Cash on delivery (COD), collectively known as collect on delivery or cash on demand, is one of the most popular payment methods used. This form of payment is one in which customers do not pay for the goods unless they have received them.
With cash on delivery shopping, businesses tend to run a significant risk when it comes to cost and assurance of payment. This is because of uncertainties in terms of the customer holding good on their part of the deal. Although various modes of digital payments in the market serve the purpose such as payment via digital wallets, net banking, etc, cash on delivery is still quite popular in today’s day and age.
What is COD, and How Exactly Does it Work?
Cash on delivery is a system where the customer transfers funds to the business only after they have received the product. It is worth noting that this form of payment generally holds suitable for non-perishable goods. That said, here’s a step-by-step breakdown of the backed process involved-
- First, a customer places an order online via a catalogue made available by the business on a cash on delivery shopping website.
- Next, once the customer receives the shipment, they may choose between paying immediately or, in some cases paying within a stipulated time frame in case they decide to keep the item.
- In the cash on delivery shopping business, if the customer decides not to keep the item, the item is returned, and the expenses involved in logistics are borne by the organisation.
- However, if the customer is happy with their products and decides to keep them, they will pay for them.
These steps ideally hold true in case the customer opts to shop from cash on delivery shopping apps as well.
Is Cash On Delivery a Good or Bad Thing?
Although something being good or bad is a matter of perspective, it certainly helps to assess its pros and cons. If you are a business considering shifting into a cash-on-delivery shopping model, then here are a few sets of pros and cons to help you decide –
Advantages of cash on delivery shopping
- The COD method is the best for consumers who want to try new products but are afraid of risks. As in this, they can try products from new businesses and pay for them only when they receive the order and are satisfied with them. Hence, for small businesses looking to make an impression, COD is definitely one way to go.
- One more perk with cash on delivery shopping method is that customers can make multiple orders and then pay for the ones they want to keep. For example, if a customer is confused about the quality of two products, they can order both and see which one is better when delivered.
- There is no possibility of online payment fraud in the COD method. Although the likeliness of online fraud happening in legitimate businesses is low, it might happen in some of the new businesses.
- The COD method would lead to an improved customer experience overall, as they get a better sense of your offering. Hence, placing the business in a position where more and more people will know about it.
- Cash on delivery shopping method frees the customer from electronic payment methods. So even if a person is living in a rural area and doesn’t have a credit or a debit card, they can buy products from the online shop.
Disadvantages of cash on delivery shopping
- If multiple customers choose to purchase items in bulk for the sake of trying and choosing a perfect product, then your business will run low on inventory. And if the customer decides not to keep them, the chances are that you will lose the customer who is willing to buy the product because you are out of stock.
- This pseudo stockout may create problems for other newer customers looking to purchase your product.
- Cash on delivery shopping is a definite risk for sellers, as they usually tend to send goods without the guarantee that they’ll be paid for them.
- Cash on delivery shopping may also create issues with cash flow. That is, there tends to be a delay in receiving the cash that the business could have potentially gotten and invested.
Cash on Delivery Shopping Sites in India
There are several sites in India that offer the COD method as a way of payment. And we have compiled a list of significant cash on delivery shopping sites in India where you can try selling your products –
This list is not exhaustive but rather indicates that it is still a popular mode of payment.
Cash on delivery shopping allows the customers to purchase the products of their liking without the fear of getting frauded by an online company. Now you can buy a product that caught your eye while scrolling through Instagram or Facebook and pay for it when the delivery is done. It saves you the risk while giving you a chance to bring the accessories you like to your home.
Since the seller runs a major risk, cash-on-delivery shopping websites may choose to set an upper cap on the acceptable amount for COD delivery.
Ideally, the amount is paid as soon as you receive the package from the agent. However, different businesses may vary slightly.
The courier companies that deliver COD packages have a limit of the places they deliver to. So, some places might come out of that scope, and COD is not available there.