What is Cash On Delivery in Indian E-commerce?

A recent survey by IIMA suggests that 65% of Indian shoppers prefer Cash on Delivery while shopping online. This number confirms that Indian buyers rely on cash, especially those from Tier-2 and Tier-3 cities. Interestingly, even Gen Z in these areas prefer COD over prepaid payment, as per this survey by PwC. 

This shows that as e-commerce continues to expand in remote areas with growing spending power among Gen Z, the use of cash-on-delivery is expected to increase.  

Despite brands and the government’s push for digital payments, customers have not yet moved on from COD payment, also known as Cash on Delivery, Collect on Delivery, or Cash on Demand. 

Even if they make an online purchase, they prefer to make an in-person payment. This is invariably true for first-time buyers who are familiar with a brand. 

Cash on Delivery (COD) isn’t going anywhere, at least not in India. 

Unfortunately, as much as it provides convenience to your users, it also creates an additional backlog of operations and cash processing at your end. From delayed settlements to reconciliation errors, the COD payment process can be a mess if you don’t have the right systems in place. 

Let’s dig deep into favourable payment solutions that offer COD reconciliation minus the drawbacks.  

How does COD work in an e-commerce business model?

Cash on Delivery is exactly what it sounds like- your buyer pays only when the order is delivered. 

In theory, COD meaning sounds simple. However, in practice, it often becomes complicated due to several factors, including cash handling risks, accounting challenges, and delayed payouts. We’ll discuss this later in the blog. 

There’s another challenge that often goes unnoticed: COD might not be available at all locations. 

Can I use Courier with Cash on Delivery in India?

Yes, of course. Most courier partners offer COD (Cash on Delivery) payment in metro cities and Tier 1 locations. It becomes challenging when you try to offer cash on delivery in Tier 2/Tier 3 locations and those that are relatively remote.

If you want to check where cash on delivery is available in India, you need to check it with your courier partner. 

This gets tricky if you only partner up with a single courier. Go for a 3PL logistics aggregator that allows you to access multiple carrier partners from a single dashboard. 

For instance,  iThink Logistics is one of the top COD couriers for e-commerce with 29000+ COD-enabled serviceable PIN code networks in the country.

How Does COD Work: The Complete Process from Seller’s POV:

Let’s walk through the whole process of how COD works, step by step.

1. The Customer Places an Order

The buyer places an order through your website, usually selecting Cash on Delivery at checkout. No payment is collected upfront; only a confirmation is provided that they expect to pay in cash upon delivery of the product. 

Some sellers may request a partial advance or shipping fee, especially for high-value or first-time orders; however, it’s mostly a “you pay when you get it” model.

2. The Seller Accepts or Rejects the Order

At your end, your system receives the order. Here’s where a few decisions are made:

• Is the PIN code serviceable for COD?
  
• Does the customer have a suspicious order history (RTOs, fake orders)?
  
• Is the product in stock?
  

Once verified, your team accepts the order. Stock levels are adjusted in your inventory system, and the item is moved to fulfilment.

3. The Order is Packed and Shipped

The warehouse team picks, packs, and hands over the parcel to the COD courier. At this stage, the parcel is in transit, but the customer hasn’t yet paid you.

You also need to do the following internally:

• Freeze the stock quantity in your system
  
• Generate an invoice, even though payment hasn’t been received yet
  
• Create shipment tracking and update your dashboard or ERP
  

4. The Delivery Attempt is Made

The courier takes the parcel to the customer. This is where COD becomes unpredictable.

One of two things will happen:

a) The customer accepts the parcel and pays
Your courier partner collects the cash at the doorstep. The courier acknowledges receipt and updates their system. This means your courier partner now owes you money instead of the customer. 

b) The customer refuses the order (RTO)
This triggers a reverse logistics loop. The parcel starts its journey back to your warehouse. Meanwhile, you’ve already incurred:

• Forward shipping charges
  
• Packaging costs
  
• Inventory blocking
  
• Operational time spent on the order
  

In some cases, the product may be returned damaged or become unsellable, resulting in an inventory loss, and you will have to pay out of pocket.

5. Reconciling Payments and Managing Accounts

Once delivery is done, the courier is expected to remit your cash. This is where sellers often feel the pinch.

• Remittance delays: Couriers may take 3–7 days (or more) to deposit your collected cash.
  
• Bulk payouts: Payments from multiple orders may arrive in lump sums without clear order-level details.
  
• Reconciliation headaches: You (or your accountant) now have to match each order with incoming payments manually.
  
• Cash flow gaps: While you’re waiting for payment, you may need to purchase more inventory or pay for ads, on top of a cash crunch.
  

6. Updating Inventory Post-Delivery or Return

If the parcel is delivered successfully, the stock is marked as sold and removed from the inventory.

If it was returned (RTO):

• Stock re-enters your system (if it’s still in good condition)
  
• SKU needs to be checked, repacked, and quality-verified
  
• RTO cost is tallied and added to the monthly operational loss
  

Did you realise the issues you must battle at each step to ensure your customers enjoy COD? 

• Manually update your OMS and ensure accuracy with actual stock levels.
• Even minor reconciliation errors can compound over time, affecting your profit margins and tax filing.
• Tracking each order for reconciliation and returns. And more. 

There are dedicated technology solutions for COD management at each of the above steps. This is why you need a payment solution that can integrate into your e-commerce store. 

Also Read: How Cash on Delivery Dominates Indian E-commerce?

Integrating COD Solutions for Smooth E-commerce Operations

You’re probably selling across multiple platforms, such as Shopify, Ecwid, Amazon, and possibly even your own website. 

