If you have an eCommerce store, or are going to set one up, among the many actions you must carry out and make decisions about, payments are one of the most important. Customers may want different options. The normal thing is to offer credit card, transfer, Bizum or PayPal. But why offer cash on delivery?
Although A priori it is complicated and may require more problems to collect, The truth is that it offers you multiple advantages that could be interesting for you, especially if you are just starting out with your online store. How about we tell you about it?
What is cash on delivery?
As you know, cash on delivery is a payment method that is characterized by The customer does not pay you in advance for the product they purchase, but rather at the time they receive it.
To make it clearer: your online store has a pair of shoes for 30 euros. The customer sees them and likes them, so he decides to buy them. But among your payment methods he sees that you have cash on delivery.
Since he doesn't know you and has never bought from you, he may be reluctant to give you his credit card or make a Bizum without knowing if you will send him the product. So opt for cash on delivery to ensure that he will receive the shoes and pay you when he has them in his hands.
After 24-48 hours, the customer receives the product and pays the courier the money for that product plus a percentage of the handling fee, which is normally what the courier takes for acting as an intermediary.
At first, when the Internet started to take off in Spain and the first stores were created, this payment method was one of the most common ones you could find. However, Over time, it has been overlooked, and now not many are offering it.
But, we can tell you that it is quite interesting to recover it and we will explain why below.
Why offer cash on delivery?
When thinking about payment methods, you have to put yourself in the customer's shoes and analyze each one as if you were your customer and saw something you liked on your page. But knowing that you have never bought from yourself, that you don't know yourself and that you don't know how you are going to send the product, if it is of quality, etc.
Analyzing cash on delivery in detail, you can see that it has certain advantages. We will discuss them below:
Greater confidence for customers
The fact that A customer who doesn't have to pay you for a product in advance gives a lot of confidence. If you look closely, large platforms like AliExpress have started using this. Yes, it is true that they ask for a card to guarantee that you will pay, but really, until you notify that you have received the product, or the courier company leaves a notice that it has been delivered, they do not charge you.
Well, with cash on delivery it's something similar. In this case, the fact that you don't have to put up your money without knowing whether you'll receive the product or not, gives you more peace of mind and makes you trust the business more. In fact, sometimes your first order can be made this way and then the next ones will opt for other methods.
You reach people who are reluctant to buy online
It may seem silly, and you might think that, at this point, no one is reluctant to buy online. But the truth is that you would be surprised. In addition, many older people do not understand technology well, or They don't like to put their private data in the news about security.
So offering cash on delivery means that these people can buy from your store, and perhaps only from your store, since your competition isn't thinking about them.
It encourages compulsive shopping
What happens when you can buy whatever you want and you don't have to pay? You buy a lot. Well, that's what cash on delivery creates. Not having to pay at that moment encourages you to buy more.
Of course, the time will come to pay, and you have to keep in mind that the order will not be divided so that you can pay only for what you want. It's all or nothing.
Risk is reduced
This is similar to what we have told you about insecurities on the Internet. The fact that not having to give your bank details or enter your card helps you make purchases more secure.
The bad thing about cash on delivery
Although cash on delivery has many advantages, we cannot help but think about the downside of this method. One of the reasons why many are reluctant to use it in their stores is due to problems related to returns, costs or more complex processes.
You'll see, The fact that the customer does not pay before receiving the product means that he may reject the order when it is delivered, or he may not have the money to pay for it.. And that means that the cost of sending it by cash on delivery has to be paid by the store owner. Apart from logistics and packaging.
For this reason, a percentage or a fixed amount is often requested for choosing this payment method. But of course, if you don't receive the order, the customer doesn't pay and you have to take care of it.
Another problem is the fact that have the courier services handle the collection of that order. In exchange for this, they receive a commission and this impacts the profits of your sales.
Added to this is the fact that the process takes longer. On the one hand, you have to send the product, trusting that the customer will not change his mind and return it. The courier has the money, and it is they who must pay you. But there may be deadlines for that. In short, it takes longer to receive the money.
Our recommendation is to have this payment method in your online store. It doesn't mean that they will use it a lot, it's possible that they won't use it. But it doesn't cost you anything to maintain it either. And this can help customers have more confidence in your store (even if they don't use it). What do you think about this?