Anyone associated with e-commerce or has even ordered a single product of the internet is familiar with the terms Drop Shipping and Cash On Delivery. Today we pit these two very different methods against each other and do a DropShipping vs Cash On Delivery battle to see which one is the best.
Dropshipping includes paying the seller before the product is delivered while Cash on Delivery relies on the product being delivered first and paying after the customer receives it.
Both methods are contrasting with each other and worry one of the two parties, (either the seller or the buyer) on the delivery of the product. In this article, we will focus on great detail on these two modes of payments.
Cash On Delivery:
It is a payment method, where the consumer pays the courier, individual or seller by cash/card directly only after delivery of the order. This is one of the most common types of internet buying and selling transactions.
Cod has been a predominant form of payment for shopping in nearly all the nations where online enterprises have flourished. Many of them are Turkey, Bangladesh, Thailand, etc.
So what makes COD as a great form of payment? It is not a perfect system and has its pros and cons, let’s discuss that in detail:
Pros of Cash on Delivery (CoD)
Flexible payment options for the customer:
One of the key advantages of COD as a consumer is that you will only pay once the commodity is in your hand. Thus, the possibility of a loss of money is not present. E.g if you pay in advance electronically and the retailer refuses to deliver, the seller is left product-less and has sent his money down the drain. When it comes to cash on delivery payments, there is no such chance of scam.
The consumer will even test the goods to see if it is all right until it is charged. When you deem the product faulty or contradictory to the advertised product, you can send it back right there and then without paying for it.
No dependency on payment cards
Another huge bonus of cash on delivery is that it doesn't depend on credit or debit cards. Throughout the suburban or rural areas, this aspect is useful where many citizens do not use cards. The distribution is completed, the package is reviewed and the purchase is accounted for. It's easy and comfortable.
No online payment frauds
Throughout the case of cash on delivery, protection can be retained. No financial records, such as debit card, credit card, bank account information must be revealed to the seller. This is one explanation so many consumers choose COD as their favorite payment form.
Cons of Cash on Delivery (CoD)
Vulnerable to losses
One of the problems with the cash on delivery is that when the buyer returns the goods without reimbursement, the vendor becomes vulnerable to losses. You spent all your money to supply the product, but it was not received by the customer rendering the whole shipping cost as a waste. This reduces profits.
Fraudulent activity in the event of cash on delivery has become prevalent on the customer end. Because consumer information is not genuine, the risk of theft is higher.
Sometimes when you opt for Cash on Delivery most courier companies charge you a bit more than advanced payment, this is termed as security money and if you are a frequent buyer from online websites you will start to feel the burden of paying extra every time.
Dropshipping is an advance payment mode of e-commerce where the customer pays the supplier beforehand via electronic cash transfer. This calls for faster shipping and delivery as the shipping commences as soon as the supplier is paid. Although it sounds quick and lucrative, there are many risks to this mode of payment. Let’s discuss in detail the merits and demerits of Drop Shipping.
Pros of Drop Shipping:
Low Start Up Costs
Dropshipping removes the need to store and manage a warehouse and inventory which would take a ton of money otherwise.
Finding a shop, processing things, hiring and recruiting workers to store, select and drop the goods is often time-consuming.
The downside is that you fear not just launching your company but falling into debt. With zero inventory you can operate more easily and earn money.
You can use this capital to upgrade the layout and operating systems of your branding website.
No Inventory/Warehousing Costs
For company owners who operate stores, production prices are one of the largest. It involves managing faulty inventories or defects that contribute to inventories and sales reductions.
Depositary prices are a thing of the past because they unload the product pressure from you and pass it to the manufacturer and seller. Drop shipment provides security from such issues such that you can more concentrate on improving your brand and customer base.
No Delivery Hassles
A large warehouse where you can arrange, log, mark, select and pack products before distribution to clients is necessary to satisfy the order effectively.
The company owner doesn’t have to handle the drop shipping as the third party can do all this. His sole responsibility is to ensure that the orders issued are met and shipped by the manufacturer and dealer to consumers.
Added Time for Marketing
With everything taken care of by the warehouse and inventory, you have plenty of time to focus more on your website and use the advanced profits to build your base as a company.
Cons of Drop Shipping:
Relatively Low Margins
When orders drop, they save you storage and production expenses, but they cost secretly, along with the low hurdles to entry and a profitable online shopping field.
You have to pay smaller prices to offer more goods to gain a lot more money. The earnings are much smaller so the income would be reduced.
Therefore, once your company expands and you develop consumer satisfaction and you can raise price easily You would not be able to make big financial gains
Dependency on Suppliers for Order Fulfillment
You do not share the responsibility and the expense of production or storage but customer satisfaction is on your shoulders.
If a customer makes an order through the manufacturer or dealer, the consumers may protest or abandon the shop for the competitor because the owner does not monitor the products and they can be defective. Hence the product quality cannot be monitored.
Dropshipping and Cash on delivery are both great modes of payment, benefitting e-commerce greatly. Until and unless customer and seller trust is not solid, both modes of payment will be risky and the chance of loss on any of both parties. Dropshipping is highly profitable to e-commerce as compared to CoD while CoD is a great way to earn customer satisfaction while also risking fraudulent orders.
I started this blog around the second half of 2017, after realising that I wanted to let people know about all the different ways someone could make money online. From DropShipping, Affiliate Marketing, Network Marketing and more.
This blog has now grown to review and explain a variety of different tools and platforms, in the bid to help you.
This blog contains affiliate links, and I will get a commission for purchases made through these links. It doesn’t change anything for you and will on occasion save you money! Enjoy, James,