COD, Cash On Delivery, means that the seller delivers the goods only after the consignee pays cash. That is, we often say “one hand to pay and one hand to deliver”.
This business was first carried out by the international courier and logistics companies, and then gradually spread to the world, and now in various countries has been developed very mature. It is especially used in international transportation.
Cash On Delivery Process
Merchants in the receipt of consumers have the intention to buy under the premise of delivery to consumers, consumers in the receipt of goods at the same time, no objection to the inspection of goods, by the carrier of the courier company on behalf of the recovery of goods, and then through the docking system, the courier company will receive the payment of goods and then transferred to the merchant to complete the final transaction.
Advantages of Cash On Delivery
Increase shopping confidence
Cash On Delivery provides the opportunity for users to collect after clarifying the quality of the product, which is conducive to creating shopping confidence, especially for first-time shoppers.
Since consumers can pay for the product after receiving it, the return rate is low. This helps to reduce the cost of the business with the diversity of money back solutions.
For customers without credit cards
In some countries, many consumers do not have a credit card or do not want to use online payment methods, the COD model provides a convenient payment option for such customers.
Expand market coverage
Picking COD can cover such potential customers who are unwilling to prepay online, thus expanding the market coverage.
In cross-border e-commerce, COD can attract customers from international markets, especially those overseas customers who do not enhance their learning or trust online payment.
Cash management
Cash On Delivery represent the ability for merchants to deduct cash money at the time of shipment without worrying about the fees and delays associated with online payment methods.
Businesses can manage the flow of funds more flexibly and avoid the payment lagging difficulties that may occur with online payment methods.
Cash On Delivery Risks
Payment uncertainty
Cash On Delivery elevate the risk of fraud faced by store owners, as products can be handed over to willful customers who subsequently refuse to pay.
Customers sometimes deliberately refuse to pay or provide invalid borrowed credits. This can be detrimental to the merchant.
Extremely high operating costs
The Cash On Delivery usually requires the store to collaborate with a logistics partner, which increases transportation costs, including logistics costs and cargo insurance.
Businesses have to deal with large amounts of cash, which may require additional security and control methods.
Long payment cycle
In contrast to online prepayment, Cash On Delivery usually have longer withdrawal cycles, due to the fact that customers can choose to pay within a certain period of time.
Limited Market Coverage
In some countries, COD is not suitable due to the fact that international transportation and logistics can be complicated to manage cash payments.
The Cash On Delivery does not appeal to such customers who are used to using credit cards for online collection.
How to choose a good COD logistics company
When you need COD services, what are the points that you need to pay attention to when choosing a logistics company?
- COD logistics company should generally choose a higher degree of maturity, good technical strength, with the logistics industry, especially with the COD logistics business solutions for third-party payment platform cooperation, while taking into account a variety of payment forms.
- COD logistics business involves a huge amount of capital flow, COD logistics company should first establish a viable funds management system, process, solve COD logistics business collection and payment of funds management standardized objectives, which is also the basis for the construction of COD logistics business collection and payment of funds management mode.
- In COD logistics business, involves e-commerce company’s information system, COD logistics business management system, fund management system, the third party settlement system, banking system and so on many systems, these systems are involved in information sharing and exchange with each other, any one of the system’s fragmentation will lead to the fund management can not form a closed-loop, which is the COD logistics business in the construction of the collection and payment fund management mode must adhere to the technical principles. This is the technical principle that must be adhered to when constructing the COD logistics business collection and payment fund management model.
Xiongda focus on freight forwarding China to USA for 17 years.We provide variable plans for air and fast shipping from China to USA.
