by Arun Nair

Why COD isn't our best friend

Taking the plunge to accept COD wasn't a very easy decision. I dare say that it was driven by a bit of thought, a whole lot of emotions and an absolute need to increase revenue.

For starters, cash on delivery was never part of our initial plan. The general Indian market norm is that 1 out of every 4 COD orders is usually a reject. These figures are for retail e-commerce. So technically, the products that are returned will always be used for another customer/order. Now let's take our scenario. Unlike retail, custom merchandisers don't have the advantage of reusing the product as each one of the products was designed/printed in line with the requirements of a specific customer.

So the intent was very clear - Accepting COD seemed downright stupid and partially suicidal and we wanted nothing to do with it.

According to a recent study, 72% of retail buyers prefer to use the COD option as opposed to online payments.

There are multiple reasons which would support the logic behind this. Some of the most important reasons would include:

  • Cash in hand is still preferred to Cash at the bank: In spite of the numerous initiatives undertaken by the government, the bulk of our population still prefers to keep cash in it’s most liquid state. This can also be attributed to the conservative outlook that is still extremely prevalent.

  • Lack of Trust: Most customers believe in paying for a Product only when they can actually touch and feel it. Ironically, there exists an interesting paradox here as most sellers (logistics agencies) don’t actually allow the customers to open a package without first paying for it. One can only assume that the customer is relieved to actually receive something and verify that the company/seller is bonafide.

  • Faster Check out: With the pace at which things happen these days, millennials in particular don’t really want to go through an additional step of verifying an OTP or going to a third party payment app. Since COD is direct and immediate, they often select this and worry about the “How to pay” at a later time.

  • Habit: “I’ve been paying in cash all my life, why should I change now”. We are all creatures of habit and Indians in particular love to maintain traditions and habits. We aren’t all that conducive to change.

Why COD isn't our best friend

Right! So let’s get back to how  Your Design Store eventually fell victim to this economic necessity. Three months into launching the website, we started noticing that there was a huge volume of abandoned carts. Customers loved the experience, went ahead to design their customized product but would someone drop out after adding the product to their cart. This was disheartening and we automatically attributed it to cost. We figured out that there were many such portals (With a substandard user experience) offering products at lower prices. Like any other retailer would, we started offering discounts (5 to 10%) but the trend continued. 

At around the same time we started getting multiple calls/messages/chats asking us if COD was an option. Our answer was obvious and unanimous - Are you crazy ? We aren’t going to take the risk of making you a product for which we have a 25 to 30% chance of getting paid. These calls continued, as did our stubbornness. Then finally, on a cold winter night (Okay i’m just kidding, I don’t remember the day) something happened that would change the course of our business. I was on amazon.in buying a home essential product. After adding my product to cart, I checked out using COD. Honestly, the entire process was subconscious. I keep thinking back to why I would do this (Or why I still continue doing this). None of the points above hold good to me - I have multiple options for payment (Credit card included) and I’m certainly not worried about trust. I know that I always have an option of returning the product. The only point which made sense was - Habit / Faster check out. Irrespective, this changed everything. If I (Someone who is absolutely conscious and aware about online payments) can so easily choose COD, then we were in A LOT OF TROUBLE.

Why COD isn't our best friend

About 5 months into operations, we finally accepted that this might just be a necessary evil and truth be told, this has certainly changed things for the better. Unlike other retailers, we take a more cautious approach to accepting COD orders. Of course, a bulk of the orders will receive are just bogus -

  • The number given is fake

  • The customer is not responsive on call 

  • At times we have some superstars who design and order it “Just for fun” !

Once we get past these orders, we see quite an amazing trend

Here’s a state-wise representation (Spanning 18 months)

Why COD isn't our best friend

It’s safe to say that while COD comes with a huge bunch of drawbacks to a business,

there is no doubt of its impact on revenue.