One of the golden rules of eCommerce is to offer customers multiple options to pay for their orders. From net banking to credit and debit cards, unique payments interface to wallets such as Paytm, PhonePe, Payzapp, Ola Money, and cash on delivery. While sellers keep on adding partners to their online modes of payment, they often miss out on one of the most fundamental payment methods in the Indian context- cash on delivery.
According to recent research by Nielsen’s Global Connected Commerce Survey, as many as 83 percent of Indian online shoppers use cash on delivery as their preferred mode of payment. While these statistics were observed to be close to 72 percent in the urban areas, 90 percent of such orders were from rural regions.
No doubt that net banking, UPI, wallet payment modes are becoming popular among the audience with growing stress on digitization. However, most buyers still prefer paying via the cash-on-delivery method for a variety of reasons. While many people believe that the reason behind online payments not being so popular is the limited use of the Internet in rural regions of India, the results state the opposite. Despite the low Internet usage in countries like India, the eCommerce sector is experiencing staggering growth and has reached an astonishing $1 trillion mark. Moreover, the growing eCommerce industry is also fostering digital enablements for sellers, vastly in the form of third-party logistics.
Cash on delivery has enabled even those people to purchase who don’t possess a bank account or an e-payment service. It wouldn’t be incorrect to say that it has brought eCommerce to the consumer’s doorstep in many ways. With best logistics partners like Shyplite, sellers can extend their eCommerce capabilities and provide customers with what they’ve been waiting for. Here are other reasons why cash on delivery is the preferred mode of payment for Indian customers-
Familiarity with Cash
One of the biggest reasons behind cash on delivery still being one of the most popular payment options is the customer’s familiarity with cash. Most of the buyers have experienced shopping in the retail model. That’s where customers get a look and feel of the product and make payment once they decide to purchase it. However, the case of shopping is entirely different in eCommerce. We replace the actual product with product listings that have images from various angles, their respective descriptions, and even videos in a more recent endeavor.
Despite these changes, it’s intuitive that Indian customers are more accustomed to paying cash. Nobody wants to get into technical failures with cards and digital wallets, so most of the population carries cash with them. After all, if you’ve been shopping for a while, you must have faced the issue of payment failure at least one, either in retail or online stores. With cash, there are no such issues. Consider it an old habit that dies hard.
Fear of Online Frauds
With digital developments taking over the world by the storm, there is seldom any industry that hasn’t invested in online establishments. That being said, the cases of online fraud have also risen by many folds. Cyber attackers are now eying many industries, especially eCommerce, where payments and transactions are quite frequent. Additionally, since the Internet is more accessible these days, anyone can set up their stores. From a shopper’s perspective, what is the guarantee that the store you’re shopping from will not just run away with your money?
That’s where cash on delivery payments play a huge role. Suppose that a new seller creates their eCommerce store and reaches out to customers with new products and unbeatable prices. With lower prices, it is easy for a buyer to get enticed and make a purchase. However, unless the store is Amazon or Flipkart, it is difficult for customers to trust it. After all, we’ve all heard cases of new websites scamming customers. This scenario drastically changes in the presence of cash on delivery as a payment method.
With COD services, buyers can dare to make the purchase even from a new eCommerce website they’ve come across. That’s because, with COD, they will be required to pay only when the product arrives at their doorstep.
Unavailability of Online Cards
Keeping the fraudulent activities aside, a lot of customers do not possess credit or debit cards. Similarly, in rural areas, customers might not know about wallet payments, UPI services, etc., that can be used to pay for online purchases. These segments of people have no other way than to rely on cash for availing goods and services. So, unless an eCommerce store offers COD as a mode of payment for online purchases, there is no way they are winning over these customers.
In another instance, customers don’t always have cards beside them, and chances are they might not remember the necessary numbers to authorize a payment. In such scenarios, it is much easier to rely on cash than any other payment source.
Limited Secure Gateways
Even if you’re an authentic seller, who’s been catering to the customer’s orders for a long time, there is no assurance that cyber attackers can’t hack your system. In other words, for your website to process payments, you need to partner or integrate a payment gateway. When your customers decide to pay for an order online, a payment gateway opens that acts as a bridge to collect the customer’s payment and deposit it in your account for a small fee.
Online attackers understand how the data packets travel in between the gateway and place an attack there. This means either your customer’s account details, card information, passwords, etc., are bound to get stolen. Or, they can capitalize on this moment and transact a much bigger sum of money from your customer’s bank account. Either way, your customers lose money, and more significantly, the trust in your brand. There are no such issues with cash on delivery payments, as the customer hands over the money to the delivery representative. Even if the customer has not faced any issues themselves, the hoax created around digital payments restricts them from using their cards online.
As a seller, you must have been through an order canceled a short while after being placed. When customers make a purchase online, there are many chances that they might withdraw their orders soon enough. Maybe because they changed their mind, found a better deal anywhere else, needed it sooner, or any other reasons. Paying online usually is bound to a mentality that a customer is forced to receive an order. Moreover, the customers who cancel it midway understand that the payment will take some time to reverse, so they tend to make purchases carefully. The point is that canceling orders that are paid for online has more than a few hassles.
On the other hand, when you pay for orders via cash on delivery, you can cancel it anytime without putting your money at any kind of risk. Similarly, there is a greater degree of shopping satisfaction with COD payments. Many times the package gets damaged during transit, and when the delivery agent comes to your door, you can clearly see the package distorted in shape, etc. While this is the logistics company’s fault, it is the customer’s money put at risk. With COD payments, customers can refuse to accept the package that arrives in poor condition.
As a seller, it is advised to partner with a robust logistics solution like Shyplite that offers you the choice to ship with 30+ best-in-class courier services. This can help you avoid such issues and provide a seamless COD to your customers.
Ship Seamless Cash on Delivery Orders with Shyplite
With eCommerce sellers striving to maximize the customer reach and provide them with an outstanding experience, there is a need for robust technology-based logistics support. Shyplite, being one of India’s top logistics partners, helps eCommerce sellers reach their goals with seamless cash on delivery payments. The platform offers the choice to ship with more than 30 courier services, including COD, at the lowest shipping rates. Additionally, sellers get to leverage technology to reduce their returns, find the best courier partner for a particular order, and provide their customers with an end-to-end branded tracking and notifications platform.
There is no doubt that the eCommerce industry will continue to grow in the coming time. Thanks to the growing trend of digitization and rapid change brought upon by the industry due to the pandemic. For sellers, this means an unprecedented opportunity to reach out to rural and untouched territories with their products. With the proper logistics solution, this dream will find the light of the day and help even the small sellers and new entrants to compete fiercely in the market.