Reducing Losses with COD Services: Strategies for E-Commerce Brands

Cash-on-Delivery is still the most used Mode of Payment in India, and as long as there is a segment of users who prefer COD, we must make it loss-free for brands.

‍Which is why we have steps in place to reduce losses due to COD orders all while keeping your customers happy. So, today we’ll take you through an in-depth blog on COD Services to limit losses.

‍What is Cash On Delivery (COD)?

Cash On Delivery (COD) is a payment method commonly used in e-commerce where customers have the option to pay for their purchases in cash upon delivery of the goods. With COD, customers only need to make the payment when they receive their order from the delivery person or courier. 

This payment method provides convenience for customers who may not have access to online payment methods or prefer to pay in cash. But with cash on delivery problems rising in terms of fraud returns that lead to higher expenses to brands, the COD payment option needs to be dealt with on priority.

Finding the solution to cut down RTO losses

Return to Origin (RTO) losses refer to the costs incurred when a delivered package is returned to the seller's warehouse or origin due to reasons such as delivery failure, refusal by the customer, or inability to collect payment. To reduce RTO losses in the context of D2C (Direct-to-Consumer) brands, several strategies can be implemented:

Optimized Delivery Processes: Streamlining delivery processes to ensure accurate address verification, efficient route planning, and timely delivery attempts can help minimize instances of failed deliveries and subsequent returns.

Improved Customer Communication: Providing customers with timely updates and notifications regarding their order status, delivery schedule, and payment options can help mitigate misunderstandings and reduce the likelihood of order refusal or non-payment.

Enhanced Payment Options: Offering a variety of payment options beyond COD, such as online payment gateways, digital wallets, and card payments, encourages customers to pay upfront and reduces the reliance on cash transactions, thereby decreasing the risk of non-payment upon delivery.

Clear Return Policies: Communicating clear and transparent return policies to customers, including instructions for returning items, eligibility criteria, and any associated costs, helps manage expectations and encourages customers to accept deliveries rather than initiating returns.

Quality Control Measures: Implementing rigorous quality control measures to ensure accurate order fulfillment, product quality, and packaging integrity minimizes the likelihood of customers refusing deliveries due to damaged or incorrect items.

Customer Engagement and Support: Providing responsive customer support channels, such as live chat, email, or phone support, allows customers to address concerns or resolve issues promptly, potentially preventing order refusals or returns.

By implementing these strategies, D2C brands can effectively reduce RTO losses associated with COD orders, optimize delivery processes, and enhance the overall customer experience.

How Pragma solves the RTO problem?

Let’s now look at how Pragma’s stack can help you solve the RTO problem in detail:

1. Pragma COD Verify

No More manual COD order verification calls

Pragma’s automated COD Verify confirms the orders through messages once they are placed.

Communicate via WhatsApp, SMS & Email - 72% prefer WhatsApp and other non verbal modes.

• 10 to 15% are cancelled by consumers, stopping RTOs at its root
• Entirely Automated, Zero human error.
• Repeated fraudulent users can be flagged/blacklisted

2. Pragma C2P Conversion ( COD to Prepaid )

Because Prepaid orders are more efficient for Brands

Why cash on delivery is not available‍ - This might be a common phrase when users choose a COD option.

Instilling the idea of a Pre-paid order into customers - We send seller-approved offers to convince customers to convert their orders to paid via WhatsApp, SMS and/or Email.
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• See a 25 to 35% increase in paid orders post our C2P initiative. 
• Improving cash flow efficiency because of non-cash payments
• Eliminates RTO loss in case of an NDR

3. Instant COD Refunds made possible

No more coupons or discounts for a future order in place of COD Refunds

‍Because now you can Automate COD Refunds - where you just need to create Cashfree’s Cashgram URL and have it sent automatically via WhatsApp or any other means of communication.
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• Customers can now get instant refunds instead of limited period coupons
• Number of dissatisfied COD customers is reduced by over 20% due to the immediacy of refunds.

4. Cash on Delivery - COD Refunds

Cash on Delivery (COD) refunds are a critical aspect of managing customer satisfaction and trust in e-commerce. Unlike prepaid transactions, COD refunds require more nuanced handling due to their cash nature. E-commerce brands must ensure a smooth and efficient refund process to maintain customer loyalty and avoid dissatisfaction.

Pragma offers solutions to streamline COD refunds by automating the process using digital tools. For instance, with Cashfree’s Cashgram URL, refunds can be processed instantly through digital means such as WhatsApp or SMS, providing a quick and hassle-free refund experience. This method significantly reduces the waiting time for refunds, increasing satisfaction and reducing the chances of losing future sales.

When Will the Customer Get a Refund?

The speed of a COD refund depends largely on the e-commerce platform’s refund policy and the tools they use to process refunds. Traditional methods can take days or even weeks, but with advanced solutions like Pragma’s automated refund process, refunds can often be initiated within hours of receiving the return.

5. Can a Refund Once Processed Be Reversed?

Reversing a processed refund can be complex, particularly if it has been issued in cash or credited to a digital wallet. Automated tools like those provided by Pragma help minimize errors by verifying transaction details and customer information before issuing refunds. This accuracy helps prevent the need for reversals and enhances customer satisfaction.

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6. Dynamically disabling COD during checkout

Eliminate RTO losses for COD orders

With 1Checkout by Pragma, brands can remove the COD option for high risk orders.

The risk is analysed based on data from past purchase info on online customers across platforms and 250+ brands. 

COD could also be disabled during peak sales, i.e, holidays.

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