Cash on Delivery (COD), sometimes called Collect on Delivery is just another mode of payment you provide to the customers which is an effortless way to earn a wide range of customers. COD gives the customers a sense of security which is a great advantage for new merchants who want to gain trust among the customers.
However, customers barely consider what happens when they return or cancel an order. When a customer returns or cancels an order, the seller loses the money paid for packaging and shipping the product, and any damage caused to the product. Also, the seller has put a lot of time and effort, which was of no use.
So, in this article, we will explain the challenges that you face while handling COD orders and how you can overcome them by automating the COD order handling. We will also explain the different methods using which you can reduce the COD orders and encourage customers to choose the prepaid payment option.
How to Enable COD on Your Shopify Store?
- Head to Shopify Settings and click on Payment Providers.
- Now, select Manual Payment Methods from the list. Select COD and activate it.
How to Collect the Payment on Delivery While Fulfilling COD Orders?
If you are managing the delivery on your own, then the payment can be collected on delivery. The customer makes the payment in cash, card or any other option.
But that is not the case with most of the Shopify merchants. They choose a carrier that provides the COD option. Most of the top carriers like FedEx, UPS, etc handle COD orders and collect the payment from the customers and remits the amount to the seller’s account after deducting the handling charges.
UPS will attempt to collect the amount shown on a COD label and send payment to the merchant. If the package is not collected by the customer after three attempts, the package will be returned. Similarly, FedEx sends the payment to the merchant that the FedEx agent collects from the buyer when the package is delivered.
What is the Challenge While Processing Shopify COD Orders with Carriers like FedEx or UPS?
If the COD orders are managed directly with these carriers, you face a lot of challenges. When a COD order is received, you have to log in to the carrier account, mark it as a “COD” order, enter the amount to be collected from the buyer and then generate labels manually. If there are a lot of COD orders, this manual process takes a lot of time and effort.
Automatically Generate FedEx COD Shipping Label in Shopify
What if you get hundreds of COD orders a day?
Confirming the COD order and manually printing the label by logging into the carrier account is a hectic job. So, it is really necessary to automate the process. In the case of a carrier like FedEx, it is really easy to automate the process using the Shopify FedEx App.
With the Shopify FedEx app, you can completely automate the FedEx COD order processing. Once the customers place COD orders, it gets imported into the app and you will be able to generate COD labels for the orders in bulk directly from the app. When you generate the COD labels, the app automatically informs FedEx that the order is COD along with the amount to be collected from the customer.
Here is a sample FedEx COD label.
Now, consider a situation where you handle COD orders with multiple carriers like UPS, USPS, DHL, Delhivery, etc. You will have to manually login to the different carrier accounts and then generate COD labels for your orders.
With the Multi Carrier Shipping Label app, you can automate the COD order handling process. Once the customers place COD orders, it automatically gets imported into the app and you will be able to generate COD labels for the orders in bulk. Similar to the Shopify FedEx app, when you generate the COD labels, the app automatically informs carriers like DHL, USPS, UPS, Delhivery, etc, that the order is COD along with the amount to be collected from the customer.
Here is a sample COD label for Delhivery.
How to Reduce Shopify COD Orders and Encourage Your Customers to Choose Prepaid Option?
Although we have discussed different methods to automate COD orders, handling COD is always risky. So, here are some of the effective measures which can help merchants reduce COD orders and encourage the customers to choose the prepaid option.
Charge Extra Amount for COD Option
This is the best and the most accepted method to reduce COD orders and encourage your customers to choose the prepaid option. If you charge extra amount for COD orders, your buyers will automatically opt for the prepaid option. One such example is shown below.
With the help of Multi Carrier Shipping Label app, two payment options were implemented on the checkout.
- COD: If the customer chooses this option, an extra cost of Rs.75 each for shipping and handling was charged from them along with the product cost.
- Prepaid: If the customer chooses this option, the shipping is absolutely free and they save Rs.150 on the order.
Display Higher Expected Time of Delivery for COD Orders
This is one of the best ways to encourage your customers to choose the prepaid option. Almost all customers want their order to be delivered as fast as possible. So, if you display the expected time of delivery higher for the COD option than the prepaid option, there are high chances that the buyer would opt prepaid option.
Provide Offers and Discounts on Prepaid Payment
This is an excellent way to tempt your customers to choose the prepaid payment option. By giving extra offers, discounts or gift vouchers, customers feel that they save a lot if they choose the prepaid payment option over COD.
Use IVR Apps for COD Confirmation
In this method, you can use Interactive Voice Process (IVR) apps to confirm a COD order. Once the customer places a COD order, you can confirm the order using an automated calling process using these apps. This reduces the chance of order cancellation or the customer not accepting the order.
Maximum Purchase Limit on COD Option
Although this method is not as effective as the others, you can still use this method to force your customers to go for the prepaid option. In this method, you can set a maximum purchase limit on the COD option. For example, you can set the maximum limit as Rs.1000, over which there is only the prepaid payment option available. This method helps you save money, even if the item is canceled or returned as the cost of such orders will be less.
Remove the COD Option Once You Gain Popularity and Trust
COD is always an easy way to way to earn a lot of customers. Your customers feel a sense of security while choosing the COD option. But, once you gain trust among these customers, most of them will choose prepaid option over COD as they are sure that the order will be delivered. So, once you gain popularity and trust among customers, removing the COD payment option isn’t a big deal.
So, that’s it! In this article, we explained the challenges that you face while handling COD orders and how to automate the COD order handling. We also explained the different methods using which you can reduce the COD orders and encourage customers to choose the prepaid payment options.
It is not that you have to completely ignore the COD option. You just have to consider a few measures as listed above, before offering the COD option which can save you from the burden of order cancellation and returns.
So, we hope this article will help you understand how to reduce COD orders and encourage your customers to choose the prepaid payment option.
Good Luck 🙂