For those of you who run an eCommerce business, order processing is an essential aspect of your daily operations. Your firm may develop to the point where you can no longer fulfill customer orders in-house. Beginning when a consumer places an order and ending when the order is delivered to their doorstep, this procedure is called order fulfillment.
COD can be used in two ways: as an order fulfillment service or a financing option. For eCommerce store owners, there are benefits and downsides to using this option. This article focuses on listing out cash on delivery pros and cons in eCommerce to help online store owners decide whether they should adopt this payment option or not.
Though this method has several drawbacks, those can be understood better by looking at both the pros and cons of cash on delivery.
Snapshot of the Pros and Cons of COD
Pros:
- Cash on delivery is very convenient for customers as they do not have to worry about any payments until they get their product. You can offer this option to customers to build trust with them and increase your sales.
- This method is suitable for sellers because it offers them flexibility in pricing, stock management, etc. For example, you can give discounts to customers who choose cash on delivery.
Cons:
Cash on delivery has several drawbacks, though.
- Firstly, customers might not make immediate payment as promised, and you will have to bear late fees charged by the courier partner without getting paid yourself.
- Secondly, cash on delivery payments gets stuck with the courier partners for days before the seller can finally receive the remitted amount.
Detailed Overview of Pros of Cash on Delivery
- Cash on delivery helps eCommerce stores increase their sales conversion rates because it enables them to accept orders from customers who are unwilling or unable to use credit cards and other forms of online payment methods due to financial reasons.
- Cash on delivery is one of the fastest-growing methods of payment used by customers. COD works well for both customers and sellers. For the customers, this method offers the convenience of buying the product without having to make upfront payments. Moreover, customers don’t have to worry about credit card information being stolen or misused by fraudsters.
- This also prevents customers from abusing this option by making multiple orders from different eCommerce sites and then returning them all together, which can happen if you allow a customer to pay after delivery.
- Customers do not need to worry about paying customs fees when making an online purchase with COD. It is a good option for those who do not own a credit card and those who don’t have enough funds.
- COD is an easy and convenient payment method to buy products without paying upfront. It is suitable for customers who want to pay after receiving their products or those who wish to make payments through cash.
- If you are receiving a large number of orders from your customers, it can be challenging to deliver such orders on time without proper planning. Cash on delivery helps you avoid this problem by allowing your customers to pay for their order when it reaches them, thus helping you control the timing of deliveries more efficiently.
- Because customers are paying at the time of delivery, customers have fewer chances to initiate a chargeback after receiving their order. This is especially true if you are doing business with customers from foreign countries who may be unfamiliar with online shopping and eCommerce frauds.
Detailed Overview of Cons of COD in eCommerce
- As a customer, cash on delivery requires you to keep money on hand for deliveries which can sometimes be risky.
- As a seller, it requires you to hire a courier service, especially if you are selling expensive items or products that need special packaging and handling.
- Courier services may delay or fail to deliver your product on time which can cause great inconvenience for customers who want their purchases as early as possible.
- In some cases, high-value items are delivered to consumers without their knowledge. The customer then receives a fake invoice. The customer then realises they have been conned into receiving stolen goods and loses both money and goods.
- Cash on delivery frauds are standard because sellers get to keep the customer’s money until they confirm safe receipt of the purchased product/service.
- If a customer is dissatisfied with the product received, cash on delivery transactions can be difficult to cancel or reverse, which can cause further inconvenience for both parties.
Why is Cash on Delivery (COD) a Preferred Mode of Payment?
When it comes to online shopping, cash on delivery (COD) is one of the most preferred payment options. The eCommerce industry has been keeping this mode of payment as an additional feature because of its popularity and ease of use.
To date, COD is considered a reliable and safe mode of payment. However, there have been some drawbacks observed by the users. In some cases, the customers were not happy with the quality of the product or services they received from the merchants. All these complaints led to COD being a controversial mode of payment. But still, many online shoppers prefer this method for various reasons.
One of the benefits of cash on delivery is that it allows you to shop in complete peace. There are no additional charges or taxes that you will have to pay at your doorstep while receiving the product. As soon as you place an order, you can get the product delivered to your doorstep without any worries.
Wrapping up
Cash on delivery is a payment option in the grey area of online shopping. It’s a convenient feature, but it has cons attached to it as well. The above-listed pros and cons of cash on delivery can help you decide whether to use it or not.
