What is COD business? What problems do sellers face under COD business?

What is COD business?

COD is the abbreviation of cash on delivery, which means that the goods are delivered first, and the customer pays the courier for the delivery. This is what we often call "hand over money and hand over goods", which is generally used in e-commerce (online shopping). Many companies in the popular third-party logistics do cash on delivery.

What problems do sellers face under COD business?

1. The rejection rate is high

Unlike the high delivery efficiency in China, it usually takes two weeks for Middle Eastern people to receive their goods after placing an order on the website. During this waiting period, buyers are very likely to change their minds; in addition, after receiving the goods, if the actual product is too different from the online picture, buyers are also very likely to return the goods, which makes the product signing rate and successful delivery rate low.

2. High cash management costs and long settlement cycles

Generally speaking, domestic sellers will entrust the delivery of goods to courier companies based in the Middle East after the goods are delivered. After the package is successfully signed for, the logistics company will collect the funds and then pay the seller. However, from the delivery of the goods to the successful delivery, to the collection of the funds, and finally to the conversion into RMB, the order is considered to be successfully completed. It usually takes more than half a month to achieve a closed loop of the capital chain. This greatly reduces the liquidity of funds and cannot increase the seller's capital turnover rate. Therefore, it is also necessary to find a professional payment company to solve pain points such as payment collection.

3. The number of courier companies available is very limited

For sellers, it is also very important to choose a courier company that they can get along with. Currently, most of the well-known logistics companies in the Middle East have bad tempers, low efficiency, and high prices, which can easily lead to unpleasant cooperation. But when choosing a small company, you need to consider its credit safety to prevent the logistics company from "taking the money and running away".

4. Big bottleneck in logistics delivery

Take Saudi Arabia as an example. Different express delivery companies have different address databases for different local areas according to different translated names. Therefore, within the scope of the order, it is necessary to circle the correct location. In addition, many houses in Saudi Arabia do not have house numbers, which adds a lot of difficulty to delivery. At the same time, for orders in remote areas, if the scope is not divided in time, it will be useless in most cases. The order is easy to be returned due to non-delivery, which also leads to hidden costs.

This is the end of the introduction to COD business in this issue. If you want to get more information about COD business, please pay attention and we will continue to answer you~