Cash on delivery: What is the advantage & disadvantage?

Many of the pioneers of electronic stores seek to obtain the payment service on delivery, especially by the segment of customers who are having their first experience in purchasing from the Internet, or who prefer to see and touch the product before purchasing it, or even because of their previous bad experiences with electronic stores.This makes them not trust the promises of online stores, as some reports indicate that 80% of customers in Saudi stores prefer payment on delivery, especially when dealing for the first time.

On the other hand, some merchants are reluctant to adopt the payment-on-delivery model in their stores, due to the many problems of returning orders and the negligence of some customers and not receiving their shipments for flimsy reasons

Especially since most online stores rely on a third party to ship the products, which may expose them to financial losses due to the costs of shipping the products back to warehouses,

This is what torod works on, enabling merchants to fully manage the shipping process from the moment the parcel leaves the warehouse until it reaches the customer’s door.

In this article, we provide you with an overview of the payment on delivery model in the Kingdom in terms of importance, advantages, disadvantages, and the most prominent challenges

What is cash on delivery?

Cash on Delivery COD, in English, is that the buyer pays the money after receiving the product, whether by cash or by bank card. Payment terms and policies differ from one store to another. What is the importance of payment on delivery in e-commerce?

In traditional trade, the buyer has to go to the exhibition himself and pay in advance for obtaining the products, while in e-commerce, he can, with the click of a button, choose all the products he wants without leaving his place and pay only upon receiving the products.

This increases the volume of sales and financial liquidity, especially since payment on delivery does not require the entry of any basic data or information, which increases the buyer’s confidence in the store from which he will buy.

What are the advantages and disadvantages of payment on delivery?


Obtaining financial liquidity.

The possibility of shopping through electronic stores

without having to own credit cards.

Protect customer privacy and information from theft and fraud.

Ease of returning the product in case it differs from the agreed product.

A guarantee in case the product is not available.


Some online stores charge additional fees for cash on delivery.

Some shipping companies handle the products in an inappropriate way.

The online store may incur additional losses if the customer refuses to receive or cancels the purchase.

Some stores do not receive their products due to delayed shipments or the product being different from what was agreed upon.

The most prominent challenges of payment on delivery:

Many online stores face some challenges when adopting the payment-on-delivery model, and collecting payments is one of the biggest challenges due to the poor financial technical equipment of some shipping companies, which face a major problem in matching records of received and returned shipments in order to extract the amount due to the merchant, which takes a lot of time .

This necessitates the provision of smart technical solutions such as a parcel wallet, which uses advanced technical solutions that facilitate tracking of collection operations and enable the merchant to have instantaneous access to data on each shipment and whether the shipping company has received the amount or the amount is still in the possession of the customer.

The merchant can also access the amounts collected on the same day and benefit from them by managing shipping operations and purchasing policies for new orders through a parcel platform

Finally, the different segments of customers in e-commerce necessitate that store owners keep up with this demand by developing new payment methods or returning to using old methods after making some modifications to them to suit different customer conditions. Especially since the payment service on delivery has been credited with increasing the volume of e-commerce in the Kingdom from a segment of people who may have never thought of buying their needs from the Internet!

If you are looking for an authorized shipping partner Torod offers you the following:

Connect your store directly with shipping companies in 3 minutes

Create a shipment and parcel tracking page

Serving all types of packages, whether prepaid or cash on receipt

An online store is not required to benefit from the platform’s services

No need to contract with shipping companies

Monitor the status of each shipment

Shipment automation through a single screen