![]() When a postal worker or delivery person has a mobile card reader on their person, they can process payments for delivered goods immediately. While “cash” is in COD’s name, it’s not the only payment method merchants can use for this service. In some cases, returns are too costly for retailers to process, so COD can result in lost profits. ![]() Cash on delivery also creates cash flow issues for retailers, because they don’t receive cash at the time of order that they could invest in other parts of the business.įurthermore, COD can lead to increased return rates. The resulting waitlists and stockouts can create a frustrating customer experience.ĬOD is risky for retailers because they’re producing and sending goods without a guarantee that they’ll be paid for them. If customers place bulk orders to try items in different sizes or colors, there’s a greater chance that items other shoppers want will be out of stock while the merchant processes returns. While COD is riskier for retailers than for consumers, retailers can charge a deposit or delivery fee to outweigh the costs of making a delivery without a guarantee that it’ll turn into a sale. Just make sure they’ve opted in to hearing from you before sending them anything. □ PRO TIP: Sending digital receipts via email is a great way to organically collect customer contact information at checkout and build an email list to fuel your retention marketing. When customers do that, it increases the chance that they’ll retain more of those items. This improved cash flow is also beneficial to merchants, because customers may order more items than usual. Ultimately, COD improves cash flow management for consumers because they don’t rack up debt if they order more than they intend to keep. With cash on delivery, customers can order multiple sizes, colors, or styles and find the right fit without taking on the financial burden of paying for these items ahead of time. Consumers can try products risk-free before making a decision, which is great when they’re shopping for something they may need to order several versions of, such as clothes. Advantages of cash on deliveryĬash on delivery is beneficial to consumers for a number of reasons. If the customer fails to pay for their food, the delivery driver won’t hand it over.Īre you considering offering cash on delivery payments at your business? Weigh the pros and cons before you make a decision. If a customer doesn’t pay for their delivery in advance, they need to pay the delivery driver directly. This can lead to more frequent inventory counts to reconcile differences between your ecommerce platform and POS system’s inventory quantities and ensure stock levels are accurate.Ĭash on delivery works in a slightly different way if you’re dealing with perishable goods, such as a delivery order from a restaurant. □ PRO TIP: When you use different platforms to run your online and retail stores, inventory discrepancies are more likely to happen as a result of both systems not being in sync with one another. The key difference is that the merchant doesn’t ship the goods until they’ve been paid for. ![]() In most instances, customers still have the option to return items if they’re not satisfied with them. With cash-in-advance payments, customers pay for items before they receive them. Instead, they can decide whether or not to keep and pay for the items after receiving, inspecting, and (in the case of apparel) trying them on. Despite what the name suggests, the customer usually doesn’t have to make a decision immediately upon delivery. However, most retailers who offer cash on delivery require customers to place a deposit or put a card on file so they can be charged if they decide to keep the goods. The customer places an order without committing to the purchase. With COD, the retailer carries the costs and risk associated with shipping products without a guarantee that the customer will buy them. How does cash on delivery differ from cash in advance? The sale isn’t final until after the goods have been delivered and the customer has decided to pay for them. With cash on delivery, the retailer carries significant financial risk, and usually pays for the cost of shipping, because they don’t know if the customer will end up paying for the goods. If the customer doesn’t want to keep the items and pay for them, they go back to the retailer. Cash on delivery (COD), also known as “collect on delivery” and “cash on demand,” is a payment method in which customers don’t pay for mailed goods until they’ve received and decided to keep them. ![]()
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