Wednesday, May 15, 2013

Why we don't do cash on delivery

Cash on Delivery is one of the most common ways for ecommerce delivery and we know customers love it. We would love to have Cash on Delivery as one of our options for payment but we can't unfortunately because of the following reasons :

1) Increase in Prices : Cash on Delivery requires our delivery partners to go collect cash or card during delivery. This requires them to equip their delivery men with swiping machines and additional logistics for collecting cash and transferring back. Also, sometimes multiple trips are required to collect cash. Because of this, they charge 50-200 Rupees extra per package. This will translate into our products becoming costlier to the customer by 10%-20%. Currently we offer free shipping and it wont be possible to do that in case of COD.

2) Delivery rates : We have a proud record of 100% deliveries. In case of COD, based on trial data, delivery rates are sometimes poor which means wrong address and identity issues. This is unfortunately not sustainable for us as we are a small company and anything less than 100% deliveries will mean we wont be able to pay our employees on time.

3) Location availability : Currently a lot of our customers are from small towns in India. Most courier companies support only a limited set of Pin codes when it comes to cash on delivery.

4) Size of items : Our items are very large in size when packaged - typically between 3 - 10 kgs in terms of volume(not weight). This typically means that we plan for quick and reduced delivery times which is always not possible in case of cash on delivery.

5) Sustainability : As a small company, one of our primary goals is to make sure our employees, artisans get their salaries on time. Cash on delivery as a mechanism is a slow cash flow function which is difficult for us to sustain.

We know Cash on Delivery is one thing that our customers ask for all the time and at some point in time, we may reconsider our ability to provide COD. However, till then, we would like our customers to trust us with traditional modes of payment. We also have a store at Ebay which follows a strong customer feedback mechanism : Do check our feedback at http://stores.ebay.in/kraftinn

Thank you for all the love and trust

3 comments:

  1. Yes, COD is more of an inconvenience for the startups than convenience. I have been through this and had spent explaining these aspects to the prospective customers numerous times.

    My main observation was that customers wanted COD because of trust issue. If there was an escrow kind of an account, the trust issue could be handled.

    ReplyDelete
  2. Mandar,that's true - there is a trust deficit in india in most things. One good model that Ebay has is Paisapay which is like an Escrow account - if they make it available for third party websites, i think it may take off. There are others like Virtual Credit cards that address the concerns of paying online but they are partial solutions.

    ReplyDelete
  3. Hello Friends,

    Such a nice blog. Thanks for sharing this info.

    Site:- http://www.varighty.com/Help/Cash-On-Delivery.asp

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    Thanks :)

    ReplyDelete

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