Cash on Delivery – Overcoming Payment Infrastructure Challenges in Southeast Asia

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With the evolution of tech, delivery operations have changed and evolved, and customers’ expectations have also shifted the way deliveries are done.

In the face of  increasing competition from e-commerce players, more companies are considering of jumping into the digital world to reach out to a wider audience faster and more efficiently.

Same-day delivery has certainly become the norm, and this new trend has sparked changed into how deliveries are done.

For instance, more companies focus on transparency, efficiency and control when it comes to their operations in order to have smooth operations workflows and ultimately, bridge the gap between customer expectations and their own services. But these companies, also need to identify their customers  – or even the markets’ – challenges.

In Southeast Asia, one of such challenges is the lack of “Cash on Delivery” option upon placing a delivery. In countries like Malaysia, Indonesia, Thailand and Philippines, many companies still manage transactions manually due to issues like lack trust in sharing information through online channels.

But with the rise of fintech, e-commerce and last-mile delivery, while it is important to educate consumers on the convenience and ease of online payment methods, companies performing deliveries still need to come up with alternatives to stay on top of the game hence a Cash on Delivery option is integral to any successful business strategy in this part of the world.

What is Cash on Delivery?

Cash on Delivery or COD is a type of transaction in which the recipient makes payment for an item at the time of delivery. The recipient can make payment by cash or cheque depending on what the shipping contract stipulates.

This type of transaction usually takes place through a company and allows both the seller and the buyer of the product to minimize the risk of fraud.

Highlighted in e27 is the fact that “one of the difficulties when it comes to payment options is the low level of trust Indonesian consumers have when it comes to online purchases, where 34% of Indonesia’s online consumers are “afraid of fraud”, according to a survey by the Indonesia Internet Service Provider Association.”

Cash is still king in many markets

According to data from Southeast Asia-based e-commerce logistics provider aCommerce as cited by ecommerceIQ, cash on delivery was still the payment method used for nearly two-thirds (65.3%) of digital purchases in Indonesia.

Over in Thailand, the country is still a cash-driven society and Cash on Delivery is the preferred payment method for 70% of e-commerce shoppers, making payments a bottleneck for faster e-commerce growth as many sellers cannot offer COD.

Advantages of COD transactions

For consumers without credit cards, COD purchases offer a convenient way to order items online. The transactions pose low risk for the buyer since the customer doesn’t pay until they receive the product in satisfactory condition.

On the merchant’s side, offering a COD payment option may enhance buyer confidence in a new company that does not yet have strong name recognition. This strategy can also lead to more customers and increased sales.

Also, since COD transactions do not involve a credit card, merchants save money on credit card transaction fees. In addition to enjoying the benefits of COD transactions, merchants who offer this payment option must be prepared to assume certain risks.

To mitigate the return risk, big e-commerce players make sure to take high-quality photos of its products while providing as much information as possible, like exact measurements.

How does tech help? 

With a delivery management platform in place, you can use features that help companies move a step forward and get an edge up this competitive market. With CarPal’s delivery management software, companies can easily customize their deliveries and when it’s needed, clearly indicate when a certain transaction is required to have Cash on Delivery option. By having access to this option, companies will be able to easily manage their deliveries.

When paying attention to the needs of the market, companies can reposition it as a sophisticated logistics service provider with international standards and high reliability.

Together with this feature, a delivery management software has a holistic role for your organization and this means that companies can track the progress of a package in real-time, use route optimization to offer their fleets of drivers the most efficient route to perform deliveries as well as monitoring driver accountability through Proof of Delivery.

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