1 month ago
CoD Persists in E-Commerce Despite UPI Growth
Even though digital payments like UPI are growing, many people still prefer to pay for online orders only when they receive them, using cash on delivery (CoD).
This is especially true in smaller cities.
Brands face challenges like tying up money in inventory and higher return rates with CoD.
To make CoD less costly, companies are using AI to check orders and offering partial payments or BNPL options.
Some brands have reduced CoD share by using better technology and communication.
CoD accounts for 60% of e-commerce orders, rising to 75% in Tier-II and smaller markets.
Brands face challenges like tying up working capital and higher return-to-origin rates with CoD.
Companies are using AI to reduce CoD costs and improve payment certainty.
Partial CoD and BNPL options are becoming more common to balance convenience and payment certainty.
Brands like Miraggio and Sirona have reduced CoD share through better technology and communication.
- Who
- E-commerce brands and consumers
- What
- Persistence of cash on delivery (CoD) in e-commerce despite UPI growth
- Where
- India, particularly in Tier-II and smaller markets
- When
- Ongoing trend
- Why
- Trust issues, limited credit penetration, and consumer preference for paying after receiving products
Pro-CoD
Anti-CoD
Trust and Convenience
Pro-CoD
Consumers prefer CoD due to trust issues and the ability to pay after receiving the product.
Anti-CoD
CoD is costly and inefficient, leading to higher return-to-origin rates and financial strain on brands.
Payment Certainty
Pro-CoD
CoD ensures payment only after successful delivery, reducing the risk of non-payment.
Anti-CoD
Prepaid methods like UPI mandates and BNPL options provide better payment certainty and reduce financial risks.
Key facts
- CoD Share in E-Commerce
- 60% overall, up to 75% in Tier-II and smaller markets
- CoD Share in Quick Commerce
- Less than 5%
- CoD Share in Fashion E-Commerce
- 20-50%
- RTO Rate for CoD Orders
- 20-30%
- RTO Reduction with AI
- 5-7%
Quotes
Deep Bajaj
Founder and CEO of Sirona Hygiene
“We incur the full cost of goods, packaging and forward freight before we have any certainty that the cash will come in, so scaling CoD ties up capital in inventory that may not convert to revenue.”
financialexpress.com
“For fashion brands launching new collections frequently, delayed inventory can quickly become a lost sales opportunity.”
financialexpress.com
Sources
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