All You Need To Know About Cash On Delivery In eCommerce

Ecommerce stores need a clear understanding of how cash on delivery works in order to ensure they can provide their customers with the best possible experience. Paying cash on delivery is a popular payment method for online purchases, but it comes with some caveats that stores should be aware of.

This article will identify what you need to know about cash payment on delivery in eCommerce, so you can make the best decisions for your business.

What Is Cash On Delivery (COD)?

Paying cash on delivery (COD) is a type of payment method that allows customers to pay for their orders when received. This is a common payment method in countries where the spread & usage of credit cards is low. In eCommerce, COD can be used to make purchases online or to pay for goods and services delivered by courier.

Advantages Of Cash On Delivery Payment Method

Flexible Payment Option For Customers

Cash on delivery is a safe and flexible payment option for customers. As they can check the product before they commit to paying for it, and if they are not satisfied with it, they can simply return it without having to pay anything.

This makes this payment method a great option for customers who are reluctant to make purchases online, or who cannot access a credit or debit card.

Eliminate The Need For Payment Cards

Because this type of financial transaction provides the possibility to pay for orders in cash, it eliminates customers’ need to use payment cards, which can be lost or stolen, and also helps in preventing frauds. In addition to being safer, paying cash on delivery is also more convenient for customers as they don’t need to go into the hassle of finding a credit card or bank account to pay for their orders, especially for rural areas where credit card prevalence is low.

Prevention from Payment Frauds

This type of payment method is very safe and secure, avoiding the likelihood of any type from scams. Buyers are not required to disclose any type of financial information – such as debit card, credit card or bank account details to e-store owners. This is another reason why cash on delivery (COD) is the preferred method of payment, especially among buyers.

Attractive Method For A Broader Client Base

As mentioned earlier, one of the biggest benefits of paying cash on delivery is that customers can only pay for the product after it is delivered to them. That’s why  this payment system is very popular within online shoppers in the Kingdom. Therefore, it is very important to offer this payment option in your store in order to exploit a broader customer base.

Disadvantages Of Cash On Delivery

Additional Costs

Although online shopping has become increasingly popular in recent years, one of the main barriers is the additional cost associated with cash payment on delivery (COD). This is because online stores usually have to pay the delivery company a fee for each payment order upon receipt, which is then passed on to the customer.As a result, customers often hesitate to choose COD as an option for delivery, opting instead for free shipping or other methods. This may be a major disadvantage for online stores, as it can lead to loss of sales and higher total costs.

Risk Of Loss

One of the biggest disadvantages of cash payment on delivery is that it makes the sellers vulnerable to losses. When the customer returns a product without paying for it, the seller will have to spend time and money returning it. In addition, this can lead to additional loss of revenue.

It is also important to note that there are many examples of frauds using the cash payment system on delivery, often due to incorrect information provided by the customer. This increases the chances of fraudulent activities.

Minimum Transaction Value

Some online stores provide a minimum transaction amount before the buyer can choose to “pay cash on delivery” payment mode, especially when providing a free delivery service. This means that the buyer has to spend more money which can sometimes lead to customers losing.

How To Reduce The Risk Of Paying Cash On Delivery?

To protect online stores from the risk of fraud when using cash on delivery payment method, many online sellers have taken precautions like: most e-stores add additional shipping fees if the customer chooses to pay in cash. In addition, store owners are now interested in getting and making sure that customer information is authentic before providing cash payment service on delivery.For more efficient and reliable shipping, it is highly recommended to use eCommerce shipping providers, such as Shiprocket. Shiprocket not only guarantees you a fast and reliable delivery across the Kingdom and Gulf countries, but also offers affordable cash payment on delivery service.For more information, please contact us today to provide better service with additional payment options for your customers.