Cash-on-delivery (COD) model is a critical factor in the exponential growth of eCommerce companies in India like Flipkart. Snapdeal, etc. As some of these companies grew at 500% YoY in sales, COD continues to be the significant payment method for consumers. This reliance is starting to impact the margins due to – increase in costs for COD processes, longer payment cycles, higher cost of processing returns to name a few.Online transaction costs (1.5-3.5%) are lower than COD transaction costs (8-10%). Customers who can pay online still use COD due to trust issues (they want to see the product before they pay) and convenience.Given the technological advances in mobile devices, better fraud detection systems and payment options, there are new models that can eliminate and improve on the costs of cash-on-delivery system.
Propose a payment method that can replace the existing Cash-on-delivery used by most ecommerce companies in the Indian market.
Additional Considerations :
Provide a mechanism that is accessible by most target segments serviced by COD today both in terms of ease of use and ability to use different payment methods (debit cards, credit cards, etc).In comparison with COD systems:
Provide better fraud/leakage metrics.Match or increase transaction limits.Ensure payments are received by the company more quickly.Submit original ideas that are not clones of existing models being used in the market.