{"id":4525,"date":"2020-08-28T13:22:10","date_gmt":"2020-08-28T07:52:10","guid":{"rendered":"https:\/\/razorpay.com\/blog\/?p=4525"},"modified":"2025-01-20T08:33:15","modified_gmt":"2025-01-20T03:03:15","slug":"udyan-tea-scale-e-commerce-business-thirdwatch-prepay-cod","status":"publish","type":"post","link":"https:\/\/razorpay.com\/blog\/udyan-tea-scale-e-commerce-business-thirdwatch-prepay-cod\/","title":{"rendered":"How Udyan Tea Scaled Their Business with Thirdwatch PrePay CoD"},"content":{"rendered":"

PrePay CoD<\/a> is Razorpay Thirdwatch\u2019s latest product offering, and it is growing to become a must-have feature for all e-commerce companies offering cash-on-delivery. Read on to know why!<\/span><\/p>\n

Every online e-commerce store – whether it\u2019s a marketplace like Flipkart or Nykaa, or a direct-to-customer (D2C) brand such as Mamaearth or PeeSafe – is bound to have faced this problem. That is the dilemma on whether to offer Cash-on-delivery (CoD) as a payment method or not on their online store. Let\u2019s look at why this is such a big point of confusion for online e-commerce stores.<\/span><\/p>\n

Advantages of offering only prepaid payment options<\/span><\/h2>\n

By offering only prepaid options like credit card, debit card, UPI, wallets etc. for their products, online stores can look to keep RTO or Return to origin orders at bay.\u00a0<\/span><\/p>\n

With prepaid orders, there\u2019s a definite intent to purchase from the customer. It indicates that the customer is confident in making the purchase. The other significant advantage is that, at best, the money reaches the online seller within 3-5 business days, depending on the settlement cycle of the payment gateway<\/a> that powers the online store. The typical payment gateway charges<\/a> are 2%, which is also significantly lower compared to cash handling charges.<\/span><\/p>\n

Why is offering CoD inevitable for growth?<\/span><\/h2>\n

However, India is a cash-driven economy, and almost 60% of e-commerce orders in India are paid via CoD. This is the case, despite e-commerce stores offering discounts and other attractive options on prepaid modes of payment. The CoD percentage goes up to 70% if the likes of Flipkart and Amazon are not included. These numbers only go to show how prevalent cash is in India.\u00a0<\/span><\/p>\n

So if an online business owner (Shopify, WooCommerce, Magento or own custom storefront) wants to scale their business evenly, it seems like offering CoD is a mandatory move. This becomes more crucial for upcoming and smaller brands where there is a need for the brand to establish trust with the customers.\u00a0<\/span><\/p>\n

Online shoppers hesitate to pay via prepaid methods on brands that are relatively new and upcoming and thus, offering CoD provides the customer with that extra nudge to convert interested visitors into paying customers.<\/span><\/p>\n

The problem of offering CoD for e-retail stores<\/span><\/h2>\n

Offering CoD on an online platform has almost an immediate impact – a 200-300% increase in sales is conclusively evident. While only focusing on the top-line, this might seem like an excellent choice but when we take a closer look at the revenue and profit margins, offering CoD gives rise to a multitude of problems.\u00a0<\/span><\/p>\n

RTO or Return-to-Origin is a scenario where a customer orders online and then doesn\u2019t accept the order or cancels the order after shipping which results in the shipment returning to its origin. This problem plagues e-commerce retail stores in general and offering CoD only increases the RTO problem manifold.\u00a0<\/span><\/p>\n

In a CoD order, the customer might not have a high purchase intent as he possesses the luxury of cancelling the order anytime before it reaches him or simply not to accept the order delivery at all. This, in turn, results in double shipping costs, wasted packing and operational costs and even blocked inventory costs. This also leads to rises in significant RTO losses, too.\u00a0<\/span><\/p>\n

Some of the other issues are the cash handling charges by the courier partners are significantly higher than the usual 2% charged by the payment gateways. Also, it takes almost 10-15 business days for the money to finally reach the seller, thus causing problems to the cash cycle.<\/span><\/p>\n

So where does the e-commerce business stand? Offer CoD and face a multitude of monetary issues or limit growth without it? The need of the hour was to find a way in which the online store could offer CoD without consequences.\u00a0<\/span><\/p>\n

Razorpay Thirdwatch fights RTO<\/span><\/h2>\n

Razorpay Thirdwatch<\/a> is the first-of-its-kind AI-based solution which helps e-commerce businesses reduce RTO losses and increase successful deliveries. More than 500 e-commerce online stores use Thirdwatch to help increase revenue overall and cut down RTO losses.\u00a0<\/span><\/p>\n

How does Thirdwatch work?<\/span><\/h2>\n

Thirdwatch\u2019s AI engine processes all orders placed on any platform and then does the following:<\/span><\/p>\n