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COD Means Cash On Delivery: Definition, How it Works Strengths, Weaknesses and Examples

If you are a loyal e-commerce customer, you must have heard of COD or the cash on delivery payment system. Then what is meant by COD?

Anyone who often buys and sells goods online or deals with delivery services will know what it is cash on delivery (CODE). 

Service existenceThis COD presents its own convenience for buyers in terms of payment. Especially if leaving the house to an ATM or branch without using the m-banking application is too much of a hassle. 

So what does COD mean? So, on this occasion we will discuss the meaning, advantages and disadvantages, for example, to tips for doing COD.

Definition of COD

Quoted from the book E-Commerce Basic Theory in Digital Business by Muhammad Aldrin Akbar and Siti Nur Alam, COD is defined as a service that consumers will receive from sellers.

The COD service is a payment access for shipping goods when they arrive at the destination address. COD is also known as collect on delivery launch page Encyclopedia Britannica. Definition cash on delivery is a common business term indicating that payment for goods must be paid upon delivery.

In other words, cash on delivery means paying directly or on the spot after full delivery of goods.

Quoted from the official Shopee Indonesia page, COD means a payment method that is made directly on the site after the buyer receives the order from the courier.

In other words, COD is the preferred payment method. In market others like Tokopedia pay with COD. Tokopedia offers a choice of payment methods where partners (buyers) can make cash payments after the goods are received.

In fact, not all marketplace offer COD services, and not all shipping companies support COD services which facilitate transactions between sellers and buyers.

Advantages of COD

There are several advantages that sellers and buyers get from the COD payment method. Payment method cash on delivery has the following advantages:

For sellers, COD payments are a marketing strategy to increase sales of their goods because many consumers choose this method. In many cases, the COD procedure can even increase the prospect's confidence in the seller's reputation.

For buyers, the COD method adds its own convenience, because the condition of the goods can be directly verified by the buyer, thereby avoiding fraud and discrepancies in the condition of the goods with the order.

Lack of COD

Even though it is a payment method that many people are interested in, it turns out that cash on delivery also has its drawbacks. Following are some of the disadvantages of the COD process:

  • This step can be considered detrimental if the buyer cancels the transaction for various reasons. Of course, this costs the seller time, effort and money.
  • Since the COD payment system usually uses cash, sellers run the risk of receiving counterfeit payments.
  • Service range for procedures cash on delivery generally very limited and can only be offered by buyers and sellers in the same city. 
  • COD is very vulnerable to crime for both sellers and buyers. For this reason, it is recommended to use COD in crowded public places.

Example Using the COD System

Suppose you buy a laptop from an online shop. After finding a suitable laptop, you will usually contact the seller to ask for availability, price offers, complete specifications of the goods, condition of the goods, and more.

If you agree and agree with the price and goods offered by the seller, you and the seller can agree on when and where to meet. You and the seller will then meet at the agreed place and time. 

After that, the seller has the right to bring the item he wants to buy and check the condition of the item. You can then pay for the item at a pre-agreed price or cancel if the terms don't meet your expectations. This completes the COD procedure.

Tips for Doing COD

  • The first thing to pay attention to when using COD is the delivery area.
  • COD service delivery areas are limited and not in all cities.
  • Opportunities for fraud in the COD system are felt by both sellers and buyers, so be careful in choosing sellers and items to buy.
  • Please inquire about additional shipping costs. Additional delivery fees usually apply, especially in non-contract delivery areas. 
  • If you want to use cash on delivery, please prepare cash to reduce the burden on couriers and sellers.
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