We are probably quite familiar with the term COD (cash on delivery) if you are in an eCommerce business or shopping online. A simple explanation is that the customer pays by cash or card directly to the courier person or vendor after the product is delivered. This is considered to be a popular method of buying and selling online.
In nearly all countries where online businesses thrive, C.O.D. has become a standard payment method. Some of the countries include India, Bangladesh, Thailand, and so on. What makes this mode of payment so accessible, and does it come with any cons? Let us explore.
According to Commerce Survey, about 83% of consumers in India preferred using cash on delivery as a payment mode for online purchases. Due to many reasons, Cash on Delivery has long been the preferred method of payment in India.
Like all other modes of payments, cash on delivery also has some pros and cons. Here are some of the disadvantage of using cash in a delivery system that makes it risky and expensive out from the other methods.
Disadvantages of Cash on Delivery (CoD)
In some respects, cash on delivery is important to sellers than it is to customers in an online business. Due to this, you must offer this service to your customers in a judicious manner and follow sufficient measures while delivering a suspected order.
Fake Orders
There has been a precedence of fraudulent activities in the case of cash on delivery. As there is no authenticity of the available customer information, the chances of fraud become more.
It may happen sometime competitors creates multiple orders and then do not respond at the time of delivery. It results time as well as money loss to a seller.
Extra Courier Charges
If you choose the cash-on-delivery payment option, courier companies charge you. Since shifting these costs to your customers is tricky, most sellers experience these costs immediately.
Risk of Damage and Lost
The disadvantage of cash on delivery is that it leaves the seller vulnerable to losses in the event the customer returns a product without paying. After all the money is spent, the product is ultimately replaced. This gets add to your loss.
Delay in Payment Rotation
Whenever you ship through CoD, even spending more than a normal delivery you get your payment delayed. It blocks your investment in terms of more quantity.
Tips to Reduce Cost
COD is generally regarded as a risky option, so sellers should try to minimize the disadvantages by taking some actions. For example, sellers may charge additional delivery charges in case of the COD option.
Furthermore, sellers should obtain customer information, like contact details, even if they are selling via cash on delivery. In this way, the chances of fraud can be reduced to a great extent.
