What is cash on delivery and how does it work?

Have you heard about cash on delivery, but haven’t tried it yet? In this article, we’re going to explain in detail how it works, plus its advantages and disadvantages so that you can decide whether to use this payment method.

Cash on delivery has become popular for online shopping. Surely you have heard of this method, and you’re wondering how to get the most out of it when ordering online.

Below, we’re going to take an in-depth look at all the information you need to know about it.

What is cash on delivery, and how does it work?

We can define cash on delivery as a payment method where the person makes a purchase and only pays the amount once they have the product in their hands. The person who delivers the package, i.e. the delivery person, will receive the money that will then be given to the company that sells the product.

This means that, if we buy cash on delivery, all costs are borne by the seller: the product, shipping, and other amounts that may arise. On the other hand, if the customer doesn’t pay, then the delivery person won’t deliver the product.

However, keep in mind that you won’t find many online stores that have this payment system, since it’s easier for the stores to charge the buyers at the time of placing the order, rather than leaving it to the delivery company to collect their money.

But don’t think that by paying cash on delivery you will get free shipping… The shipping costs are also included in the amount you’re charged for the product, so the seller always gets back what they have spent.

What are the advantages of buying cash on delivery?

The main advantage of this payment mechanism is that it guarantees that the package will arrive at your home. Of course, the company won’t want to lose money and that is why they’ll make sure that you receive the package so that they can charge you for the product.

Those who usually choose this payment method are generally people who are suspicious when shopping online. For them, this mechanism is an excellent alternative that will prevent them from paying for a product they believe they will not receive.

Another advantage of this payment method is that you don’t have to wait for the delivery person, nor worry that they won’t find you at home when they arrive. You can pay directly at the carrier’s office and pick up the package.

What are the disadvantages of this payment mechanism?

The biggest disadvantage you’ll find when buying cash on delivery is that the final prices of the products are higher compared to what you can pay with other methods.

You should also keep in mind that there are certain limits when it comes to making payments. This is to prevent the delivery person from having to carry a large amount of money, as well as giving back money to all potential customers and dealing with that work during deliveries.

On the other hand, a big disadvantage for the company that accepts cash on delivery is that there’s a possibility that the customer will reject the product and therefore not pay for it. If this happens, the seller loses the money spent on shipping.

Something similar happens when the buyer indicates a wrong address, either by mistake or on purpose. With this failed shipment, the seller loses money and can’t recover it with the price of the product.

These are some reasons why online stores don’t offer the possibility of cash on delivery.

As we already said, this mechanism has some aspects in favor and others against. It will be up to you to choose the one that suits you best to make your purchases or to sell your products.

If you want to read more about online stores, continue visiting our blog. Here you will find all the information you need when it comes to online shopping.