What is Cash on Delivery Courier Service?
Cash on Delivery or Collect-on-Delivery (COD) courier service refers to the shipping service wherein the customer or recipient of the package pays the due amount only at its delivery time. Online retailers and sellers mostly use this service, allowing their end customers to pay for their ordered goods after adequate inspection upon delivery. In this way, businesses gain the trust of customers and grow.
On the other hand, if the customer/s is dissatisfied with the product, it is returned to the retailer, and the amount is refunded. COD payments are generally made in cash, but alternative payment methods via debit or credit cards can also be used to complete the transaction.
COD courier service is still a viable option for innumerable businesses and customers In the generation of automated online transactions.
How Does COD Courier Work?
Here’s a breakdown of how cash on delivery works for different package categories:
In the first step, buyers place the order on an e-commerce website and select the COD option as their preferred payment method during checkout. In some circumstances, buyers are required to pay an amount as a security deposit or shipping charges.
The retailer contacts a courier that offers COD services to ship the ordered goods to the recipient’s location. Once the order is handed over to the courier, the package is collected from the seller’s location and transported to its destination.
The delivery agent appointed by the courier company delivers the package and collects the total due amount from the end customer. This amount is then transferred to the courier company. The company deducts its service fees and sends the remaining amount to the retailer.
The biggest advantage of COD is that customers can inspect the quality of the goods before paying for them. However, the COD service functions differently for certain goods, particularly perishable or time-sensitive items. If customers withhold payment for packages containing food, dairy, or meat, the retailer or seller will suffer more losses with each return.
Suppose you run a food joint and offer a COD payment option to customers. You have to invest time and money to prepare the food as per the customer’s preferences. If the customer is dissatisfied and declines to pay upon delivery, the food will be returned to the restaurant. In such cases, you run a greater risk of incurring losses and food waste.
How can a Cash on Delivery Courier Help Boost a Business Service?
With the evolution in courier services, the days of waiting for weeks have come to an end. Today services such as expedited shipping, same-day, next-day deliveries, etc., ensure delivery to the customer’s doorstep within a few days or hours. As a result, demand for various types of goods has increased manifold.
Numerous businesses partner with courier service providers to cater to the ever-expanding demand of customers. Especially new entrants who aim at improving their sales, customer base, and product rely more on courier services. Therefore, courier service providers play a life-changing role for these companies.
Multiple courier companies permit cash on delivery services to help businesses come out with flying colors. The following points highlight how COD courier service boosts businesses:
Expanding your business reach
The biggest hurdle startups and SMEs face is dealing with demographics. The scope of business expansion becomes restricted while dealing with customers on a small scale. By allowing cash transactions, businesses can tap into an expansive client base, nationally and internationally. This will help you gain customers who are wary of using online or other payment options. COD can be beneficial for areas with low credit card penetration.
Cutting down expenses and time
Cost-cutting is essential for smaller companies that cannot afford to shell out lump sum amounts for hiring handling and delivery agents, customs clearance, etc. COD couriers offer a financial cushion for these companies by offering them delivery and fulfillment services at affordable rates. COD helps curtail expenses like credit card processing charges or costs related to online payments. Also, bulk shipping ensures reduced expenses.
For example, suppose you have launched a new sports apparel brand and want to deliver your products to customers based in Singapore or the Philippines. In that case, you may spend more on delivering those packages. However, if you transfer this responsibility to a courier service provider, your shipping costs will be reduced drastically because they will send your packages through their integrated channels.
Helping businesses reach their full potential
Businesses can reach their full potential only when they generate profits by expanding their clientele. COD helps businesses attain this objective by offering a convenient and reliable payment option and winning customer loyalty. With an increase in the count of satisfied customers, the chances of repeat business, positive feedback, and referrals shoot up. This supports the business’ growth and helps to reach its full potential.
Pros and Cons of Cash on Delivery Courier Service
The cash on delivery courier service can boost your business to great heights. However, is it a good fit for your business? Will it really help your business expand? You must analyze the pros and cons of cash on delivery service if you intend to incorporate it into your business model.
