The D2C market in India is witnessing an unprecedented growth. It is projected to hit $61.3 Bn by 2027, with early-stage brands entering the ecosystem at a rapid pace. These brands are leveraging the power of digital commerce to build direct relationships with their customers, offering niche products, personalised experiences, and competitive pricing. However, with growth come unique challenges, and Cash on Delivery (COD) emerges as both a catalyst and a complication in their journey.

India’s shopping behaviour is heavily influenced by its low-trust economy, with COD being the preferred payment mode. According to a February 2024 survey report by the Indian Institute of Management Ahmedabad (IIMA), over 65% of ecommerce transactions in India are COD orders.

For early-stage Direct-to-Consumer (D2C) brands, COD becomes a key growth driver, allowing them to gain traction by overcoming shoppers’ apprehensions about new or lesser-known brands. However, COD is a double-edged sword. While it increases order volume and makes customers feel secure, it also exposes brands to significant Return to Origin (RTO) challenges.

Shoppers cancel COD orders for various reasons: they find a better deal elsewhere, act on impulse and later regret the purchase, or simply lose interest and refuse delivery when the product arrives.

This leads to revenue leakage, logistical costs, and potential product damage, which are especially burdensome for early-stage brands with limited resources. High RTO rates can quickly eat into margins, derail growth strategies, and erode the trust these brands aim to build. While trust drives prepayments, the convenience of COD keeps it firmly entrenched in the system, creating a complex landscape for ecommerce businesses in India, particularly for new and emerging brands trying to establish themselves in the market.

The latest app launched by GoKwik is set out to lower RTO rates by fine-tuning the COD process with a layer of network-level intelligence. In July 2024, GoKwik launched the Kwik COD, a Shopify app to help brands manage the influx of COD orders effectively thereby reducing RTO and increasing their bottomline.

The enabler claims to house 120 Mn shoppers in its network and uses insights to flag risky orders, authenticate COD orders, offer multiple payment options, and offer partial COD options to reduce losses. It swiftly gained traction, especially after ecommerce enabler Shopify discontinued its Advanced COD (A-COD) app in August 2024.

In an interaction with Inc42, Head of Product, Checkout and Payments, GoKwik, Vineeta Vora delves deep into the boon and bane of the COD system, how businesses can encourage customers to switch to prepaid orders and how........

© Inc42