CoD (Cash on Delivery) is popular in US, where the customers pay for what they purchased through online shopping, once the items are delivered. Now, even the Indian e-commerce is also switching to Cash on Delivery to increase their customer base.
According to Rediff.com, CoD is mainly introduced due to the under-developed nature of the Indian payment system. Credit card payment is the most preferred online payment method in Western countries, whereas in India there are only 8 to 9 million unique credit card users.
CoD is introduced by Filpkart in the month of April 2011, and the company saw a dramatic jump in sales. Even for Rediff, the sales through CoD contribute to around 45% of revenue. CoD method is helpful in expanding the market beyond the audience who own credit or debit cards. Even the issues such as, customers finding online payment cumbersome or the customers not trusting the online payment enough, can be dealt with CoD.
Indian travel portals have also started using this method of payment. Students, homemakers and other demographics like businessmen and people in tier II and III cities prefer CoD. To the Indian consumer, who still prefer to make cash payment, offering CoD acts as a trust-building measure.