6 step process to sell online with cash-on-delivery

Apr 05, 2024

Cash on delivery is one of the most, if not the most, popular forms of payment methods chosen by online shoppers in India.

Having access to cards and online payment methods is not always possible in our country. Instead, the Pay on Delivery or Cash on Delivery (CoD) system presents a much more accessible and safer form of payment.


Cash on delivery for small businesses helps them gain access to a bigger customer pool. By providing cash on delivery features you can even gain an advantage over competitors who don’t have it.

How does cash on delivery payment system work in India?

Generally, the cash on delivery service in India follows a 4-step process. 

• First, an order has to be placed by the customer on the website of the merchant or seller who is providing CoD. At this stage, the customer has to select CoD as the method of payment and enters other details like address, phone number, etc.

• Next, the product will be picked up by a delivery executive from the fulfillment or merchant center. The executive will then proceed to deliver the order directly to the address provided by the customer on the website.

• Once the delivery executive reaches the delivery address the customer has to pay the required amount to the delivery executive via cash or card.

• After this, the merchant’s marketplace will receive the payment which will then transfer the amount to the bank account of the seller at the stipulated time.

Benefits of cash on delivery payment method for e-commerce businesses

1. Increased conversion rates

By making the cash on delivery feature available you can increase the probability of a purchase being made.

Since with CoD there is no prepayment involved, customers can make purchases more easily and with less hesitation.

They can also feel safer about the purchase because they pay only once they see the product.

2. Attracts a huge customer base

The cash on delivery service is definitely more accessible for use by customers than cards or online means of payment.

Not everybody has a card at hand or access to any online payment portals. By making CoD available you automatically increase the number of customers who can actually buy from you.

3. Increases business credibility

Seeing the option of cash on delivery available can boost the trust customers put in your products or services.

It indicates that your customers pay for a product or service only after it has been delivered to their full satisfaction.

This helps make it easier for customers to trust a brand and make purchases from it.

4. Reduces online fraud

By having customers pay only after a product or service has been delivered you can help reduce the scope of online fraud.

Additionally, the cash on delivery system does not require customers to provide any financial information. This can help curb the leak of sensitive information altogether.

5. Zero dependencies on electronic payment

Using CoD requires no compulsory dependency on cards, UPIs, or any electronic modes of payment.

The cash on delivery facility is particularly useful and important for businesses working in or catering to suburban and/or rural areas.

Since much of the population in these areas do not have access to online or electronic payment methods the CoD option gives them freedom from dependency on electronic payment methods.

6. Additional option for those who do not own cards

Apart from suburban or rural populations there are other customer segments that have access to cards but might not own one, for example, younger generations.

Providing cash on delivery feature for customers belonging to this segment will also improve your sales.

Process of selling online with cash on delivery as payment method for small business

1. Choose the product to sell

The first step to setting up and selling with cash on delivery for small business is choosing the product(s) or service(s) you want to give the CoD option on.

It may include all the products you sell or only a particular section of them, make sure you put careful thought into your choice.

Services are not usually sold on a CoD basis, but this has also been changing lately.

2. Selection of marketplace to sell

Once you have confirmed your product list for CoD payments you need to then decide where you want to sell your products. In this case, you have a number of options at hand.

You can choose to

• Sell via an online marketplace, e.g. Amazon or eBay

• Sell through your own Direct-to-Consumer or D2C website

• Use social media platforms like Facebook or Instagram as your online business platform.

3. Marketing your products online

Depending on the choice you made in the previous step you’re going to have to use some form of marketing to help sell your products or services online.

Marketplaces usually do their own marketing, but if you are using a D2C website or social media to sell you’re going to have to take a more hands-on approach.

4. Order collection from consumers

Based on the selling channel you’ve chosen you’ll have to collect your orders from your customers.

For instance, if you sell on social media you will have to collect orders via Google forms, Direct Messages, WhatsApp, or email. If you are using a marketplace or website, again, this would be different.

5. Delivery of the products

After order placement and collection the next step is where you actually deliver the products your customers have ordered.

Ideally, this is when you should partner with a logistics company such as BlueDart, DHL, FedEx, and so on. Marketplaces, however, usually take care of this aspect for you.

6. Collection of cash/payment

Lastly, at the time of delivery the customers, having chosen cash on delivery service, will hand over the payable amount to the delivery executive.

If you are using a logistics partner they might deduct a delivery fee but after all deductions, the total amount will be transferred to your (the seller's) account.

How important is cash on delivery for small businesses?

Cash on delivery for small businesses is a great option for boosting sales and brand reputation as well as mitigating fraud.

If used to its fullest potential CoD can even help you boost the overall growth of your business.

The Indian e-commerce market contains a huge pool of customers and by providing cash on delivery service you can tap into a massive percentage of this market.