eBay extends COD option to all Powership listings

Effective 31 March 2014, Cash on Delivery (COD) will be a default payment option for all qualified listings of sellers using the Powership program by eBay, which was first launched in 2012. It was introduced to give different options to a seller to deliver products to buyers. Powership offers two different modes of delivery – 1) Air mode – for quicker delivery, and 2) Surface mode – for larger and bulk delivery.This is being extended considering the increasing number of buyers who prefer cash on delivery option as against online payment options.

Eligibility for COD under Powership

To be eligible for this option, first, sellers need to be using eBay’s Powership program. The COD option can be availed of by all Powership sellers with “qualified listings”. Qualified listing is automatically determined by ebay on the basis of average selling price range, pincode and category.

Advantages of COD

1. COD is emerging to be the most preferred payment option for buyers who:

• Don’t own a credit card or debit card can also make online purchases.
• Make impulse purchases increase as they don’t have to pay for the product right away.
• Are skeptical about the reliability of seller will still buy as they don’t have to pay for the product till they get it in their hands.
• Are skeptical to enter card details for online transactions.

2. In addition to gaining the trust of potential buyers, COD also helps sellers to avoid one additional charge. Seller does not have to pay card charges to bank, which is applicable when customers make online payments. Seller has to pay 2-3% as bank charges for each transaction made by a customer. This gives an opportunity to the seller to sell the product at a cheaper price. Although, usually an extra cost is charged by the courier company for providing the COD option, the avoiding of bank/card charge allows the sellers to extend the COD option to the buyers.

Industry indicators have shown that COD option has been the preferred option of 60% online transactions. eBay’s indicators have proved that COD listings sell more as buyers find it more satisfactory. Coupled with eBay’s tie-ups with reliable and efficient logistics providers, the return rates from buyers are also significantly reduced with this option.

 A few challenges of using COD

Although COD helps to convert skepticism of buyers into trust, thus leading to more purchases, it is not without a price to sellers:

1. Buyers are less committed to purchase, which is indicated by higher instances of returns. It gives the buyers time to think after the purchase if they really want it, it reduces the chances of impulse buying.
2. Payment cycle is longer – Product is dispatched from warehouse through courier company, it reaches the buyer (number of days varies depending on location of buyer and courier company), buyer makes payment to courier boy, courier company processes payment, payment is then finally remitted into seller’s account.
   
3. Additional processes and costs are applicable in terms of verification calls or messages, collection charges by courier company, two-way transportation costs in case of returned goods etc.

Ways to avoid the pitfalls of COD

Although pitfalls exist in using COD as a payment method, some of them can be kept in check. For instance returns can be minimized with more accurate photos and descriptions of the product. A return charge can be levied for expensive products. Before dispatching the product from warehouse, a verification/confirmation may be asked from the buyer.

Despite the challenges of using COD, the advantage of a greater customer reach outweighs all challenges and makes it a worthwhile exercise to try it out for every seller to see if it works out with their buyer base and category. In most cases, the sales will increase as a result of offering COD as a payment option, and in many cases, it turns out to be a profitable one as well. So go ahead, give it a shot.