Part 3: Identify all Terms and Conditions to Include in the COD Policies
You should clearly explain the terms and conditions that should clearly outline the responsibilities of both the business & customer. Below are the essential elements to include:-
1. Eligibility for COD
Service Availability: Mention regions where COD is offered.
Product Limitations: List items excluded from COD (e.g., perishable goods, high-value items).
Order Value Limits: Specify minimum and maximum order amounts eligible for COD.
Example: “Cash on Delivery is available for orders between ₹500 and ₹5,000 and applies only to select products and locations.”
2. Order Confirmation and Cancellation
Order Verification: State that COD orders require confirmation via call, email, or OTP.
Cancellation Policy: Allow cancellations only before dispatch and not at the time of delivery.
Example: “COD orders will be dispatched only after confirmation via OTP. Cancellations must be requested within 12 hours of placing the order.”
3. Payment Requirements at Delivery
Exact Amount: Require customers to have the exact payment amount ready to avoid delays.
Alternate Payments: Specify if digital payment options (e.g., UPI or card) are available at delivery.
Example: “Please have the exact payment amount ready at the time of delivery. For convenience, digital payments are also accepted.”
4. Failed Deliveries and RTO Terms
Rescheduling Deliveries: Offer customers a limited number of attempts to reschedule failed deliveries.
RTO Costs: Reserve the right to charge customers for return shipping costs if they refuse delivery.
Example:“In case a customer is unable to accept an COD order, then a penalty of ₹100 is charged for return shipping”.
5. Refunds for Returned Orders
Define whether customers are eligible for refunds for COD orders that are returned due to damage or dissatisfaction.
Mention timelines for processing refunds.
Example: “Refunds for COD orders will be processed within 7-10 business days of receiving returned items. Refunds will be issued via bank transfer.”
6. Fraud Prevention
Account Restrictions: Reserve the right to block accounts with a history of fake orders or frequent refusals.
Legal Action: Warn customers of potential legal action for fraudulent activities.
Example: “We reserve the right to block accounts associated with fraudulent COD orders or frequent delivery refusals. Legal action may be taken if necessary.”
7. Partial Prepayment
Specify whether a partial prepayment is required for COD orders, particularly for high-value items.
Example: “Orders above ₹10,000 require a partial prepayment of 20% before dispatch. The balance can be paid at delivery.”
8. Dispute Resolution
Outline the process for resolving disputes regarding COD payments or deliveries.
Include contact details for customer support.
Example: “For any disputes related to COD payments, please contact our support team at support@example.com. All disputes will be resolved within 3 business days.”
Part 4: Mitigating Risks Associated with COD
While terms and conditions lay the groundwork for managing COD effectively, implementing operational measures is equally important.
1. Combat RTO Losses
Dynamic Routing: Use technology to optimize delivery routes, reducing time and costs for unsuccessful deliveries.
Proactive Communication: Inform customers of delivery status via SMS or app notifications to reduce refusal rates.
2. Prevent Fake Orders
Verify high-risk orders using phone calls or email verification.
Limit the number of COD orders a single customer can place simultaneously.
3. Ensure Faster Cash Reconciliation
Partner with logistics companies that provide daily cash deposits, early cod remittance or cashless COD collection.
Part 5: Communicating Policies to Customers
To maximize the effectiveness of your COD policies, ensure they are clearly communicated to customers at every stage of their journey:
Website and App: Display policies prominently on the payment page and in the FAQ section.
Order Confirmation Emails: Include a summary of COD terms in confirmation emails.
Delivery Personnel Training: Train delivery agents to explain COD policies if customers inquire at the time of delivery.
Conclusion
COD will always remain an essential payment option for e-commerce businesses, particularly in markets like India where digital adoption is increasing. However, some of its associated risks, like RTO losses and fraudulent orders, can be solved through clear, comprehensive policies and effective terms & conditions.
By carefully analyzing customer behavior, collaborating with reliable logistics partners, and implementing proactive measures like order verification and RTO management, businesses can strike a balance between offering COD and protecting their bottom line. Well-communicated policies and a customer-first approach further ensure that COD continues to be an asset rather than a liability for e-commerce businesses.
Additionally, shipping aggregators like Shipway empower e-commerce brands to tackle these COD challenges with advanced tools for order verification and COD fraud analysis. By identifying potentially fraudulent orders and taking effective verification measures, Shipway helps businesses significantly reduce RTO losses and control their shipping costs. This not only streamlines operations but also ensures a better bottom line, making COD a sustainable payment option in the long run.
