Remember the start of the e-commerce boom in India, and initial inhibitions of making payments online. Though there has been a significant rise in online payments, cash on delivery still remains the most preferred mode of payment for consumers in India.
Now, according to Nielsen’s Global Connected Commerce Survey (via Business Insider) about 83 percent consumers in India said they'd used cash on delivery for buying products from online stores in the past six months (surveyed in Q4 2015). Consumers still hesitate to use credit cards due to online fraud risks. Citing Yourstory, the report highlights that majority deliveries by sites like Flipkart were COD almost amounting to 80 percent in 2015, which includes 72 percent from major cities and 90 percent from smaller towns.
However, COD is causing trouble for online retailers as they face increased logistics costs. "For COD to work, the consumer needs to be physically available to receive the goods in order to provide payment. Often times the consumer is not available, which means that multiple delivery attempts are made for one order," the report further explains. The report cites other problems like customers not being satisfied with the product upon purchase and refusing to make the payment. Then, the seller becomes responsible for all the cost.
However, despite the low use of Internet than poorer countries, the e-commerce sector has tripled over the past five years from $4.4 billion (Rs 20,020 crore) in 2010 to $13.6 billion (Rs.83,096 crore) in 2014. India’s e-commerce market is likely to reach $38 billion (Rs.252,700 crore) in 2016, according to an Associated Chambers of Commerce & Industry of India (Assocham) report released in January 2016. The online retail sector in India is expected to be a $1 trillion (Rs 660,000 crore) market by 2020, according to a recent report by the Confederation of Indian Industry (CII) and Deloitte, a consultancy.
Moreover, the slowly yet steadily increasing popularity of mobile wallets could be another way to possibly convert cash on delivery into online payments.