Cash on Delivery for Your Online Business in 2020 - Dropshipping Blog

Why Offering Cash on Delivery is the Best Option in 2020?

cash on delivery services

The world of eCommerce might seem like a tough nut to crack. If you’re just starting from your home, the nuances might seem like too much.  You have to pick the right products to sell. Then you have to target the right customers. On top of it, you need to pick a courier company to partner with. Once you sort out the nitty-gritty of setting up your online business, the challenge comes in maximizing your reach. That’s where cash on delivery services comes into the picture. 

COD or cash on delivery services can be a great opportunity for your business. It can help you reach out to more customers and make profits like never before. Because customers are already looking for options when it comes to payments, adding COD can give you an extra edge.

However, there’s more to what meets the eye when it comes to cash on delivery. It is not just a profit opening option to your business but also an extraordinary customer satisfaction gateway. Sounds interesting, isn’t it?

Whether you’re starting new or have been selling to the customer in a while, cash on delivery can all seem a little challenging. You might feel like it’s an additional burden of costs for your business. Alternatively, you might also find certain risks to COD. But, don’t worry! We’re here for you!

Read on to find out more about cash on delivery services and the ways you can leverage them for your business-

What is Cash on Delivery Mode of Payment?

Cash on delivery is a mode of payment in eCommerce. As the name suggests it means that the cash is collected at the time of the delivery of a product. While there is a prepaid mode of payment, where the amount for the product is collected in advance, in cash on delivery it is the opposite. It is a popular form of payment. But before you go onto understanding more details, you must know the nuances.

Here’s the chain of events that follow in a cash on delivery order-

  • The customer comes to your website to purchase the products. They finalize on the products and add them to the basket. 
  • The next subsequent step is to move towards the checkout process. As the customer takes the cart to the checkout counter, which in the case of eCommerce is a screen
  • There are several details asked during the checkout process- these include information of address, shipping name and address, billing name and address, other contact details such as telephone number and email id. 
  • The checkout screen proceeds towards the payment page. This is where the customer has to pay for the products they purchase. In other words, they have to select a payment method. 

Prepaid Options

The store provides a number of payment options to the customer. This includes wallet payments, payments via credit cards and debit cards and more. Wallet payments include Paytm, PhonePe, PayZapp, etc wallets. These are nothing but digital wallets that enable making transactions much easier for the customers. 

Similarly, there are also UPI options, also known as unified payment services. These are a fastrack mode of payment that only asks for a digital pin from the customer. Once the pin is entered, the amount is debited from the customer’s bank account automatically.

But, all of these methods of payment are digital. In other words, the customer is supposed to pay at the time of checking out the cart. So, when the order is delivered to the doorstep, they don’t have to pay anything. 

The customer receives the order confirmation both on the email and on the mobile phone. At the same time they also receive a message that their payment will be debited from their bank accounts. Once the order confirmation is received, the seller picks, packs and dispatches the products. 

Next, the courier comes and picks it from the seller’s doorsteps to take it to the customer’s address. But before that, the parcel is taken to the central hub, where it is sorted carefully. Finally, the courier delivery agent takes the parcel from the delivery hub to the customer’s place. And the product is delivered. 

COD Option

Now that you know what happens in the prepaid case, let us understand the COD case. In this case the customer doesn’t opt for a prepaid option. Instead, they choose to pay at the time of the delivery. 

Therefore, they choose the payment option as Cash on delivery or pay on delivery. eCOmmerce brands these days are also providing an option of pay on delivery. In this case the customer need not pay for the order with cash. They can pay with their card at the time of the delivery. The courier delivery agent carries a card swiping machine with them. 

So, when the customer opts for a cash on delivery option, the order checkout happens as usual. The customer gets a confirmation of the order on their mobile phones. As a result, the seller picks, packs and dispatches the order with the courier company. However, they need to find a courier company that delivers COD orders specifically. Many courier companies do not deliver COD orders.

So, once the parcel is handed over to the courier company the same process goes on until delivery. The only difference is that when the courier delivery boy takes the parcel for delivery, they ask the customer for the cash/payment. Once they receive the payment through the means of cash or card in case of pay on delivery, the parcel is handed over to them. Finally, the customer receives the parcel and the purchase is complete. 

What are the Advantages of Cash on Delivery Mode of Payment?

Cash on delivery has several advantages. For this reason, you might find it as a common option on a large number of websites. If you’re not providing COD as an option to your customers, you are surely missing out on a lot. Take a look below at some of the advantages of cash on delivery

Men paying with cash

Wider Reach

When you’re providing cash on delivery as a payment option, there is one thing that you are absolutely ensuring- and that is wider reach. Many customers in India are not comfortable with the idea of online payments. Or maybe they do not have a card or digital wallet set up for them. This way they are often deprived of shopping online. If you are only providing prepaid options, you are losing these customers. They may want your products, but just because they cannot pay online, the sales opportunity is lost. 

On the other hand, with COD as a payment option, you can reach out to these customers. Alternatively, you can take your business to even remote areas of the world. 

More Trust

Winning the trust of customers is important in eCommerce. However, most companies fail to do so due to their negligence. If you are selling to your audience you need to be aware of these little details. For example, if you are not providing cash on delivery as a payment option, your customers might think of you as an untrustworthy brand. Because in prepaid payment, the customer’s money is put to stake first, nobody wants to take risks. Especially if they are shopping for the first time from a website. Therefore, make sure to provide cash on delivery as a payment option, so that the customers feel like they can order from you and pay when they see the product at their doorsteps.


Another aspect of the cash on delivery payments is convenience. When you provide your customers with the cash on delivery option, this means  you are providing them more options. So, if someone is not comfortable with paying online or has more funds as cash, they can opt for it. It ultimately means providing your customers with a higher degree of customer satisfaction. 

Reduced Payment Frauds

With the increase in eCommerce, online frauds are also taking place. This means that a lot of customer details are stolen from websites and stores. Having said this many customers don’t find prepaid options very reliable. They feel safe in paying for cash rather than using their card online. Therefore, by providing cash on delivery as a payment option, you are removing this doubt from their mind. So, the customers that are not comfortable in paying money online can still buy from your website. This way you are not losing the sales opportunity and at the same time providing customer satisfaction. 

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How to Provide Your Customers with Cash on Delivery Services?

You can provide cash on delivery to your customers by going through the steps mentioned below-

  • Opt for a courier company that provides COD options
  • Add a COD mode of payment to your website checkout option
  • Advertise on your website that you provide COD

Advertising is necessary, so that customers find it a way to shop on your website. 


Cash on delivery is available on several marketplaces and websites. In fact, you will find this option on all popular brands. Therefore, to make a difference to your business, it is important that you tie up with logistics companies like Dash101 that provide you with COD delivery options to more than 26000+ pincodes in India. 


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