Cash on delivery for a small store — how to offer it without bleeding on returns.
Roughly half of first-time buyers on a small Indian store want cash on delivery. Turn it off and you lose them; turn it on carelessly and a fifth of your parcels come back at your cost. The trick is not to choose — it is to price COD, confirm the orders that need confirming, and nudge repeat buyers to prepay. Here is the working version.
How COD money actually flows
The courier collects cash (or UPI at the door, increasingly) from the buyer. The aggregator — Shiprocket, Shipmozo, Rehbar Post — holds it and remits to your bank on a cycle, typically weekly, minus their charges. So a COD order placed on the 1st and delivered on the 5th might reach your account on the 12th. Two things follow: keep a cash buffer for stock, and reconcile each remittance statement against your orders, which is easy when the store has the order list and painful when the orders live in chats.
What a refused parcel costs
A COD parcel the buyer refuses — or isn't home for three times, or gave a wrong number for — is returned to you. You pay the forward shipping *and* usually a return charge, often ₹80–150 in total, plus the packaging, plus the item sitting in transit for two weeks. At 10% RTO on ₹60 parcels, COD costs you roughly ₹12 per order across the board; at 25% it can wipe out the margin on cheap items. So the goal is an RTO rate under 10%, and the levers below get most stores there.
Lever 1: a COD charge buyers accept
A COD fee of ₹30–50 does two things: it covers part of the RTO cost, and it nudges buyers who *can* prepay to do so. Show it clearly at checkout as "Cash on delivery charge" — buyers accept it; they've seen it everywhere. What they don't accept is a surprise. On SitesPlaced the COD charge is a setting (Settings → Checkout), shown as its own line on the order and the invoice.
Lever 2: confirm the orders that need confirming
Not every COD order needs a call. Confirm on WhatsApp when: the order is above your threshold (say ₹1,500), the address looks thin (no landmark, no pin code), the phone number is new to you, or the buyer ordered three of a thing nobody orders three of. A one-line message — "Hi Priya, confirming your COD order #SP-0042 for ₹1,299, delivery to Rajajinagar in 4–5 days. Reply YES to ship" — and ship on the YES. No reply in 24 hours: one reminder, then cancel and restock. This single habit halves RTO for most sellers.
Lever 3: nudge prepaid without banning COD
- Free shipping on prepaid, ₹49 shipping + COD charge on COD. The buyer sees ₹0 vs ₹99 and many switch.
- A small prepaid coupon (PREPAID5) shown at checkout.
- Repeat buyers: after two successful COD deliveries, they trust you — ask for prepaid next time with a thank-you.
- High-value or made-to-order items: prepaid only, said plainly on the product page.
Lever 4: block the bad actors
Some refusals are not buyers; they are bots, pranks or a competitor. Keep a block list of phone numbers and emails that refused a parcel, and rate-limit orders from one number. On SitesPlaced this is built in: block a customer from the order itself, and the store limits how many orders one phone or IP can place in an hour. The full method, including using the courier's NDR tools, is in how to reduce RTO and fake COD orders.
When to switch COD off for a product
COD makes sense for items under ₹1,500 with steady demand and small return rates. It stops making sense for custom or personalised items (you can't resell a returned name necklace), perishables, and anything expensive enough that one refusal costs a day's margin. Turn it off per product or per category rather than store-wide; on SitesPlaced, category kinds and checkout settings let you keep COD on for the ₹499 items and prepaid-only for the ₹4,999 ones.
The numbers to watch
| Metric | Healthy | Act when |
|---|---|---|
| COD share of orders | 40–60% for a new store | Above 70% after 3 months — nudge prepaid harder |
| RTO rate on COD | Under 10% | Above 15% — confirm more orders, raise the COD charge |
| Confirmation reply rate | Above 80% within 24h | Below 60% — your message is too long or too late |
| Remittance lag | 7–10 days | Longer — check the aggregator's cycle and any holds |
The COD vs prepaid calculator works out what an RTO rate costs you on your own prices.
FAQs
Should a new online store offer cash on delivery?
Yes, for items under about ₹1,500. Half of first-time buyers on small Indian stores want it. Add a COD charge, confirm orders above a threshold on WhatsApp, and nudge repeat buyers to prepay.
How much COD charge should I add?
₹30–50 is the range buyers accept without comment. Show it as its own line at checkout; never hide it in the price.
How long does COD money take to reach me?
The courier collects it and the aggregator remits weekly in most cases — a week to ten days after delivery. Keep a buffer for stock.
What is a normal RTO rate?
Under 10% on COD is healthy for a small store that confirms orders. Above 15% means too many unconfirmed orders or a product category that suits prepaid only.
Can I turn COD off for some products only?
Yes. Keep COD on for cheap, fast-moving items and make custom, perishable or expensive items prepaid only. On SitesPlaced this is a per-category setting.
COD with a charge, confirmation and a block list — built in.
Cash on delivery with an optional COD fee, order velocity limits, customer blocking, Shiprocket/Shipmozo remittance, and invoices — on the free plan, 0% commission.
Create my free store →
