This can happen only in India – Cash on Delivery preferred Payment Option for eCommerce.

 We Indians are famous for JUGAAD technology I.e innovating workable procedures to increase the joy of daily living.

The Cash on Delivery(COD) tool can said to be a perfect example of Indian JUGAAD to zoom up the eCommerce business.

As the Indian eCommerce industry started to get crowded, the new entrants had to have a differentiator to attract consumers to their sites.

The ‘discount’, tag was no longer attractive. Piling up a large inventory was a strain on the Balance Sheet. So, the COD option seemed to be an attractive option.

In simple terms, COD means the ‘purchase price’, is paid in Cash to the seller’s representative on receipt of the purchase item.

Why was COD required?

  1. Increase competition from sites offering the same type of Goods/Services.

  2. A perceived savings in the Payment Gateway costs.

  3. An increase in the number of dissatisfied users I.e waiting for delivery of goods after the amount has been paid via Netbanking/Credit Card/Debit Card.

  4. An increase in the number of customer feedback’s, stating that the physical goods do not match the promised goods.

  5. An increase in awareness levels on Safe ePayments techniques.

India is ranked 5th in the A.T.Kearney‘s Global Retail Development Index™ (GRDI), but does not figure in the top 30 countries A.T.Kearney’s 2012 E-Commerce Index.

Two reasons are attributed to this paradox : –

  1. Lack of technology to connect to the Internet,

  2. Those who do have the technology still avoid e-commerce because of a poor infrastructure that prevents reliable delivery and returns.

Hence, Indian eCommerce sites have turned to COD option, to keep their fires burning.

COD is an important tool for ‘pay now, deliver later’, options. The list can range from consumer products to household goods. However, we Indians are discovering new and new ways for the COD option. Rail/Bus/Train tickets are being marketed and COD is a payment option!

The major India eCommerce viz Flipkart,,, ,,,,,,,,,,, and so on offer the COD option.

Some sites may charge the customer extra for the COD option, which is indicated upfront.

There are various estimates on the size of the ‘COD’, market in India. However, the growing popularity of COD has attracted the financial regulators attention.

RBI in it’s Payment System Vision Document (2012-15), has indicated that the time has time has come to explore substitutes for the COD Mechanism. Some of the current options are Mobile Wallets, Prepaid cards etc.

As per I-Cube Survey for IAMI done in 30 cities among Active Internet users who make a transaction at least once a month (March 2012), COD was the preferred payment mode for 32% of the respondents.

Yes, the Indian JUGAAD, will find a better payment option than COD.


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