AUGUST 27, 2021
A 2015 study by Nielsen Global reported that 83% of consumers in India used Cash on Delivery (COD) as a preferred mode of payment. By the end of November 2016, as the Indian Government announced demonetisation, cash on delivery services took a temporary hit. It shrank further since early last year when India went into a nationwide lockdown in response to the COVID-19 pandemic.
“Cash on delivery (including both card and cash transactions) has seen a significant decline from 40% during pre-COVID levels”, observed Mrigank Gutgutia, director of e-Commerce, Redseer.
The movement towards increasingly cashless transactions puts SME business owners in a fix. While prepaid transactions are certainly more advantageous for SMEs, cash on delivery is an opportunity to compete with the more well-known players in the market. Because cash on delivery signifies:
Trustworthiness: For the customer, especially for the newer ones, paying after seeing the product will eliminate any risk they perceive about your reliability.
Safety: Customers are more likely to trust the online payment channels of established retail players than SMEs; COD removes that hesitation in transacting with smaller businesses.
Ease of purchase: Ordering a product and paying when they receive it is far easier and more natural for Indian customers.
To thrive in the online market, SMEs need to offer the customer choice of safe and reliable online payment options to enable contactless delivery and cash on delivery.
At Delhivery, we deliver more than 1.5 million shipments every single day. Our standardised policy to process cash on delivery orders — including adequate packaging, accurate labelling and routing — ensures that the packages reach the customer’s doorstep without damages.
Customers know this too. Choosing Delhivery as your logistics partner will assure your customer that they can prepay for their orders and rest assured that the package will reach their doorstep in impeccable condition.
One of the biggest risks of cash on delivery is the higher chances of returns. For small businesses, the operational and cost overheads in returns processing significantly reduce their profit margins. This is why most SMEs don’t offer cash on delivery.
At Delhivery, we leverage advanced analytics to prevent this. When you partner with Delhivery, you get:
Address disambiguation: Addfix is Delhivery’s proprietary address disambiguation service that leverages machine learning techniques to convert addresses into a more consumable form. With Addfix, Delhivery executives can find the exact location of the customer, ensuring higher delivery rates. This way, a higher percentage of your cash on delivery orders will be delivered and cash collected.
Real-time containment zone tracking: Based on the pin code of your customer, you can check before shipping whether they fall within a containment zone. If they do, you can either inform the customer of expected delays or proactively cancel the order. You can make a strategic decision about cash on delivery orders from containment zones.
RTO predictors: Delhivery’s advanced analytics engine processes customer data and past orders to identify and flag addresses that are most likely to return packages. You can use this to customise your cash on delivery policy or pricing strategy.
While the current situation has led to higher adoption of cashless payments, the popularity of cash on delivery cannot yet be written off. Delhivery can eliminate the risks and costs involved in COD processing.
At Delhivery SME, our mission is to bring the powers of e-commerce logistics and technology to every small business owner. We are evolving with the changing times, adapting processes to meet the needs of the end-consumer. Whether you need cashless/contactless delivery or the tried-and-tested COD, we have got your back.
To learn more about how Delhivery can power your small business, speak to a consultant today.