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The pandemic has had a massive impact on business and one of the industries post-pandemic is the e-commerce business. Although there is a strong push for digital modes of payment, most people still go with COD delivery while ordering products from e-stores. Three out of 4 people in India still opt for cash on delivery for online orders. This may be due to a lack of trust in online sellers, especially new ones.
Online selling has opened up a new market and is mostly used by today’s technologically savvy generation. However, many still do not rely on online payments and prefer COD remittance. Many are wary of fraudulent activities, poor product quality, or may not have access to fast digital payment methods. Needless to say, sellers who don’t offer cash on-delivery payment options may be compromising sales.
Step 1: What to Sell
The first and foremost step is to decide what you want to sell – if it’s a product or service. Generally, there are very few online businesses that sell services for COD payment.
Your product may be from any of the categories:
- Apparel
- Electronics
- FMCG
- Medicines
- Home Décor and Furnishing
- Food
And the list goes on. It may happen that you are selling products from multiple categories but only want to take one of them online. Make a decision on which product it is that you want to sell online.
Step 2: Select a Platform
Where to sell online is the next decision you need to take. You can choose to sell via your website, social media account, or marketplace.
1. Marketplace
Selling through marketplaces is big. Often, small businesses will sell through these platforms since they don’t need to worry about marketing. As per Digital Commerce 360, marketplaces accounted for 58% of total global sales in 2019. That’s a considerable number which only continues to rise. If you’re invested in wholly selling your products online or in the initial stages where you can’t set up your website, choosing a marketplace is a good option.
Marketplaces available in India include Amazon, Flipkart, eBay, Myntra, Paytm, IndiaMART, and more. Check out all of these brands’ seller programs. See which one offers you the best for what you need right now. Amazon and Flipkart are generally preferred choices. But if you’re selling apparel, Myntra may be the better option.
2. Direct-to-Consumer Website
If you wish to sell through your website, you need to purchase a domain name suitable for your business. You must host this domain name through a web hosting company. Examples of web hosting companies would be GoDaddy, Blue-host, HostGator, and the like.
The next thing to do is strategize content for the website. The information must be relevant and induce sales. A professional web designer and developer will help you build the website and maintain it. Once your website is live, you can start selling your products. Several businesses sell through direct-to-consumer websites, such as H&M and McDonald’s. Having your own e-commerce website is a good option. In fact, in the last year, more brands have started selling through their websites. According to Uni-commerce, growth in order volumes year-on-year was 77%!
3. Social Media
2020 brought significant changes in the way business was conducted online. One of these changes was the growth of Social Media, especially Facebook, and Instagram, as platforms for businesses to sell their products. Thrift stores, handicrafts, apparel, beauty products, and candles are only some of the products being sold through social media today. If you don’t have the resources to sell through a marketplace or your own website, social media is a viable platform for online business.
Deciding on a platform will give you a better understanding of how to sell products online.
Step 3: Marketing of Products
Marketplaces, as mentioned earlier, usually handle the marketing of the products themselves. Some marketplaces like Amazon even provide third-party services that help grow your business on their platform.
When it comes to marketing your own website, you need to be more involved. First, you must hire the services of an SEO manager. He or she will work towards increasing organic traffic to your website and converting leads. You could also market yourself through social media.
For businesses that are already selling through social media, marketing and selling through the platform happen simultaneously.
If you’re still unsure about how to sell things online by marketing them through these channels, get a digital marketing agency on board. They will generally provide SEO and social media marketing services. Some agencies will even help you with website development and maintenance.
Step 4: Order Collection
Customers may place orders differently depending on the platform you’re selling through.
If it’s a marketplace, orders will be placed on the platform and relayed to you. If it’s through your website, customers will place orders on the website. And if it’s social media, customers may place orders through direct messaging, Google Forms, WhatsApp, or Email.
Step 5: Delivery of Products
Once your orders come in, you will need to enlist the help of a logistics partner to deliver your product to the customer.
Marketplaces typically handle logistics, so you don’t need to have another delivery partner on board. Everything, from the time the order is placed to delivery, is taken care of by the marketplace.
