Definition
Cash on delivery (COD) is a payment method where the customer pays for an order when it is delivered, usually in cash or by scanning a QR code, rather than paying online at checkout.
Detailed Explanation
COD lowers the barrier to buying online because customers do not risk money before they see the product. It usually increases conversion rates, especially for new stores and first-time buyers.
The trade-offs are real:
- Refused or failed deliveries, which lead to return-to-origin (RTO) costs.
- Delayed cash flow, because the delivery partner collects money and remits it later.
- Handling risk for delivery staff carrying cash.
Many sellers balance this by confirming COD orders by phone or WhatsApp, offering small incentives for prepaid orders, or limiting COD on high-value items.
Nepal Context
COD is widely used in Nepali e-commerce, alongside wallets and QR payments. Delivery partners collect payment and remit it to sellers on an agreed schedule. Sellers often call or message customers to confirm orders before dispatch, which reduces refused deliveries. Increasingly, customers pay the rider by scanning a QR code instead of cash.
Practical Examples
- A clothing store confirms every COD order on WhatsApp before dispatch and asks for a landmark for the address.
- A seller offers free delivery on prepaid orders to encourage digital wallet payments.
- An electronics shop requires a deposit for high-value COD orders.
Key Takeaways
- COD increases conversions but adds refusal and cash-flow costs.
- Order confirmation reduces failed deliveries.
- Track COD refusal rates by channel and region.
Common Mistakes
- Dispatching unconfirmed COD orders.
- Not tracking RTO costs when judging ad performance.
- Hiding COD availability, which can reduce trust.
Related reading: logistics and courier marketing and e-commerce in Nepal.
