Despite digital boom, COD reigns supreme for D2C brands: Report
As per Shopflo's report, cash on delivery or CoD remains online consumers' preferred choice of payment.
While online shoppers across India are increasingly turning to digital payments, cash remains the king, according to a report by D2C enabler SaaS platform, Shopflo.
About 40% of all ecommerce orders are processed via UPI, second only to cash-on-delivery (COD) orders, which decreased marginally from 46.5% to 45.6% in 2023-24.
However, this doesn't take into account many cash-on-delivery (COD) orders that are ultimately paid through the delivery partner's UPI QR code at the last mile.
Shopflo, which enables about 600 D2C brands to offer an easy checkout experience, in its latest report highlighted the consistency in the distribution of cash on delivery orders across the country.
Cash on deliveries is widely considered a double-sided sword for D2C sellers. This method of payment raises concerns about fraud, incorrect addresses, and heavy reverse shipping costs in case customers change their minds.
Even with all its cons, the service allows consumers to take risks with new brands resulting in a non-trivial increase in conversion.
While top metropolitan cities such as Mumbai and Chennai are key drivers for their states' gross merchandise value (GMV), Tier II towns clock a higher average order value, especially for categories like home & kitchen and health and wellness, according to a survey done by PwC.
"Bigger purchases typically happen in offline channels, so they tend to make smaller, more frequent, and scattered purchases online. In contrast, Tier II consumers’ online shopping behavior is characterized by less frequency but significantly larger basket sizes. This could be explained by fewer offline options in Tier II and Tier III cities," noted Aditya Agrawal, Co-founder and CEO of P-TAL, a Shopflo customer.
"In Delhi, our Average Order Value (AOV) through offline channels was over Rs 10,000, while online it remained below Rs 5,000. Urban consumers have the privilege of accessing D2C brands offline through their own stores as well as retail options like HomeCentre," added Agrawal.
The festive season, which brings in heavy traffic and sales, witnessed growth in average order values for categories like baby products, footwear, apparel and beauty and cosmetics. While, categories like electronics, health & wellness and home & kitchen witnessed lower AOV during the festive season.
Edited by Affirunisa Kankudti