If you’re running your business through a direct-to-consumer website or social media, you may get in touch with logistics services such as DHL, Blue Dart, FedX, etc., to complete the delivery for you.
Step 6: Collection of Payment
Once the customer receives the product and is satisfied, they will make the payment in cash or digitally to the delivery partner. The logistics partner will then transfer the amount for all deliveries completed within a particular month. The partner may also deduct charges for their services before transferring the amount to the seller.
Importance of cash on delivery
COD delivery, one of the most talked about features of e-commerce, plays an important role in any online business. According to Nielsen’s Global Connected Commerce Survey, 83 percent of Indian consumers prefer to pay via COD delivery. This method of payment is prevalent in tier-2 and tier-3 cities where there is no infrastructure or awareness of online payment. To avoid online scams customers prefer to pay through cash on delivery to avoid the hassle of providing their bank details for online transactions. However, since more than half of the customer base opts for COD orders, it becomes mandatory for online stores to provide that mode of payment.
Advantages and disadvantages of Cash on Delivery payment option
‘Cash on Delivery’ has been a sensitive topic in the e-commerce industry. It was pioneered and now is the most widely used model in India. The overwhelming majority of e-shopping transactions in the Middle East are COD. 60% of online transactions in the UAE and the Middle East are done by cash on delivery and this has also led to the growth of courier companies offering a COD service. But even now, an e-commerce business owner would want to skip providing their customers with this feature intentionally due to many reasons, namely – vulnerability to losses on returns, delay in the amount being credited to the seller’s account, etc.
Of course, there are advantages to COD too like trust-building with customers and easier order placement but are they worth the extra efforts from the e-commerce owner’s end? Online payment options and fast bank transfers might cause the business to question whether it makes sense to offer the option for cash on delivery to customers. Spoiler alert – we do have a strong view and suggestion on this topic for you. Here we are going to explore the advantages and disadvantages of cash on delivery and what our views are on the same, so hold tight!
Advantaged of Cash on Delivery (COD) payment mode:
1. Attracts a wider customer base: As mentioned before, for the customers, one of the biggest advantages of COD is that they can pay for a product only after an e-commerce courier service delivers it to them. This has made COD an immensely popular payment mode among Indian online shoppers. In order to exploit this wider customer base, it is important to offer a COD payment mode for all your orders.
2. Builds customer trust: Since with the COD payment mode the customers do not have to pay for their products in advance, there is no risk of loss of their money. This increases the trust that the customer has in your brand. Moreover, the customer can personally check the product and ensure that everything is exactly the way it was expected before making the payment. In case the e-commerce courier service delivers a different product or a defective product, the customer can easily return it without making the payment.
3. No dependency on electronic payment: Another major advantage for customers of using the cash-on-delivery payment mode is that it does not make you dependent on debit cards and credit cards. This is an advantage for customers from suburban and rural regions where a lot of people do not use these cards. In these places, most customers prefer simple transaction processes – receive the product, check the product and then make the payment.
4. Security of sensitive data: With a cash-on-delivery payment mode, security can be maintained well. You need not disclose any sensitive financial information, such as credit card, debit card, or bank account details to the seller. This is again one of the primary reasons why most online shoppers in India prefer cash on delivery as their preferred mode of payment for their online shopping.
Disadvantages of Cash on the Delivery (COD) mode of payment
1. Some customers change their minds about a product when they have already done the necessary shipping and delivery. The seller at this point will have already incurred transportation costs which accumulate into a loss for the e-commerce business.
2. The business representatives will be handling a lot of cash through the COD system unlike in the use of credit cards. This can easily lead to theft if the right security measures are not in place.
3. When partnered with a courier service, it usually takes a long time before the money collected through COD is transferred to a seller’s account, whereas credit and debit cards are instant.
4. Cash receipts make it rather difficult to determine the correct cash inflow and outflow figures and balance records.
Overall, the advantages of Cash on delivery overweigh the cons but it’s up to you to decide if you can accommodate the latter or not. We strongly recommend COD for new e-commerce businesses.