The Cash on Delivery method we see around us today has been in existence for a long time. All our transactions at markets and shops near our home have been a “give money, take item” system. Eventually, we progressed to debit cards and UPI payments and preferred whatever offered the best deal. Online shopping is popular nowadays as they are hassle-free and provide reasonable offers for a specific form of payment. Cash on Delivery has been a popular mode of payment; let’s read further into the blog for an in-depth read.
Cash on Delivery
Cash on Delivery (COD) is a way of selling products and services. And here, the payment is made after the delivery and not in advance. Cash on Delivery is one of the most popular modes of payment in the Indian e-commerce space. E-commerce merchants and other online stores mainly use cash on delivery. The buyer does not have to make any payment when placing the order and only have to do so once they receive the item.
Cash on Delivery enables sellers to gain the trust of the customer. The customer feels secure because they will have the product at the time of the payment. This trust factor has made India’s favourite way to shop online cash on Delivery. Cash on Delivery has remained India’s first mode of payment for online shopping.
These factors like flexibility, sense of trust, ease and comfort have made cash on Delivery India’s most preferred way to buy online. There is no doubt that cash on delivery will continue to be India’s most popular way to shop online shortly.
How did Cash on Delivery start in India?
It was Flipkart that started cash on Delivery back in 2010 in India. COD was a game-changer for Flipkart. It enabled Flipkart to gain the trust of its customers. Sales skyrocketed for Flipkart because of cash on Delivery. Cash on Delivery made Flipkart the e-commerce giant it is today. This is how powerful the COD method can be.
Modes of Cash on Delivery/Payment
The buyer can use various modes of payment at cash on Delivery. Some of them are,
- Cash Payment – As the name suggests, paying money in bills when an order is delivered or when you pay for your ice cream on the spot on a hot day
- Cheques – Cheques provide a signed form of payment for the amount required
- UPI Payment – Google Pay and Phone Pay are the most preferred payments, where transactions take place on the spot through QR codes.
Cash on Delivery Impact on Online Business Sales
According to Nielsen’s Global Connected Commerce Survey (Business Insider), almost 83 per cent of online shoppers in India preferred using cash on Delivery for all their online orders and purchases.
Buyers still shy away from entering sensitive information like Credit/Debit card numbers, CVV, expiry date and so on because of various online frauds and scams. This has made cash on delivery a safer option.
Reports suggest that a big chunk of the payments made by consumers on online shopping platforms like Amazon, Flipkart, Snapdeal, Myntra, Nykaa and Ajio was COD, a whopping 90 per cent from small towns and villages and 72 per cent from significant metro cities.
Advantages of Cash On Delivery
Cash on Delivery has its own set of advantages and disadvantages. Some of the benefits are,
- Convenience is a significant advantage of the Cash on Delivery system for the buyer. It is effortless to receive an order, check the product and pay. Cash on Delivery system does not require the buyer to pay some amount to place their order. This convenience factor is a major attention grabber for many online shoppers.
- More and more consumers are making payments by cash for their offline purchases. When online shopping sites offer to accept some money, it makes them feel familiar. But when the sites give them the option to pay after getting the product, it makes the consumer feel more familiar with the business.
- India has lesser credit or debit card users when compared to other major e-commerce economies like the United States or Canada. Because of this, many Indian online shoppers choose to make an order with Cash on Delivery rather than other prepaid order options.
- There is a lack of secure payment gateways trusted by the people. Some payment gateways are malfunctional at times, and these technical errors and malfunctionings make people lose their trust in these payment gateways. This is one big reason why Indian online buyers choose COD while buying from online small businesses that depend on these payment gateways.
- Insufficient network for online transactions is also a reason why COD is famous. Many Indian rural areas and small towns lack proper network connections, leading to failed transactions.
Disadvantages of Cash On Delivery
- A few sites could apply extra charges as a person would have to wait for the money in hand
- Customers could return or refuse to pay for the product once delivered.
- Return of Items could be risky for businesses with no support or infrastructure.
- Customers could expect difficulty returning or asking for a refund for a product during Cash on Delivery.
Significance of COD in India
Indian online shoppers choose Cash on Delivery as a payment mode because it is very convenient. They do not have to make an upfront payment while placing their orders. This feature makes sure that the buyer makes impulse purchases. There is no post-purchase order anxiety when the buyer does not commit the order. Once the order is delivered, they can check it to ensure that they are satisfied with the product; if the customers are unhappy with it, they could return it or decline to receive the delivery. This gives the buyers much-needed trust and flexibility.