Why Would Indian E-Commerce Stores Swear By COD Payments?

Did you know 83 percent of Indian customers prefer COD (Nielsen’s Global Connected Commerce Survey) for their online purchases? Yes, that’s certainly a surprise in the contemporary age of digital payments but surely holds solid ground. Put simply, the Cash-On-Delivery payment facility makes virtual shopping more trustworthy for shoppers, thereby pulling in more customers and higher sales for online sellers.

Online shopping- a double-edged sword

Virtual shopping and e-commerce stores have made shopping a breeze. From books to electronics to apparel to home appliances to even groceries, you can buy anything and everything through online shopping from the comfort of your home. But, here comes a glitch. Unlike offline shopping, online shopping doesn’t offer the privilege to touch and feel your purchase immediately while shopping it. You cannot check the smoothness of a chosen Pashmina shawl or the operation of a new smartphone when you buy it online. And when you can’t examine your purchase right when you are buying it, it raises concerns.

Even the most frequent online shopper would admit to having order anxiety especially when it comes to pricey orders and more so when they have been paid virtually. Add to it the alarming rise in unscrupulous online shopping frauds which is leading people to frequent WISMO calls.

A stress-free shopping ambience is crucial for Indian online stores to survive, scale up and sustain in the market. This is where the COD payment method serves as the much-needed messiah to assure customers of a safe shopping environment. No, Cash-On-Delivery won’t allow customers to touch or feel their purchase right at the time of shopping just as is viable with offline shopping. But at least, COD reduces shoppers’ anxiety by assuring they don’t have to pay before they receive the delivery.

Sneak-peek into the COD system

COD stands for the acronym for “Cash On Delivery”. It can be defined as a convenient payment method where a virtual shopper only makes the payment when s/he receives the parcel. Thus, COD is also referred to as “Cash-On-Demand” or “Collect-On-Delivery”. In other words, with COD, online shoppers don’t have to pay in advance.

COD history

First things first, the concept of COD ain’t anything new. It has been in practice across the world since the introduction of mail deliveries. The first ever COD parcels were recorded in 1857 in Germany when Germans started buying stuff from their neighbouring land of Austria.

COD today

Cut back to modern times, COD comes with a new dimension altogether. You will primarily find it with online e-commerce stores- including both types of stores that cater only to national citizens and both national and international ones.

Why Indian e-commerce stores “should” offer COD payments?

It all boils down to one simple question- why would your online store allow COD payments? In one line the answer is- Your customers want it.

We have already mentioned the huge proportion of Indian online shoppers voting for COD for virtual shopping. The Nielsen survey also revealed two other key percentages in this regard. One, 72 per cent of online shoppers from major Indian cities have given preference to Cash-On-Delivery payment for online shopping. Two, 90 percent of customers from smaller Indian towns have stressed choosing COD as their favourite payment mode (for online shopping) over advance payments.

If you have been thinking digital payments have been ruling the roost for online stores in the country, think again. As per the survey, modern payment options like net banking, card payments as well as online wallets only make a humble 30 per cent of all payments made at online stores in India.

Why so?

Well, you have a long list of reasons here:

  • Cash payment is an age-old payment mode and people are familiar with it
  • Online shopping scams are on the rise
  • Transaction gets easier
  • Lack of safe payment gateways
  • Relief from post-purchase order anxiety
  • Fear of network issues during online shopping that might affect digital payment modes
  • No unwanted dependency on card payments
  • Reassurance and comfort of safe shopping online

Business Perks of extending COD at your online store

  • Brownie points for the “trust” quotient
    Put yourself in the shoes of your shoppers. Would you feel comfortable paying in advance for something that you have not been able to check physically? The answer is “No”. A lot of online shoppers who sometimes opt for digital payments would admit to being in mild anxiety till the order is actually delivered. This is because, with online shopping, there is no manual contact with goods. Product images and descriptions could be confusing, complicated and even misleading for shoppers at times. So, an online shopper never really knows what s/he is going to receive until the parcel actually arrives. If the shopper has already made the payment, he might experience money loss if he receives a non-returnable faulty product. And that doesn’t make a conducive ground for a seller to compel a shopper to pay in advance. In fact, if advance payment is the only payment mode in your online store, you might lose out on many prospective shoppers.

