Cash on Delivery: Relevant or Redundant?

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Cash on Delivery: Relevant or Redundant?

For starters, cash on delivery (COD) is defined as a type of transaction in which the recipient makes payment for goods at the time of delivery; and the goods are returned to the seller if the purchaser does not make payment when goods are delivered.

Paper Over Plastic

Before you start to think paying cash is irrelevant or might be a thing of the past, let’s take a look at some advantages of COD.

  • Buyers do not need to own a credit card to make a purchase
  • Transaction poses low risk for buyers since no payment is needed until goods are received in satisfactory condition
  • Buyers are protected against online scams involving credit card details
  • Credibility of retailers may increase as buyer’s confidence is enhanced

To my surprise (yes, guilty as charged), a vast amount of people in Southeast Asia South are still for COD. And with recent studies proving that Asia-Pacific is already the largest digital retail market in the world with eCommerce sales at $877.61 billion, Southeast Asia is fast becoming the new frontier for e-commerce.

In most regions, payments are made via non-cash methods such as credit card, but a recent study has shown that Southeast Asians desire other methods for payment. More than one-third of all consumers surveyed in top cities and outlying areas listed COD as their preferred payment mode.

Not All Roses

Utilizing a COD payment mode does come with its issues. Delivery companies in Southeast Asia face various problems like payment not being collected because delivery drivers are actually forgetting to do so. Plus, human errors are inevitable. Most drivers do multiple deliveries a day and not every delivery is a COD transaction. This makes it extremely easy for drivers – and sometimes, customers themselves – to overlook that payment is needed for a particular delivery.

Neglecting payment collection or collecting a wrong amount could lead to other issues as well. A driver who has forgotten to collect payment initially could be reluctant to ask for payment from a customer afterward, in fear of being reprimanded. Drivers may not even remember which particular delivery that payment was supposed to be made.

Customers themselves are not happy and are naturally less willing to fork out money if there was an error made during delivery (especially if it’s not their fault). In certain cases, customers who have already made payment are asked to pay again as drivers are not entirely sure which transactions required COD. Disputes would arise when both parties do not take responsibility and are not willing to make payment.

These simple mistakes would eventually cause severe loss to companies in the long run. Also, when the customer had a nasty experience with the company where COD disputes arise are less likely to buy from the company again. 

Is there any way to make COD transactions easier?

Yes, in fact, companies have been getting creative to mitigate the issue of overlooking payment collection. One way is to use labeling to differentiate the parcels that require COD from those that do not. For instance, the payment mode can be included on the airway bill or shipping label. Other more creative ways include drawing a dollar sign on the COD parcels or sticking colored stickers to mark the ones that require COD.

Some companies go the extra mile by having a column on the delivery run sheet for COD collection and signature and also marking out the deliveries that require COD with a highlighter.

Though errors may still occur, having a simple reminder system may still really be helpful for delivery drivers.

Moving forward, companies have turned to technology for a helping hand. Drivers now have mobiles apps to assist them with their deliveries. Such apps may have features that would remind drivers which deliveries are COD transactions. Another helpful app feature would not only prompt drivers for uncollected payment with sound notifications, but also inform them how much is needed in total. Apps could also inform drivers any shortage of payment collected, and help calculate exactly how much change is needed to return customers.

With constant, hard-to-miss reminders provided, delivery drivers are less likely to overlook any payment collection – making COD transactions virtually error-proof.

Here To Stay

Based on aCommerce’s latest aggregated numbers, COD made up 74 percent of transactions in Southeast Asia, up from 53 percent the year prior. The result validates the importance of COD to e-commerce in the region. So like it or not, COD is a payment mode that is still relevant and is going to stay relevant for the foreseeable future.

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