While most online shopping platforms and ecommerce websites offer plenty of cashless payment options, most customers still prefer cash-on-delivery (COD) payments.
However, while COD has its pros and cons, it can be a major issue for your revenue when dealing with rejected or returned orders.
Rejected and returned COD parcel deliveries can accumulate significant losses in inventory, packing and shipping costs. This can hurt your business and eat into your profits. That’s why many business owners ask: how can you reduce cases of COD returns?
Why do online shoppers prefer cash on delivery?
A 2022 survey published by Statista found that 86% of Filipino online shoppers pay for their orders through COD. There are many possible reasons for this:
- Financial cybercrimes. Some Filipinos may be hesitant to put their credit or debit card information online because of a fear of hackers stealing their data.
- Online scams. Many customers worry that a seller may be part of an online scam that steals their money, especially for high-value items.
- Counterfeit and damaged products. With cashless payments, customers unsatisfied with their order have to go through a long process to get a refund. With COD parcels, customers can inspect a product before giving payment or can return the product without losing their money.
- Lack of funds. Some Filipinos live paycheck-to-paycheck and can’t afford instant cashless payments. COD payments allow them more time to save up for their orders before they arrive.
- No Access to cashless options: Many people don’t have access to debit or credit cards or e-wallets. COD provides them with the advantages of online shopping even without cashless payment options.
Also read: Be Smart and Take These Steps to Avoid COD Scams
Why do customers return their orders to sellers?
While rejected or returned orders are a problem for both COD and cashless orders, many COD parcels end up marked as Return To Sender (RTS). Ninja Van has found the most common reasons for this happening:
- Wrong or incomplete order. Customers input the wrong address in the system, which makes it difficult for the courier to find and deliver the package.
- No one receives the package. If the customer is not present at the delivery address, the customer doesn’t have the option to ask the courier to leave it in a mailbox or with a receptionist because they need payment.
- Change of mind. Customers might no longer need the product, find the same item for cheaper, or make a mistake while ordering.
- Wrong, defective, or damaged order. Customers can refuse an order if the item or its quality doesn’t meet their expectations.
#NinjaTips: You don’t have to worry about unsuccessful deliveries. Ninja Van provides 3 delivery attempts for free before returning your rejected or undelivered parcels. Find out other perks you can enjoy when you become a Ninja Van VIP Shipper!
When a customer rejects or returns your parcel, it’s eventually returned to you. This doesn’t mean that there’s no loss involved on your end.
When you consider the packaging costs, shipping expenses for free shipping promos, damaged returned inventory, and customized inventory for sellers who offer personalized products, these costs can add up to a big loss for your profits.
8 ways to reduce COD returns
While you can remove COD as a payment option, this can affect your business negatively. Many customers prefer COD – including some of your repeat customers.
Removing COD entirely may lead customers to find others who offer it. Instead, use these ways to minimize COD parcel rejections and returns.
before shipping their orders.
1. Verify your customers’ order
Ensure all the details your customer provides – name, address, and phone number – are correct. Some ecommerce platforms allow customers to confirm their details, though you can also message your customers to confirm.
2. Send confirmation photos
Many businesses also practice preparing orders and sending a photo of the order to the customer. This is proof to both customers and sellers that the order was complete before packaging and shipping.
3. Provide an accurate expected delivery date
Some customers reject COD parcels if they arrive unexpectedly and they don’t have the funds to pay for them.
A good way to avoid this is to provide an expected delivery date. If you need to pre-order or have time to customize their order, inform them when their order is ready and how long it can take to ship.
4. Improve order packaging
Reduce the risk of damaged inventory that can no longer be sold by carefully wrapping your items. If a customer accepts the order, proper packaging can improve customer satisfaction as it reduces damage.
If they reject or return to sender, your inventory’s quality is still good to resell.
5. Set purchase limit on COD orders
Minimize your losses by placing an order value limit on COD orders. If your website or ecommerce platform has the option, set a purchase limit that prevents COD payments.
Otherwise, you might have to cancel orders to minimize the risk of loss.
6. Transparent pricing and additional charges
Make sure your customers know the total cost of the item before confirming their orders. Hidden fees or additional service charges may cause parcel rejection and even bad reviews for your business. Ecommerce platforms provide a clear total amount that includes the cost of their order and shipping.
additional service charges and shipping.
7. Offer COD to verified customers
If you run your own online store, you may consider providing COD as an option only to verified users. This could be users with confirmed mobile numbers or email addresses or users who have already purchased from your store in the past.
COD from verified customers are more likely to complete their purchases.
8. Choose a reliable courier partner
A dependable logistics company that allows COD parcel deliveries can help you minimize the losses of RTS instances. They’re less likely to result in failed deliveries and ensure proper handling of your parcel to avoid damage.
Minimize COD returns’ impact on your business with Ninja Van
Providing COD opens the door to more sales opportunities. However, you need to find ways to mitigate the risks of returns and rejected parcels.
With Ninja Van’s postpaid delivery services, you can experience the different ways we help our business partners minimize their losses:
- Fast delivery: Our flexible delivery solutions offer free 3 delivery attempts to complete fulfillment. We provide estimated delivery dates to help your customers anticipate when to receive their orders.
- Fast COD remittances: You’ll never have to follow up on your COD payments because we’ll send them to you immediately. Plus enjoy low COD rates as low as 1.5%.
- No RTS fees: In case of COD parcels getting returned or rejected, we don’t charge a fee to ship the parcel back to your address. We also provide liability coverage for lost and damaged parcels to minimize your losses.
Find out how you can get the best COD shipping deals, exclusive rewards and big rebates with Ninja Van’s VIP Shipping!
More tips to optimize your ecommerce deliveries:
The Benefits of Postpaid Shipping for E-commerce
How 3PLs Help Your Ecommerce Business Grow
Inventory Management Techniques for Online Sellers
