Pros and Cons of the Cash on Delivery Option in Ecommerce

Most people who engage in eCommerce businesses and online shopping are probably pretty familiar with the term cash on delivery, or commonly known as COD. In layman’s terms, it is a method of payment in which the client pays the courier or vendor directly with cash or a credit card immediately after receiving the product. This payment option is actually one of the most common methods of transaction in online buying and selling. In fact, cash on delivery is now the norm for retail payments in almost all countries where internet firms have thrived.

The best and most dependable eCommerce platforms are those that try to provide their clients with the highest level of satisfaction. And one of those perks is the availability of cash on delivery payment options. In fact, if a business is just starting out, it might still benefit from accepting COD. By guaranteeing that the customer’s order will be fulfilled and only seeking payment at that time, this helps to demonstrate dependability to the customer.

Customers can also choose COD if they do not have credit cards or enough money in their bank accounts. In other words, this option allows a consumer to finish a sale even if they only have cash and are unable to pay online. Additionally, it can be helpful to clients who might be wary about making payments online.

Of course, cash on delivery has benefits as well. This includes fostering client trust and making ordering simpler. But then, are these benefits worth the additional work required on the part of e-commerce owners? The business might question whether or not it makes sense to allow clients to pay cash on delivery in light of quick bank transfers and online payment options.

Cash on delivery obviously has advantages and disadvantages, just like all other payment methods. But then, you will be more successful as a buyer or seller in an online store if you are aware of these. Continue reading to know these pros and cons, which will then help you decide which payment option to consider.


Flexible Payment Options

One of the biggest advantages of cash on delivery for you as a consumer is that you may only make a payment once you have the merchandise delivered to you. This eliminates the possibility of financial loss. Your hard-earned money is left with the seller, for instance, if you pay in advance online and the seller does not deliver. When it comes to cash on delivery payments, there is no such danger there.

Additionally, before making a purchase, the consumer can inspect the product to ensure that everything is in good condition. You can always return a product for a refund if you discover a flaw in it or receive a different result than expected.

No Dependency on Online Payments

The fact that you are not dependent on debit and credit cards is another significant benefit of adopting cash on delivery as a payment method. Customers from suburban and rural areas, where few people use these cards, will benefit from this. The majority of clients in these locations favor straightforward transaction procedures. This includes receiving the product, inspecting it, and then paying for it.

More Secure Mode of Payment

When it comes to making online purchases, many customers procrastinate and leave their carts empty. Numerous factors could be at play, such as not trusting the seller, as well as the available payment options. But then, if you pay cash on delivery, security can still be maintained. You are not required to give the vendor any financial details, such as debit card, credit card, or bank account information. Additionally, it eases the anxiety of a return in the event that the product is not delivered. Only after receiving the merchandise in their hands may the customer make a payment. This eliminates the possibility of financial loss. This makes it one of the main reasons for which many clients select cash on delivery.


Loss of Revenue to Sellers

Cash on delivery has many drawbacks. One of which is that it leaves the seller open to losses if the client returns the item without paying for it. Even when you spend all the money on the product’s delivery, it is eventually changed. This increases the revenue you lose.

In fact, there has been a history of fraud involving cash on delivery. The likelihood of fraud increases since the customer information that is currently available lacks legitimacy.

Additional Costs

Most of the time, online shopping platforms use a courier service to deliver the goods. And actually, cash on delivery costs more than other payment methods. Couriers deduct their part of the fee from the selling price of the item that is being purchased. When you choose the cash on delivery payment option, courier providers will charge you a fee. The majority of sellers quickly experience the impact of these charges. It can be difficult to pass these costs to your customers.

Minimum Transaction Value

Some online shopping sites additionally require a minimum purchase value before a customer may select the cash on delivery payment option. This requires the buyer to spend more money, which then occasionally results in client loss on the seller’s side.

Key Takeaway

The cash on delivery option might be useful if you are launching a new online store with little to no branding or customer feedback. It will give your customers a feeling of credibility. And cash on delivery, as previously said, gives consumers a feeling of security and flexibility. You can use this technique to give your clients a smooth buying experience.

Additionally, sellers should try to implement some steps in order to lessen the drawbacks and risks associated with COD. For instance, many retailers today add on additional delivery fees when customers choose COD. Even if they are using cash on delivery, retailers still need to collect crucial client data including contact information. The likelihood of losses and frauds can be greatly reduced in this way.

Leave a Reply

Your email address will not be published. Required fields are marked *