Why cash on delivery matters
In India and many emerging markets, COD built ecommerce: it let customers without cards, or without trust in prepayment, buy online at all, and it remains a major share of orders in those markets. For merchants it’s a trust bridge with teeth, conversion rises, but so do refusals, returns, and the cash-cycle drag of money that arrives days after the product does.
The merchant’s COD ledger
- UpsideConversion from first-time and low-trust buyers prepaid checkouts lose
- DownsideRefusal at the door, RTO costs, and delayed remittance
- FeesCourier COD charges per collected order
- Fraud surfaceFake orders costing real shipping both ways
Questions
How do stores reduce COD’s downside?
Verify and convert: order confirmation by call, message, or OTP before dispatch filters the unserious, small prepaid incentives shift the willing, and repeat-refusal addresses earn prepaid-only status. The goal is keeping COD’s reach while shrinking its refusal tail.
Should new stores in COD markets offer it?
Usually yes, deliberately: refusing COD in a COD-habituated market hands those customers to competitors, while offering it unmanaged bleeds margin. The mature position is COD with verification, incentives toward prepaid, and honest per-order economics.