Whatever the case, your COD solution needs to integrate seamlessly with all of them without fuss. It should connect smoothly with your sales channels and also talk to multiple courier partners without delays. This is where a reliable shipping aggregator, such as iThink Logistics, comes into play. 

If you are plugged into a courier aggregator like iThink Logistics, order data is pushed to the shipping partner, and pickup is scheduled.

With iThink Logistics, you enjoy the following benefits: 

• COD reconciliation is automated. 
• You get clear remittance breakdowns at the order level. 
• You have early settlements 1-2 days after delivery, T+1/T+2, fastest in the industry. 
•  Intelligent dashboards can help you monitor every rupee.

What works in Indian E-commerce:  Prepaid Vs Cash on Delivery

• Risk Checks Before Shipping
  Prepaid orders are typically processed immediately. However, with COD, you often need to verify the buyer using OTP, IVR, or order history checks to prevent fake or high-risk deliveries.
  
• Inventory Held Without Payment
  Prepaid fulfilment frees up cash immediately. With COD, your stock is blocked and your cash is stuck until delivery and settlement, impacting your working capital cycle.
  
• Courier Handoff Involves Cash Handling
  Prepaid parcels are straightforward. COD shipments need extra tagging, tracking, and cash coordination—plus you pay more for cash collection.
  
• Delivery Doesn’t Equal Payment
  In prepaid, you’re already paid. With COD, delivery is just the first step because couriers can take days to remit the actual money.
  
• Higher RTOs and Reverse Logistics
  COD orders see more rejections. Prepaid customers are more committed. With COD, you’re handling extra returns, damaged stock, and repacking losses.
  
• Manual Reconciliation Required
  Prepaid sales are clean and easy to manage. COD means you’re chasing courier reports, matching payments manually, and often struggling with vague bulk summaries, unless you automate it.
  

Compare the Best COD Delivery Partners for E-Commerce

Choosing the right COD courier is one decision that can broadly impact your efficiency and customer experience. 

Here’s how some of the most widely used courier aggregators compare on critical COD metrics.

What E-commerce Sellers Need to Know about COD delivery partners:

• Cash Remittance: If speed matters (and it should), iThink offers one of the fastest COD settlements in the market. Most others make you wait 3–6 days to see your money.
  
• Reconciliation: Vague, bulk-level reports are a common complaint of D2C sellers on a growth trajectory. iThink Logistics gives order-wise reconciliation with complete visibility.
  
• RTO Management: Most aggregators rely heavily on partner protocols, which means inconsistent handling. iThink offers better NDR follow-ups and proactive RTO controls.
  
• Coverage: All major players claim pan-India coverage. iThink services 26,000+ pin codes, including Tier 2/3 zones that many sellers target today.
  

It’s about who you can trust to handle cash, settle payments on time, and not disappear when things go wrong.

Also Read: How To Minimize Cod Failures And Returns?

Cash On Delivery Payment Reconciliation: The Silent Profit Leaker

What is COD Reconciliation?

COD reconciliation is the process of matching your delivered orders with the payments collected by the courier. Any mismatch = delayed payments or potential loss.

Common Pain Points

• Orders marked delivered, but cash still pending.
  
• Courier partner delays remittance without transparency.
  
• Complex, manual tracking in spreadsheets
  
• Fraudulent delivery markings or cash discrepancies
  

How iThink Logistics Simplifies Your COD Payments?

• Real-time visibility into COD collections
  
• Early COD remittance options (even next day)
  
• One-click reconciliation reports
  
• Seamless integration with Shopify, WooCommerce, Magento, and custom platforms
  

Manual vs Automated COD Reconciliation

Definitely, COD comes with its baggage, but careful planning and implementation can go a long way to optimise COD. 

Best Practices to Optimise Your Cash on Delivery Operations

1. Reduce RTO with Better Buyer Verification

• Use IVR calls or WhatsApp confirmations to validate intent.
• Offer prepaid discounts to loyal or returning customers.
• Flag and review high-risk buyers based on past RTOs or fake orders.

2. Set expectations clearly

Many failed deliveries occur simply because customers are unsure what to expect. Be upfront:

• Confirm the estimated delivery date. 
• Share the exact cash amount due. 
• Clearly explain the return or refusal process at checkout and via SMS/email.

This alone can reduce last-mile confusion.

3. Track and Communicate Payment Status

COD fulfilment doesn’t stop at delivery. Keep the customer and your team in the loop:

• Use real-time dashboards to track which orders have been paid. 
• Monitor remittance dates and the status of courier cash. 
• Trigger updates to notify your team or buyer if any items are delayed or disputed.

But, how do you identify that your COD process is slowing you down and eating up your margins?  

Also Read: Cash on Delivery: Advantages and Disadvantages

Checklist: How to Know Your COD Process Needs a Fix

• You don’t know how much cash is still pending
  
• Your courier takes more than 3–4 days to settle COD
  
• You’re manually updating Excel sheets every week
  
• You get vague or missing reconciliation reports
  
• RTOs are eating into 20%+ of your COD orders
  

If even 2 of these are true, you need to upgrade your COD game.

Build a Smarter Cash On Delivery Strategy with iThink

COD is a reality of Indian e-commerce. Ignoring it isn’t an option, and mismanaging it will cost you money and customers. With the right partners and systems, COD can fuel your growth instead of draining your margins.

Want to simplify COD payments and get your cash faster?

Try iThink Logistics for free and see how we make COD feel like prepaid.