Take a quick look at the benefits of cash on delivery courier service:
- Increased sales volume – Cash on delivery service helps boost sales volume as it is convenient for numerous customers unwilling to use online payment options or debit/credit cards. COD offers a more secure alternative for customers who want to try out new or lesser-known brands.
- No risk of fraud – Customers can rest at ease with COD as there is no risk associated with payments. They only pay for the products upon delivery. In case of non-delivery of packages, the customers won’t have to bear the hassles of procuring a refund.
Additionally, unlike card or mobile payments, confidential bank information is not disclosed.
- No dependency – With COD, customers need not depend on debit or credit cards for transactions. This is particularly resourceful and more straightforward for the sub-urban and rural client base, as most customers do not have access to or know about online or card payments.
Also, dependency on cash is nullified. For instance, if you do not have the required cash amount on your person, you can use your mobile phone or other available options to make the payment instantly.
- Competitive advantage – COD increases sales and ensures greater customer satisfaction. Especially if you aim to expand your business, this payment method can come to your aid. Customers get good quality products and payment security becomes more loyal to your brand. This will help you build goodwill and render a competitive advantage in the industry.
Despite some significant advantages, cash on delivery has a few major drawbacks responsible for your business’s underperformance. Here’s a walkthrough of the disadvantages of cash on delivery courier service:
- Generation of loss – There is always a persistent fear of non-payment with COD. Also, extra expenses are incurred with multiple delivery attempts when the recipient is unavailable at the time of delivery. These additional operational costs can further the business’ resources. Cash on delivery can be particularly risky for food delivery businesses and restaurants if they have high return rates.
- Increased return rate – When customers get the opportunity to make cash payments, they may change their minds, no longer need the product or refuse to pay at the time of delivery. Sometimes customers opt for COD while experimenting and trying out newly launched brands. If these brands fail to meet customer expectations, they must deal with more returns and face dire consequences to stay afloat.
- Minimum cart value – More often, customers must fulfill a minimum transaction amount to avail of cash on delivery service. While some customers agree to pay a comparatively higher cart value, not all are willing to spend more. This leads to cart abandonment and loss of potential customers.
How to Choose the Best COD (Cash on Delivery) Courier Services Company for Your E-commerce Business?
When partnering with a COD courier service provider, businesses must choose wisely to achieve their full potential. A wrong move may thrust your business into an irrevocable position affecting the customer base, profitability, and overall stability. Remember these five tips before signing up with a courier company:
- Tie up with a COD-equipped courier company
Conduct thorough research about the COD courier service provider and ensure that it holds a good reputation in the market. A reliable company with a track record of secure and timely deliveries will augment customer satisfaction and the chances of repeat customers. Therefore, you must check customer reviews and feedback.
Additionally, you should determine if the courier company is equipped with well-trained officials, enough registered vehicles adhering to safety protocols, an effective reverse logistics system, and similar operational facets.
- Set up an NDR management system
A seamless NDR or Non-Delivery Reports management system plays a significant role regardless of the payment option. With such a system, you can track and monitor your failed orders and know the reasons for failure. This information will render a better understanding of the areas better suited for COD services and the required actions to enhance operations in those places. Performance assessment will ensure that customers receive their packages on time.
- Have a strong customer support team
The courier service provider must house a helpful and responsive customer support team to look after the needs of its clients. The team must efficiently resolve issues and handle queries that may arise during the delivery procedure.
For instance, if the delivery agent fails to complete the delivery due to the absence of the customer, the customer support team can come to the rescue by contacting the customer and coordinating the delivery time. This will eliminate unnecessary hassles of repeated delivery attempts, save time, and minimize potential losses.
- Make use of a courier integration platform
An efficient API-driven courier company helps to track and manage all the operations of multiple courier partners. An integrated management system ensures improvement in reverse logistics, COD reconciliation, and other aspects requiring attention. A tech-enabled company is comparatively better at handling deliveries and minimizing errors.
