Cash on delivery–everything you need to know

At the end of the customer journey in an online store, a customer has to decide on the payment option. Many customers know what their choice is going to be way before that stage. Some of them prefer traditional money transfer, while others choose PayPal. There are different forms available in other countries, like, for example, instant bank transfers via BLIK. However, there are still many people who think that payment on delivery in the safest option. This raises the question–should you have that option in your eStore?

 

What do customers want?

 

We ought to begin by stating that every seller’s indisputable duty is to provide various payment options in a clear and understandable way. You cannot let it happen for your customer to feel confused about the shopping summary because it’s hidden or unclear. If you don’t provide sufficient and legible information, you put yourself in danger of receiving a penalty.

 

Moreover, customers are reluctant to purchase products in stores that make shopping difficult or create a negative customer experience. There are thousands of eCommerce companies, and unsatisfied consumers have a vast selection of your competitors. The lack of transparency results in:

 

  • Decreased conversion
  • Worse traffic monetization
  • And, ultimately, sales

 

Moving on to the payment on delivery question, it is vital to state that they are much more popular in Eastern Europe than in Western Europe. Only 4% of Western European customers utilize this option. In Russia and Eastern Europe–as much as 36%. Today, however, that number decreases. Naturally, the COVID-19 pandemic is a partial reason. Customers are encouraged to choose contactless delivery options, and some sellers have resigned from this option altogether. 


Global Online Consumer Report, KPMG International, 2017

 

On the other hand, the group of customers who want the payment on delivery option is still significant and cannot be neglected. Mainly because the benefits of this payment method are vital and clear:

 

  • Guarantee of quality and compliance. A customer that pays on delivery can verify if the delivered product matches their order and if it’s not damaged in any way.
  • Shorter delivery time. You don’t have to wait until your payment is confirmed. The parcel can be sent almost immediately after placing the order. But, here, someone might argue that instant bank transfers eliminate this problem.
  • Increased privacy. Payment on delivery leaves no online tracks. If, for instance, you want to buy a gift for your partner, and you’re using a joint account, payment on delivery if your best bet.

 

How long does the seller have to wait for money?

 

That depends on the agreement between an online store and a courier company or a courier services broker. Each company has a different policy regarding this question. Bear in mind that if you cooperate with the broker, that time will be extended. That’s because the customer pays the courier, and then, the courier company transfers money to the broker. Your store is at the very end of this process.

 

Depending on who your carrier is and what option you choose (express or standard), you can wait for money from 24 hours up to 30 days. Also, remember that the date of the money transfer is counted from the next business day (after delivery to the recipient). Only working days are counted. The indicated date is the date of the transfer, not receiving the funds on the account.

 

Convenient settlement thanks to the order fulfillment service

 

Some of the fulfillment operators accept payments on delivery. At Omnipack, we have a tool that facilitates this process–CoD Tool. As a sender, we are an entity that receives payments for the cash-on-delivery parcels. CoD Tool allows us to automate the process of transferring this money to our client’s accounts. Once a week, we provide a settlement for all cash-on-delivery parcels. Each of our clients can see their settlements (archived as well) per each parcel. Such integration is possible with every courier companies that accept payment on delivery.

 

Can you protect yourself form not collected parcels?

 

Unfortunately, the practice of not collecting the cash-on-delivery packages is a real thing. The good news is, you can protect your store from it. What should you do? Just ask your customer for a letter (simple email will do) with the request for payment on delivery. Today, carriers (brokers too) have systems that allow you to track each order’s status. If the parcel is not collected, you wait until the courier company returns the shipment. Next, you should send an email to your customer asking them to cover the delivery costs. If that proves to be inefficient, you should send a registered letter with acknowledgment of receipt with the final pre-court payment request. It the customer fails to respond, you file a claim in court.

 

The payment on delivery option is no longer a necessity. However, many stores still offer that option, mostly because of their reputation and transparency reasons. The lack of the payment on delivery option can be a severe shopping barrier. As a result, there’s a risk that some of your customers will abandon their carts.

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