Why Cash on Delivery is Important for Your Online Business?

Cash on delivery in India

Cash on delivery. Why it matters?

You might have many questions about cash on delivery, especially after demonetisation in India.  

But the fact is :

Cash on delivery(COD) remains the most preferred payment method in India despite government’s strategies to promote cashless transactions.

It took ecommerce to the masses in India.

Now it accounts for 57% of transactions in ecommerce sector.

Why cash on delivery is the leading payment method in India?


COD is the most convenient method to make payments. You only have to pay when the product is delivered. You don’t worry about refunds if you’re not satisfied with the product. Just give it back to the delivery boy!


Through cash on delivery, you can make sure that you’re protected from fraudulent hackers who steal your money. There is no chance for fraud.Your payment is directly received by merchants.

No bank account needed

For every online payment method you must maintain an active bank account. But in case of COD, anyone who has money can place orders and pay for it at the time of delivery. That is, a person who doesn’t even have a bank account can make a purchase.

Hassle-free transaction

This is one of the greatest advantages of COD. You just give cash and take the product. No need to think of typing your lengthy plastic card number with tension!

How does Cash on Delivery Work?

  • Customer places order for a product
  • The online retailer verifies the order and approve it
  • The product is packed & shipped to the customer via a logistics partner
  • Customer makes payment at the time of delivery
  • The logistics partner transfers the money to the retailer after deducing the delivery charge

Cash on delivery: How it helps your business?  

You can attract more customers

For merchants, providing cash on delivery is the best way to reach out to a wider customer base that still prefers paying for the product on the spot.

A tool to grow your business

COD is the most preferred payment method in India. So adding it to your ecommerce website will grow your business as you could cater to a lot of customers who belong to the remote areas of the country. It also boosts impulse purchases during checkout.

It helps build trust 

When you provide best product for your customers through cash on delivery people start to trust you and you can emerge as a credible brand.

The equation is simple- people trust you since your product reaches them even without being paid.

Did you know?

India didn’t have much digital platforms to make online transactions when Flipkart was launched.

So they actually tried to solve a problem that Indian market faced- lack of digital payment options.  They introduced cash on delivery on their platform and publicized it well.

Cash on delivery not only brought many customers to Flipkart, but also reinforced the company’s credibility across India.

Now Flipkart is the the leading e-tailer in India, which  remains at top spot despite fierce competition from rival Amazon.

Now over 70% of Flipkart’s customers prefer cash on delivery to make payments.

The fact is:

Majority of Indian population are yet to familiarize with digital transactions.

So to bring them to your ecommerce business you should definitely have cash on delivery as a payment option.

According to the latest statistics, India has nearly 34 million credit card users and 826 million debit card users.


This is barely 10% of the whole population in India. So cash on delivery is the best strategy to attract more customers to your online business

The ecommerce scenario is quite different in India.

When customers across the globe mostly use digital payment methods, the majority of Indian customers prefer cash on delivery.

This is because even after demonetization, the government’s effort hasn’t really reached out to the entire Indian cities.

Moreover, people who belong to rural parts of India are still not acquainted with digital payment options.

Besides, the recent KYC(Know your customer) rules imposed by RBI on e-wallets have decreased digital wallets transactions in India.

So people who used e-wallets are now resorting to cash on delivery.

According to the Global Payments Report of 2015, cash on delivery will show a static growth  of 7% in future.

It is expected to remain at a static growth of 10% in India even in 2019.

So, if you’re going to set up your online business make sure that you have cash on delivery as a payment option.

Because this is a great way to generate business from every nook and corner of the country.

If you say no to COD, it will affect your business negatively as customers usually are reluctant to make prepaid orders from a new seller.

Besides, when you provide quality products, you can easily build a loyal customer base for your business.

List of top ecommerce websites with Cash on Delivery option

  • Flipkart

  • Amazon

  • Snapdeal

  • Myntra

  • Jabong

  • Paytm Mall

  • Yepme

  • Pepperfry

Logistic Partner

To deliver cash on delivery orders seamlessly, you must partner with a logistic service provider.

One crucial thing that you should consider while selecting logistic partners is the delivery charges.

Cash on Delivery in India

There are some cash on delivery risks that discourage sellers from providing cash on delivery options.

What are they?

Delay in cash flow

The customers do not make payment instantly. So the retailer has to wait until the product is delivered and the payment is transferred.

Additional cost

The courier companies take additional charges for cash on delivery products. The cost rises even more when a customer returns the product.

This is why almost every ecommerce marketplace restricts cash on delivery to a certain price point.



There have been multiple incidents of theft and fraudery while delivering the product. This high risk has discouraged retailers to provide cash on delivery option.



Cash on delivery and its convenient return policy might affect your business. People often make impulsive purchases and return it after a second thought at the time of delivery.

But don’t worry you can still grow your business! Here are some tips to excel in cash on delivery business

  • Make a strong presence on web and mobile platforms

To increase traction you must have a full-fledged website and its mobile version. This is a great way to attract more customers.

  • List more items with cash on delivery options

By listing more cash on delivery eligible products, you can persuade customers to make purchase from your ecommerce website.

Because when your customer sees a wide range of products under cash on delivery category, he or she is likely to place an order.

  • Highlight best products under COD items

This is a good tactic to grow your business. Inform your customers about products eligible for cash on delivery.

Always highlight these products on your website to attract impulsive customers.

  • Bring more logistic partners to serve beyond your current geography

This is an effective strategy to serve more locations and create a loyal customer base. You can either set up your logistic arm or avail others’ services to deliver products.

But make sure you choose a logistic partner with reasonable delivery charges.

  • Ensure timely delivery

Make sure you deliver the products within the promised time. This helps bring repeat customers to your ecommerce store.

  • Use advanced tracking devices

You can make use of advanced tracking devices to prevent fraud and theft.

Why do you choose COD? Share in the comments below!


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