    Prevents risks of money loss for shoppers

    On the other hand, the COD facility at your store would help you to earn the trust of your potential shoppers. The primary reason behind it is you are not compelling them to make any upfront payment here. In other words, you are offering your customers the liberty to pay online after receiving and checking the product physically-even when they have bought from an online store. With COD, shoppers might not even choose to pay if the product delivered doesn’t match the claims of the online store during purchase. Thus, there is no risk of money loss here which is otherwise not uncommon with digital payments made in advance.

    So, by offering COD, you are assuring your shoppers that you care for them and won’t let them waste their hard-earned money on futile purchases. This simple ethos on part of your online store would inspire customers to bank on you big time.

    No stress of online payment fraud

    COD payment facility allows your online store to ensure safe payment activity for shoppers. This is one of the major parameters customers look for when choosing an online store.

    Unlike digital payments made in advance, COD doesn’t ask a shopper to divulge his/her fiscal details which might otherwise be preyed upon by hackers. So, with COD payment, your shoppers are at a lesser risk of being targeted by virtual scammers than they are with upfront advance payments. And that definitely scales up their trust quotient about your online store.

  • Fans shopping spree
    What’s the absolute maxim to attract and retain customers to your online store? The answer is to ensure a convenient, fast, accessible and credible shopping environment. And COD payment mode will enable you to achieve all these dimensions to the T.We have already discussed how COD will help you to earn customer trust and is safer than upfront payments paid in advance. In regard to speed, well, with COD, a shopper always has a lesser number of steps to fulfil the payment activity than he has with digital payments. This is especially handy during limited-time deals when shoppers have to finalize an online purchase in a flash. In such situations clicking on the COD tab makes the process way faster than filling in card or payment wallet details for digital payments.

    And such a conducive shopping environment only inspires more shopping activities in shoppers, much to the pleasure of your online store.

  • Expands the horizon of the shopper base
    COD payment facility will not only enable you to attract shoppers online but also those potential shoppers that are otherwise apprehensive to shop online. The latter group comprises people intimidated or unable to shop online because of one of the or both the two key reasons- they are scared of digital payment frauds or/and they don’t have digital payment mediums. It must be stressed here 2-tier and 3-tier Indian cities lack the adequate infrastructure and awareness required for digital payments. Also, a huge proportion of individuals across the whole country do not have bank accounts. So, if your online store only allows digital payments to be made in advance, you are losing out on these customers mentioned above. On the contrary, just a simple inclusion of a COD button in your payment page will solve the problem and help you to tap into this huge unchartered potential shopper base.
  • Expands the horizon of the shopper base
    In light of the above discussion, it can be claimed COD facility at your online store will highly improve the appeal of your business, thereby earning customer loyalty big time. Satisfied customers would assure proliferating sales and higher ROI for your business. In fact, shoppers prefer to share shopping experiences with fellow shoppers. If they find a convenient and credible shopping experience at your store, they are most likely to spread the word. And that would mean more shoppers, more sales and more ROI.

Wrapping up

So, yes, the COD facility is a must for your Indian online store simply because your Indian shoppers prefer it and for all the right reasons. You can set up the payment method manually on the payment page or through an app.

But, then the easy shopping ambience assured by COD facility has sometimes been exploited by some fraudulent shoppers. Some online stores have faced huge monetary losses with COD payment-based orders which ended with wishful order cancellation on part of some unscrupulous customers. In fact, sometimes the address given by the shopper (opting for COD) came out to be fake or incomplete and hence the order could not be delivered and payment could not be collected. Such an unsavoury situation would mean a huge blow for the seller because despite the cancellation he had to pay the courier and other services that form part of the shipping process.

On average, virtual stores have reported encountering a 30% RTO (Return To Origin) rate on orders placed. But then, you should not let such numbers deter you from installing COD in your online store – you can easily prevent such blows and fool-proof orders with special apps. Let’s see how these apps will help you-

  • Detect orders carrying high RTO probability to facilitate timely cancellation
  • Identify fake/incomplete address
  • Speak to the shoppers and update the address prior to shipping orders
  • Identify fraud orders so that they can be cancelled prior to shipping
  • Spot impulsive purchase patterns that might otherwise lead to higher RTO rates

The bottom line is, the COD payment facility is not free from glitches but its solid advantages far outweigh those minor concerns.

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