India is going cashless. Yes, it is slow, and for a cash-driven society like ours, there is an inherent resistance to going completely cashless. However, things are changing and for the better. When even the local ‘paan-wala’ in his little corner standee displays a sign that says it accepts payment through a digital wallet, its time for businesses to rethink their payment strategy. What started as a revolution in the Indian e-commerce story, Cash On Delivery or COD is going to die a slow death or evolve into something that’s truly unique, just like the Indian consumer.
If you are building an online business based on this outdated payment model, here are 5 solid reasons that’ll make you stop and re-evaluate.
1. Availability of Reliable Online Payments
When e-commerce started in India, cash on delivery was the only way to trust sellers that customers had never seen before. Indian businesses have always had a reputation for having an average customer service. With cash on delivery, the customer had an assurance that their product was coming, no matter what. Unreliable internet connections and technical glitches at the banks end only added to the problem. Fast forward to 2018, now there are far more reliable and secure payment options available and the customer actually prefers making payment online than carry around cash.
2. COD- A Logistical Nightmare
Cash on Delivery logistics is a real pain for any business. Cash which is collected by executives takes time to make its way into the bank account of the actual business. The requirement of the customer and the delivery executive to be available at the same place at the same time only adds to this logistical predicament.
3. Capital Intensive
Cash on Delivery model makes businesses more capital intensive. Almost all logistics providers charge extra for cash on delivery model requiring an increase in the working capital for the business. This combined with the fact that online businesses (especially e-commerce) operate on wafer-thin profit margins doesn’t help either.
4. Return Requests
The average Indian consumer is very demanding. Even though e-commerce and online purchase “returns” have been decreasing drastically, it is still a problem for sellers. When the customer demands that the cash be returned, the seller or the business will have to initiate refund even before the actual cash has made its way to the business’s bank account.
5. Reduce Chances of Fraud
Online business has always had its share of trouble with fraud. Many of India’s leading e-commerce companies have dealt with different kinds of fraud including unscrupulous customers paying with counterfeit currency, using black money and in some cases even mugging delivery executives for the cash they carry. With Cash on Delivery eliminated, these problems will become non-existent.
It doesn’t necessarily mean Cash on Delivery will completely die off; Indian e-commerce is not quite there yet. But it is interesting to note that payment companies are introducing innovative solutions like “buy now, pay later” to give customers the peace of mind of cash on delivery without actually having to carry cash. As online businesses in India evolve and expand their user base, only the companies that innovate and cater to the customer’s need for reliability and convenience, while aiming for profitability will thrive.
Have a business and facing similar woes? Join ePayLater now to improve your customer experience!