Cash on delivery is a collection method where the order is paid to the courier in cash or by card at the moment of delivery. In Turkey it lifts conversion noticeably among customers who do not trust credit cards or do not want to pay before seeing the product. In exchange, the carrier charges a collection fee per order and the money reaches the business days later.
Cash on delivery has two invisible costs: the collection fee and the rate of parcels that are not accepted. Because payment is not made upfront, the customer can change their mind at the door; the product comes back having eaten both the outbound and the return shipping. For that reason cash on delivery usually runs at a loss on low-basket, high-desi products (desi is Turkey's volumetric shipping weight unit). If it is offered, a minimum basket amount should be set, address and phone should be verified, and customers who repeatedly fail to accept delivery should be flagged and the option closed for them. The collection term also stretches cash flow.
Cash on delivery unit cost = Collection fee + (Non-acceptance rate × Round-trip shipping)
If 8 out of 100 cash-on-delivery orders are not accepted and round-trip shipping is 90 TL, this line alone adds 7.2 TL of cost per order.
Cash on delivery has two invisible costs: the collection fee and the rate of parcels that are not accepted. Because payment is not made upfront, the customer can change their mind at the door; the product comes back having eaten both the outbound and the return shipping. For that reason cash on delivery usually runs at…
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