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What is Cash on Delivery(COD) and How Does it Work in Drop Shipping?

Create Date: 2019-06-11 09:28:36

Cash on delivery, also known as COD, is a method of payment for goods at the time of delivery rather than in advance. Besides, COD doesn't always mean cash as a payment, but certainly include transactions by cash, credit card, check, or any other electronic payment. It mainly depends upon the establishment from which you're purchasing something, as to what forms of payment are acceptable.

Since COD offers customers a time-saving advantage to make a full payment, it is a great opportunity for many big dropshippers. Thus, learning a whole new e-commerce strategy of COD is urgent since with only several items using COD, you will see the winning product, the funnel, the exact ads as well as scaling techniques.

Advantages and disadvantages of COD for dropshipping:

The Advantages of COD for Customers are:

1. The customer does not need to own a credit card to purchase;
2. In some ways COD is a means of protecting the customer from a seller who would take the money and then fail to deliver agreed upon items;
3. COD offers customers the advantage in time for saving to make a full payment since the customer is required by an intermediary to pay at delivery;
4. COD can help customers avoiding the risk of buyer identity fraud, stopped payments, or electronic card disputes.

Eventually, may enhance consumer confidence in a new company that does not yet have strong brand recognition.

The Advantages of COD for Dropshippers are:

1. The credibility of dropshippers may be tremendously increased because the consumer only has to pay when the item is delivered;

2. Impulse purchases may increase as payment is not due at the time of ordering;

3. Orders will tremendously increase accordingly as COD has lots of advantages for customers.

The Principal Disadvantage is That:

customer will not plan appropriately for payment or dislike the products they purchased, it increases the risk alternatively that many more orders will be returned than if   they had paid in advance. Returned purchases forego intended profits and may require shipping return fees which are both disadvantages for the merchant.

The popularity of COD in the Developing World:

In some countries, COD remains a popular option with internet-based retailers, since it is far easier to set up for small businesses and does not require the purchaser to   have a credit card. Many small businesses prefer cash payment to credit card payment, as it avoids credit card processing fees and time. Some shops also offer discounts if paid in cash, because they can offer a better price to the consumer.

The overwhelming majority of dropshipping transactions in the Middle East are COD. 60% of online transactions in the UAE and the Middle East are done by COD and   this has also led to the growth of courier companies offering a COD service.

In some countries like India, COD transactions are boosting internet commerce. COD transactions can also appeal to consumers who do not have established credit or   alternative means for paying for goods.

For more information about COD, please refer to list the URL: