in the picture would be same or not.


This insecurity on the shopper's part can be dealt with by providing them with more trustworthy shopping sites. There shall be full transparency and credibility of online shopping sites. 


Laws shall be firmed up for the swindlers and fraudsters in online space or e-commerce industry. Al this can make the e-commerce experience more conducive and shopper friendly and help mutual growth of the industry. 




2. Frauds





Many vendors have swindled the shoppers and scared them to this habit of paying COD only. Many other unethical practices and frauds being heard about regarding the product that are delivered has also rendered the shoppers in a state of mistrust in online shopping companies.


They are also not convenient with online payments which they don't feel too safe and secured about many times. Thanks to all credit card and online payment frauds and phishing.


Payment and online transactions security is a must to tackle this problem. 




3. No Plastic money




Many shoppers still do no have any plastic money and deal in cash only. They are not in to plastic money usage online or away in any form.

Use of plastic money shall be promoted and e-commerce and banks should collaborate for massive results and get hold of the market and promote more usage of plastic money by enticing them with lucrative deals and offers. 




4. Convenient





COD feels more convenient and one can order anytime whether they have their cards handy or not. There is no hassle of remembering card pins and passwords. Just pay the money to the delivery guy as soon as the order is received.


More and more one click payment and digital wallets usage can be promoted and made a habit like with cash handling. 


Digital wallets are the next gen cash nowadays as it is easy to use and you do not need to fill in all information every time you make an online transaction. 




5. Behavioral





Shoppers have been into a habit of paying instantly when they buy and have the product physically with them in conventional shopping. So, COD also feels like the same. 


This is one of the many reasons why most of the shoppers choose COD over online payments. 



Old habits die hard but with more attraction and enticing deals it certainly can allure more to give into forming new habits.


There can be better deals and offers given on the online transactions and gradually the cash on delivery shall be made an expensive deal as compared to online transaction.


Though this shall be made very wisely and gradually as we do not expect to loose shoppers just by making it more expensive. So there should be a calculative strategy for implementation in this regard. 




Also Read:


Best Packaging Companies in India


Best Payment Gateways in India


Some Common Inventory Mistakes






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