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Amazon’s Cash on Delivery Service: All You Need To Know

sahil bajaj

Sahil Bajaj

Senior Specialist - Marketing @ Shiprocket

May 30, 2024

6 min read

Amazon continues to lead the way by providing innovative payment solutions to its customers to cater to their diverse needs and preferences. Cash on delivery and pay on delivery are among the most sought-after methods of payment in India. Most online buyers prefer to pay when they receive their orders. Also, knowledge about prepaid payments is not widespread across the country. Hence, cash-on-delivery or pay-on-delivery payment options take the upper hand. Amazon is a leading marketplace in India, which helps the marketplace to revolutionise the online shopping experience. In this blog, we will explore Amazon’s cash-on-delivery and pay-on-delivery services by understanding how they work, their eligibility, advantages, and limitations.

Amazon Cash on Delivery (COD)

Cash on Delivery is now Pay on Delivery

Recently, Amazon introduced its ‘pay on delivery (POD) model’, where buyers can pay for their orders via cards, cash, wallets, etc., once they receive them. Cash on delivery has now been merged with the pay-on-delivery model.

In cash-on-delivery services, customers pay for their orders or purchases via cash at the time of delivery to the delivery person who is handling the package. Cash on delivery is used in remote regions or where trust in online payments is low. Whereas, pay on delivery includes a wide range of payment methods like cash, cards, UPI, etc. Pay-on delivery allows customers to choose their preferred payment method at the time of delivery as per their choice and availability.

Amazon has introduced pay-on-delivery services to provide accessibility and a convenient shopping experience to its customers. But just like Amazon’s cash-on-delivery service, pay-on-delivery is also restricted to a few pin codes and product categories.

Who is eligible For Pay on Delivery?

Amazon’s pay-on-delivery option is available to a wide range of audiences as per different regions, products, regulations, etc. Here are some general factors that help to determine the eligibility of the customer to pay for delivery services: 

  1. Location: The delivery location plays an important role as there can be some specific or remote regions or countries where Amazon does not provide pay-on-delivery services because of market conditions, security, feasibility issues, etc.
  2. Type of product: There are some products that are not eligible for pay-on-delivery or cash-on-delivery services because of their high value or other security reasons.
  3. Customer’s account status and order history: If the customer has a verified account, positive order history, and a good payment track at Amazon, then the customer is qualified for the pay-on-delivery and cash-on-delivery services.

Amazon Sellers can accept payment on delivery via cash, card, or other wallets when cash on delivery or pay on delivery is available. Once Amazon receives the payment from the buyer, they initiate a payment to your bank account and settle the same within 7-14 days. The same is reflected in your Seller Central account.

Why are Prepaid Payments a Better Option For Your Business?

Prepaid payments and orders are always better for businesses in comparison to cash-on-delivery or pay-on-delivery services provided by Amazon. Once the seller opts for easy shipping and FBA on Amazon, their products automatically become eligible for returns. If a buyer has opted for Amazon Cash on delivery or Pay on delivery and then placed a return request, there is a good chance that the seller will lose extra money with the return order processing. Also, there are times when buyers don’t accept your product. This way, sellers lose out on cash and inventory easily. Here are some other advantages listed that prove that prepaid payments are advantageous for businesses:

  1. Prepaid payments improve cash flow and revenue for the business, which further helps to plan investments and finances for growth.
  2. The risk for sellers of no payment or late payment is reduced as the customers have paid in advance.
  3. Prepaid payments increase the financial stability of the business and help sellers deal with debt easily.
  4. Prepaid payment options help sellers trust their customers and build stronger and more loyal customer relations.

To safeguard your business from mishaps like no payment, late payment, return, loss, etc., you can choose to ship via Amazon self-ship and select Shiprocket as your courier partner. Shiprocket offers a faster and cheaper way to ship products and provides leading payment gateways for its customers to securely pay through different options.

Advantages of Amazon’s Cash-on-Delivery or Pay-on-Delivery Services

Amazon’s cash on delivery and pay on delivery services offer different important benefits to customers and sellers. Such as:

  1. Cash on delivery and pay on delivery services are secure and convenient for customers, as they will not be sharing their account details with others.
  2. Customers are provided with flexible payment methods to choose from at the time of delivery to pay through card, cash, or any other electronic payment option.
  3. Cash on delivery and pay on delivery services allow customers to build trust in your brand, while reducing their risk of fraud and receiving damaged goods.
  4. A wide audience prefers to pay at the time of delivery to reduce extra charges, fraud, and online thefts.
  5. When customers see cash on delivery or pay on delivery as a payment option, this leads to high conversion rates and sales among customers, and removes the basic barriers of online shopping.

Limitations of Amazon’s Cash-on-Delivery and Pay-on-Delivery services

Even though Amazon’s pay-on-delivery and cash-on-delivery models are excellent, they have their limitations. As a seller, there is a good chance that you might not be able to make a profit from your sales with either payment method. Here are a few reasons or limitations why Amazon cash-on-delivery or pay-on-delivery must be avoided. Such as:

  1. Cash on delivery and Pay on delivery services are not available in all regions and for all products, so there is limited availability of these services for customers.
  2. The courier services also add cash handling fees to the cash-on-delivery or pay-on-delivery orders, which increases the price that you pay for the product.
  3. Sellers experience no payments or delayed payments in case of cash-on delivery or pay-on-delivery, which impacts their business’s cash flow and liquidity.
  4. Return orders can be a bane for most sellers. With Amazon FBA and Easy ship, return orders are mandatory. Therefore, there is a higher chance of loss as there is an uncertainty about payments with pay on delivery.
  5. With cash on delivery orders, there is a chance that the seller does not accept the request or refuses to pay. This can lead to a loss in payment and also increase returns.

Conclusion

After exploring Amazon’s cash-on-delivery and pay-on-delivery services, we can say that these payment options help shape the online eCommerce world by enhancing customer satisfaction. It is a useful feature, as most Indians are still skeptical of online shopping. Cash-on-delivery and pay-on-delivery payment options provide customers with flexibility, help build trust, and provide a seamless shopping experience while also empowering sellers with improved cash flow. However, with increasing digitization, prepaid payments will become a norm as cash on delivery or pay-on-delivery services also have limitations like limited availability, cash handling fees, payment delays, etc. Therefore, sellers should make an informed choice and choose what best suits their business to drive growth, foster trust, and unlock new opportunities.

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