The Drawbacks of a Cash On Delivery Business you should Know

Cash on delivery (COD) business requires that the customers make payment for the commodity when it is delivered. In other words, the customer pays for the commodity when the product is delivered to their doorstep or agreed on location.

As much as the cash-on-delivery business gives the customer some confidence, the seller may also be at loss sometimes because of certain negatives. Don’t forget you need to pay for a courier service to send the product and if the customer doesn’t like it, you may have lost some profits. 

One quick tip you need to know about COD is that you track the product via websites like China post tracking to ensure it is not sent to another location. See the negative side of a COD business:

Rejection

Rejection is one of the greatest disadvantages of operating a cash-on-delivery business. Assuming a customer rejects the products you sent for delivery, it means that you’ve lost the cost of two-way shipping costs without any sale. That’s why a lot of courier companies seem to lose a lot of funds.

Also, for most of the products, you may need to install and test the device if it’s working properly or not. More so, the customer must be satisfied with the product’s workability before payment is made.

High Cost of Running COD Business 

Running a COD business requires that you will pay for two-way shipping. Although in most cases, the seller’s offer adds the cost of shipping to the product, it may become a disaster if the products are rejected. 

Also, even when you decide to allow the customer to pay for the cost of shipping, you may have spent some money packaging the product. So one way or the other, running a COD business requires a lot of funding. 

Competition

What’s more, it will be difficult to survive in a COD business if you are trying to compete against an already established competitor. Most often, the COD business is made up of companies that have been around for a long time. Therefore, if you are a start-up it may be difficult for you to dive into the COD business and survive for a couple of months without firm capital. 

How to Overcome COD Drawbacks ?

Although a COD business seems to have a lot of drawbacks, you can overcome some of the drawbacks if you take some measures. Below are measured to overcome COD drawbacks:

Tracking

If you are using a shipping company, you need to ensure that you track the package. That way, you would know when the customer has received the product or not. The courier company will provide the tracking number that you need in the tracking package. 

Use Reliable Courier Service

Partner with a courier service that understands your kind of business. Not to mention,  the courier service needs to also know the security measures to take to prevent issues that may arise. 

Unserious Customers

Take note of customers that have refused to take delivery of products they ordered when they are delivered. That way, you may take extra measures if the customer requests another delivery. 

Summary

Tracking is one of the major ways to keep taps of your product when it is in transit. As a COD business, you need to keep your tracking number intact. Also, you can use tracking websites to track your parcel. With this, you don’t need to wonder “how can I track my parcel?”. Finally, keep in mind that COD is a high-risk business and you need to be very meticulous and vigilant.