The e-commerce industry is growing tremendously, and new companies are entering this market day by day. As per India Brand Equity Foundation (IBEF), Indian e-commerce will reach US $99 billion by 2024, growing at a 27% CAGR over 2019-24. 

There has been a significant rise in online shopping amid the pandemic. From day-to-day groceries to large electronic items, everyone is purchasing online and avoiding stepping into physical stores.

However, with online shopping, there comes a host of insecurities – not being able to instantly receive the product, online frauds, unencrypted data, fake apps, unsecured Wi-Fi, to list a few. That is why e-commerce companies and digital businesses are promoting Cash on Delivery along with other payment methods.

What is Cash on Delivery (CoD)?

Cash on delivery is a payment method offered during online shopping. Through this payment method, the buyer has to make the payment on delivery and not in advance. It sets you free from hassled transactions. 

Shopping remains fun, and you can still use this payment method even if you don’t have a bank account. Placing an order online and not paying for it until you receive the product helps in reducing customer anxiety.

However, it doesn’t always mean making payment using cash, you can use other forms of payment – credit/debit cards, QR codes, or make an electronic payment.

How can Cash on Delivery help in growing your business?

Let’s have a look at the multiple advantages offered by cash on delivery to businesses:

Boost Customer Loyalty

Offering the cash-on-delivery payment option increases the likelihood of people completing their orders. Since you are not asking for an upfront payment and the customer gets to check out and feel the product, it builds trust for your brand. 

Customers get an assurance that your brand is more focused on fulfilling its orders and not just on receiving payments. It boosts customer loyalty which can eventually result in them paying online for their purchases.

Increased customer reach

Cash on delivery is considered a safe payment option and is a popular choice among customers. If you offer this payment method to your target customers, you are much more likely to appeal to a broader set of audience.

Increase order completion rates

If you go through your web analytics dashboard, you will notice that often people visit your website, add the product(s) to their cart and then abandon the order before completing the purchase. This happens because people are not ready to spend their money at that instant. 

With the cash-on-delivery option in place, you can fight cart abandonment issues and offer an increased sense of trust to your customer. It is a common customer mindset. Furthermore, the customer doesn’t have to pay right away. Hence, they’re more likely to push through with an order.

Increase in impulse purchases

These days, customers are always on the go. They want to do everything quickly. They want to browse products and complete their payments hastily. According to Statista, 21% of survey respondents admitted to abandoning a shopping cart owing to the long checkout process.

When it comes to digital payment methods, two-three more steps get added to the entire checkout process. However, with cash on delivery, the entire buying process can be completed within seconds. As a result, this can increase impulse purchases at the customer’s end.

Word-of-mouth advertising

Happy and satisfied customers are the best brand advocates. The likelihood of such customers sweet-talking your brand in front of their friends and family is quite high. With the benefit of cash on delivery, you can turn your customers into your brand advocates and reduce acquisition costs. According to Forbes, loyal customers are five times more likely to purchase again and four times more likely to refer a friend to the brand.  

Attract potential buyers

Offering cash on delivery services helps you attract potential buyers. It is not easy to trust new websites and apps, but when buyers get the option to pay on delivery, it reduces the risk and increases comfort. This is an excellent way to lure new customers.

Why is it important for businesses to offer Cash on Delivery?

As per Nielsen’s Global Connected Commerce Survey, published on Business Insider, around 83% of Indian customers prefer Cash on Delivery over other payment methods while shopping online. 72% of customers from major cities and 90% of customers from small towns pick cash on delivery over other digital payment modes.

 Primary reasons for the popularity of the CoD option among consumers:

  •         Safe and Secure
  •         Relieves stress
  •         Smooth transactions
  •         Payment flexibility – Lesser risk in case of defective products
  •         No hidden charges (Amazon is one such example)
  •         Familiarity with cash payments
  •         Fear of online scams

How to implement Cash on Delivery?

To successfully implement cash on delivery, you should have a credible logistics partner because they will be in charge of payment collection on your behalf. Discuss with the logistics company and find out their rates for different shipping conditions. 

You would be adding these charges to the customer orders. Share the contact details of the logistics vendor with the customer so that they know who to coordinate with in case there is an issue with the delivery.

Once you have finalized the agreement details with the logistics partner, you can include cash on delivery as one of the payment methods on your website/app. Ensure the courier is notified whenever you receive a new order. The order receipt should include the final charges. This will give the delivery person a clear idea about your share and the share of the courier company.

Closing words

Lately, with the Covid-19 pandemic and the strict protocols placed by governments across the world, online shopping has been on a steep rise. Cash on Delivery is another extremely important part of this puzzle. The safe and smooth transaction, the secure procedure, and lesser risk compared to its digital counterparts make it the topmost choice among today’s consumers.

This is a win-win opportunity for both the retailers and buyers. Buyers enjoy convenience, safety, flexibility, and money security, and on the other hand, sellers enjoy the increased trust, reach, sales and advocacy.


An avid football fan and a Fintech enthusiast.

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