How does cash on delivery work?
December 16, 2022
Offering a cash-on-delivery method in your e-commerce checkout is an easy way to increase your sales, since your customers will have several payment options to choose from.
What is cash on delivery?
It consists of giving the recipient the option to pay the carrier upon receipt of the package. Keep in mind that companies will usually ask your customer to pay in cash.
That is, when the carrier arrives at your customer's home or office, he will deliver the package and in return, your customer will pay the exact amount of his purchase.
You, as the seller, will receive the money paid by your customer by bank transfer, unless the transport company gives you other options.
With cash on delivery, can my customer open the package before paying?
Before sending cash on delivery, you should know that your customer will not be able to open the package until he has paid.
With C.O.D. shipping, the transaction is reduced to three simple steps:
- The carrier delivers the purchase to the recipient
- The customer pays you for the total amount of the products purchased
- The shipping company is responsible for paying you the amount of your sale
However, if due to the nature of the items you sell, or for any other reason, you want the customer to be able to open the package to check it before paying, you will have to specify this on the delivery note.
Only then will the carrier allow the recipient to open the package before receiving the money. So be sure to put it in writing on the delivery note if you want to give your customer that option.
Is it safe to ship cash on delivery?
We can definitely say that cash on delivery is safe.
The buyer does not have to enter his credit card details, or any other payment method he uses, in your online store. So for some users this method can be more secure and private.
On the other hand, from your side as a seller, you are assured that you will receive the money from that sale.
However, as with any transaction, there is some risk in using this shipping method.
From the buyer's point of view, you may receive the wrong products or products that are not in perfect condition. However, keep in mind that this possibility is present in all shipping methods.
As a seller, one of the problems you may encounter with this method is that the customer decides not to keep the package. If this were to happen, you would still have to pay the shipping cost to the carrier.
In summary, we can say that it is safe to ship cash on delivery. The risks that both you as the seller and the buyer would run are practically the same as they would be with other shipping methods.
Advantages for your customers that translate into a great opportunity for your business
Most of the advantages of cash on delivery directly benefit your customers. And, therefore, this translates into higher conversion for your eCommerce.
These are some of the advantages you can enjoy and offer by shipping COD:
- You ensure that the customer does not cancel the order when it is already on its way to their home, avoiding the possible economic consequences that this would have on your business.
- You increase the trust towards your e-commerce with this shipping method.
- Your customers know they can pay until they receive their order at their doorstep.
- Your customers will not have to enter their card details on your website. Ideal for those who are more reserved with their information.
- The buyer does not have to pay in advance, so he will feel more secure buying in your eCommerce.
You know what they say, the best advertising is created by a satisfied customer.
How to ship C.O.D.
Sending a C.O.D. package is easier than it sounds, although the steps are not exactly the same as for other shipping methods.
You only have to add one extra piece of information: the amount your customer must pay for his products, and request the service, of course.
When you contract the additional C.O.D. service, you must inform the carrier the exact amount to collect from the recipient. It's as simple as that.
Some carriers, such as UPS, will collect the amount specified in the C.O.D. code or on the shipping label of the package. So the amount will always be visible to the carrier.
From this point on, the order path is similar to that of the other shipping methods. The carrier will deliver your purchase to your customer, but not before collecting the amount you indicated when you contracted the service.
Subsequently, in a few days you will have the money from that sale at your disposal.