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Is CoD killing ecommerce?

Written on 18th April 2016

Cash on Delivery (CoD) has revitalised parts of the ecommerce industry, particularly in Asia where it has brought in more rural customers. But it is also a huge risk for retailers, who often fail to receive payment for goods sold.

The Indian online bookseller Flipkart launched a CoD payment system in 2010, and it now makes up 80% of the company’s online sales. But the company has suffered from hidden logistical, insurance and cash handling costs, and from customers being refunded for returned goods that never materialise back at their warehouses.

Suraj Vazirani, an Ahmedabad-based online seller, commented: “What a customer returns is never checked by the pick-up guys – but before it reaches you, the customer has been refunded, and the marketplace charges the sellers 1% of MRP, charges for pick and pack, other logistics and handling charges, as well as 20% of commission, up to 300 rupees. All this amount for a product that is not sold.”

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Mobile wallets are increasingly being seen as the solution. But Middle Eastern entrepreneurs Fouad Jeryes, from Jordan, and Sinan Tayfour, from Syria, have launched Cashbasha, an innovative “cash before delivery” system that currently has Amazon as its only customer.

Cashbasha differs from other mobile wallet platforms in allowing customers to use it as a guest, without having to create an account first, and in automatically calculating customs and shipment fees. It also allows users to browse the Amazon website in Arabic, a facility not offered by Amazon itself.

When Cashbasha first started, its two founders set themselves a target of 60 orders in their first months from people they did not know. To their surprise, they reached this target within two days. Cashbasha is now set to expand into Saudi Arabia, the region’s biggest market.

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