[Seller Speak] “No COD, 35% returning customers & less than 3% returns!” Online seller Jayanti spills the beans..

jayanti gupta

Parinita is an exclusive online store for traditional sarees from Bengal and Bangladesh, each with a signature weaving tradition and form of art, some even dating back to pre-Mughal and British time. Founded in 2013, the designs have evolved in time in sync with the changing preferences and tastes of the users/customers.

Without letting go of the rich heritage of the weaving communities, Parinita sarees range from lightweight and comfortable for everyday wear to heavy and elaborate for festivities.

For one of our recent articles on COD, “Is COD slowing down Indian ecommerce?”, Jayanti Gupta, founder of Parinita, commented:

“I wanted to share my experience from running an online business for 3 years. We took a decision to not offer COD from the very beginning, as we are in a niche product category (handloom sarees), and wanted to see if it is possible to build a business without COD. While we do get queries once in a while from folks who prefer COD, most of our customers are happy paying online. Even small businesses can build trust in a variety of ways, and we believe we’ve been quite successful with that. Today 35% of our orders comes from returning customers and our return rate is only 3%.”

We usually hear of online stores being at a disadvantage when compared to marketplaces on the COD aspect. Most storeowners are reluctant to offer and customers are skeptical in the absence of COD facility. So when we got the above comment from Jayanti, we wanted to know more. Here’s what Jayanti shared with us.

IOS: Tell us about your Cash on Delivery (COD) journey.

Jayanti: When I started my business 3 years ago, COD was touted to be the single-most important factor for the rapid growth of ecommerce in India, responsible for over 80% of online purchases. Yet, every etailer we asked, complained about the numerous hassles they encountered with COD payments – non-serious buyers, customers changing their mind during delivery, unavailability of cash with customers etc. All of these were leading to increased logistics expenses, higher return rates, more human resources, chances of cash pilferage, longer credit cycles with logistics providers etc. These in turn resulted in significant erosion of their profit margins.

These insights made us doubt whether we should offer COD at all!

At the risk of losing some business initially, we decided to start with online payments only, but staying open to the option of enabling COD payments at a later stage, if necessary.

I think we have been largely successful in growing our business profitably over time, without offering cash payments at all. Initially, about 20-25% of customer queries were on COD availability, and this has gone down to less than 5% now. We realized that customers who had access to e-banking facilities but were skeptical of making payments online could be won over by establishing trust and confidence in their minds in various other ways.

Today, 35% of our business comes from returning customers and we have a low return rate of 3% of sales, leading to better margins and lower customer acquisition costs.

How detrimental is COD to Indian ecommerce?

On the face of it, COD has led the boom in Indian ecommerce, and enabled millions to shop online. Yet, the hassle that cash payments create for sellers indirectly affects buyers too, leading to inefficiencies in the ecosystem. Some industry-wide statistics on this:

  • Extra logistics charges: Rs 50-100 additional charges by logistics companies for last mile delivery
  • Longer delivery times: About 24% more time required due to multiple delivery attempts when customer is not at home or doesn’t have cash available for payment
  • More cancellations & returns: Average of 30% more cancellations by non-serious buyers who change their mind after placing orders
  • Longer payment cycles for sellers: Around 30-60 days credit cycles, locking up cash with logistics providers.

These indicate that cashless transactions in ecommerce will lead to faster deliveries, fewer cancellations and reduced costs, benefiting all – buyers, sellers and marketplaces.

So in your opinion how can etailers get the confidence of skeptical customers without offering COD?

  • Establish trust

To start with, you need a professional and user friendly website. Transparent Cancellation & Return policies, informative About Us page and clear Contact information convey authenticity. Frequently updated blogs with relevant content, testimonials from satisfied customers and positive press coverage will add to your credibility. Above all, provide awesome customer service, acknowledge and rectify mistakes whenever they occur and engage with your audience online and offline.

  • Ensure security

Encrypt all customer information on the website using SSL technology. Create and adhere to a Privacy Policy for your site promising users that their personal information will be protected.

  • Enable convenient modes of online payment

Customers with access to online banking facilities can be encouraged in many ways to make their payments online. Use a reliable, integrated payment gateway on your website that has good coverage of banks and offers multiple payment options. One-click payment systems and digital wallets can further simplify the ordering process. You can offer incentives on online payments and employ instant refund mechanisms for cancelled orders. Satisfied customers who have tasted the ease of e-payments are more likely to come back for future purchases, leading to a win-win situation for all!

So who else wants to try Parinita’s tried-and-tested formula? Do let us know how it works for you.

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5 Comments

  1. Yes , its truth

    we are also offered COD payment service to costmer but lots of order will return so its loss of time & money , also returned product will not handle properly its max. damaged during in transit.
    also costmer will ready to pay online, but some of e shopping site offers that why its need to offer for attrect to costmer

    but we go one step ahed , firstly confirm properly costmer need an then we shipped product with VPP / VPL service(by Indian post). so it will reduce our work & return upto 2-3 % due to some reson (address not find, person not avaible, door loked), but its ok.

  2. YES ALL ONLINE MARKETPLACE SHOULD GIVE AN OPTIO N TO SELLER NOT TO OFFER COD.

  3. Paresh Mistry Reply

    Absolutely agree,COD is not beneficial for us,even it also increase our expenses too.some time also happen that shipment missing during RTO.
    so definitely need to end COD system for permanent basis.

  4. I completely agree with Parinita but when in a business it’s both the calls that need to be attended.Buyers as well as Sellers.That is why in Shopiya we let Buyers directly interact with Sellers before they place an order.Whether they settle down with Online Payment or COD ; the business should take place. As we charge no commission or selling fee; Sellers can lower their marked price and yet earn more profit margin and Buyers get quality products at lower prices from known Sellers.Therefore we create a win win situation for both Buyers & Sellers at shopiya.com

  5. COD has initially encouraged the customers to get on to the eCommerce wagon and purchase online with no risk. But the sellers especially vendors on marketplaces have been at the receiving end wherein all the extra costs of logistics, damaged return products have to be taken care as customers can decide not to take delivery of goods ordered on COD basis arbitrarily.
    We completely agree that it is important to provide transparency , build trust with the online customers and facilitate an environment wherein they feel comfortable to make online payments instead of COD options. Prompt and satisfactory replies to queries raised by customers also helps in building a better purchasing experience. Thus @ http://www.kidskouch.com we do not offer COD option.

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