Retail

5 ways to optimize the Cash on Delivery process in logistics


Technology has brought about a sea change in every industry over the years, undeniably. The pandemic has accelerated technological adoption and disrupted various sectors, with the logistics industry being at the forefront of disruption given the multiple restrictions due to prolonged lockdowns. The ecommerce logistics sector was also one of the few that managed efficient revival post the lockdowns.

However, the pandemic has transformed the way the sector operates with changes such as contactless deliveries becoming a mandate and with it, more users shifted to ordering on ecommerce portals on prepaid mode during the lockdown phase.

While the eCommerce industry has adopted these on a large scale, India has always largely been a cash-based economy, and as vaccinations are starting to be administered to the masses whilst implementing safety measures, the Cash on Delivery (COD) mode of payment is making a comeback. When considering payments, although a significant percentage of the population has adopted digital payments, India is a predominantly cash-based economy. This means that for ecommerce websites & marketplaces, the Cash on Delivery (COD) mode of payment remains a key area of focus.

Despite digital payments such as UPI, card payments, and mobile wallets gaining traction, studies reveal that COD still happens to hold one of the highest percentages of the total payment methods in developing markets. However, while COD appears to be a convenient process for customers and seamless from the business end, it comes with its share of challenges. A comprehensive, robust mechanism needs to be devised for frictionless COD payments since COD payments come with inherent issues such as a higher probability of Order rejections at the time of delivery leading to higher sales returns. This directly impacts revenue realizations, inventory planning etc, all of which ultimately impacts the bottom line of the company. On that note, here are five effective ways to optimize the COD order delivery process in the eCommerce logistics industry.

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Analyzing customer history

Good and bad customers are a part of every business. Some may be punctual with completing their cash transactions for the orders while some may drag the process with delays. To optimize the COD process, it would be best for logistics players to drive customer behavior analytics based on their history of orders and rejection. This can then be used to create internal flags, hence filtering out the customers who are serious about their purchases accordingly at the time of order taking, eventually allowing the COD process to become more efficient.

Customer contact and address verification

A substantial amount of customer acquisition in eCommerce comes through various social media channels. These customers are generally from Tier 3 & 4 cities and mostly order on Cash on Delivery format as majority of them are making their online purchase for the first time. Guiding the customer to write proper addresses with house/ward Nos, nearby landmarks while booking the orders plays a very important role. Most of the large ecommerce stores and websites also have address validation software which they use to identify noisy addresses and run an address re-verification process before shipping those orders.

Rechecking a customer’s address and contact number can go a long way in enabling a smoother delivery experience for a COD order. Key steps such as re-validating a customer’s contact number through OTP, running an address check basis the content of an address and validating the pin code basis Google Maps APIs to flag redundant/bad addresses will ensure that the last mile delivery happens without any hiccups.

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Sending updates to customers in case of delays

From the customer standpoint, no one likes their orders to be delayed. But in times such as the ongoing pandemic, unexpected delays are bound to happen. Logistics players can have deep integration with the carrier’s Transportation Management Systems and the Delivery Mobile Applications to update the customer in the event of any transit delays due to COVID-19 restrictions, natural calamities, carrier-initiated delays, etc.

Proactively sharing a shipment’s Non-Delivery Reasons (NDR) to ensure that the delivery executive remarks concerning the non-delivery of the COD shipments are valid. Furthermore, sharing NDRs with customers via SMS or WhatsApp, and taking feedback from the customer via these platforms will enable the customer to highlight any gaps in real time back to the company so that corrective actions can be initiated.

Shipping TAT & adherence

It is important to ensure that the TAT (Turn Around Time), which has been committed to the customer are adhered to. In order to allocate a carrier that has the highest probability of delivery conversions and TAT adherence, logistics platforms can run internal analysis based on a carrier’s recent performance in those cities, lanes or pincodes. These will allow them to identify carrier issues concerning capacity, infrastructure, ability to fulfill the deliveries on time, and allocate the best feasible carrier for COD shipments.

Enabling electronic/card payments for COD orders

eCommerce Logistics companies must provide the means to customers/consignees to pay a COD Order via UPI, Wallets or via swiping their debit/credit cards on an EDC machine at their doorsteps. Allowing such electronic payment options will ultimately reduce the customer rejections and facilitate higher deliverability of COD orders.

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With COD continuing to remain the most popular method of payment for ecommerce; brands, ecommerce websites & marketplaces need to be highly agile both in terms of using technologies and incorporating internal and external control mechanisms to ensure higher deliverability of COD orders. The steps mentioned above will go a long way to achieve this objective.

The writer is Senior Vice President – Supply Chain, Shiprocket.



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