- Improve visibility of shipment status
Transparency of delivery operations is crucial for businesses and customers alike. Visibility of shipment status will help you to decipher the loopholes and take required actions in time. You can have first-hand knowledge of undelivered packages and packages that have been delivered, but the payment is yet to be transferred by the courier company.
Types of Payment Methods for COD
Although the name “cash on delivery” suggests a cash transaction upon delivery, several other payment methods can be used to pay the outstanding to the delivery partner. Here are the types of payment methods you can avail of:
Mobile payments
This is one of the most efficient, hassle-free, and common digital payment methods. Nowadays, numerous retailers accept mobile payments for COD transactions. You can clear your outstanding via apps or net banking. This payment system is quicker, safer, and more convenient as transactions are made with your mobile device.
Cash
Customers mostly pay in cash at the time of delivery when they opt for COD services. Although this is the most preferred payment mode for many, it posits some drawbacks. Firstly, you have to keep the payment amount handy in physical currency. Secondly, the delivery person has to shoulder the risks of theft or other unforeseen events and crimes while carrying cash.
Check
Check payment is another option for COD transactions, but it is not as popular as cash or mobile payments. Customers write a check for the total order amount and issue it to the delivery person. This is then deposited and cashed after delivery. However, the process is very slow and inconvenient. Additionally, payments through checks are not secure and reliable as it carries a greater risk of non-payment if they bounce. Hence, checks must preferably be used as the last resort.
Online card payments
Most online sellers and retailers accept online card payments where customers can purchase goods and pay for them with their debit or credit card. It is convenient, fast, and efficient. The only drawback of this payment method is buyers fear disclosing their card information by entering the necessary details into the online portal. However, this is one of the most prevalent payment methods today.
Conclusion
In a nutshell, the right cash on delivery courier service can uplift your business if it offers wide coverage, a strong customer service team, advanced technology, etc. When used effectively, COD services can guarantee a high-profit margin and unparalleled growth. Despite other modern payment methods around the corner, cash on delivery is here to stay.
FAQs
How is cash on delivery service beneficial for your business?
Cash on Delivery service can be beneficial for your business for more than one reason. Here are a few benefits:
- Increase in potential buyers – Cash on Delivery services attract buyers who are hesitant about making online transactions or do not have access to online payment methods. COD boosts sales by catering to these customers.
- Credibility – This payment method also brings in new customers, particularly those unfamiliar with or unable to rely on your brand. COD helps these lesser-known or newly launched brands to gain customers’ trust and loyalty by ensuring payment security and convenience.
- Improved customer experience – Not all customers are flexible and comfortable about sharing their card details, especially in the face of rising cyber crimes. In such a scenario, COD offers the most reliable payment option and better customer experience.
- Lower cart abandonment rate – Numerous customers abandon their carts owing to the absence of their preferred payment mode during checkout. COD helps to retain these customers and increase the conversion rate.
Wider customer reach – Unlike the other payment options, cash on delivery service can be availed by all. For example, individuals who are reluctant to reveal financial information via online options or cards feel comfortable with the COD option. COD is also popular among people residing in areas where online payment options are not widespread. Hence, you can cater to a larger customer base when the hindrance of payment is removed.
What is the difference between pay on delivery and cash on delivery?
The terms “cash on delivery” and “pay-on-delivery” are frequently used synonymously. Nevertheless, a few subtle differences set the two apart. In the case of cash on delivery, customers are specifically required to pay for their order in cash at the time of delivery. On the other hand, the latter requires the customers to use any payment method to clear the order amount at the time of delivery.
In short, pay-on-delivery is more adaptable, allowing for a wider range of payment options. COD is typically used by customers who are unable to use other payment methods.
Can I open the package before paying COD?
No. Sellers already shoulder a huge risk while shipping goods without receiving the payment. Payment before unpacking offers security to these sellers, ensuring they receive the money after delivery. So, the recipient is not allowed to unpack the delivered product before completing the payment.
What is the risk of cash on delivery?
The greatest risk associated with cash on delivery is the probability of non-payment and higher returns, often leading to more expenses and losses.
