COD is the abbreviation of “Cash on delivery”, which means payment upon delivery. After the goods are delivered, the customer gives the money to the deliveryman. This is what we often call “payment on delivery”, which is generally used in e-commerce. There are many large e-commerce platforms have opened COD payment methods, but in the cross-border dropshipping circle, COD refers to a transaction method in which consumers pay the courier in cash when they receive the goods. This model has unique and significant characteristics, including reducing the shopping risk of consumers because they pay after seeing the physical goods. In addition, for merchants, it can increase the conversion rate of goods. Because some consumers may give up buying due to the cumbersome payment process or distrust, the COD model eliminates this obstacle. At present, the COD dropshipping model of cross-border platform like shopify shopee in Southeast Asia and the Middle East is gradually becoming mature, and the price is becoming more transparent. The COD dropshipping model is also emerging in markets such as Europe, the United States, Middle East and Japan. What’s Pros and Cons for COD dropshipping model? Let’s talk about the COD dropshipping model via the following aspects.

COD dropshipping mode

Social media advertising + localized customer service + waterfall conversion page

. The sales channel is social media and Shopify platforms. Usually Facebook and Instagram are the main channels.

. Use pre-sales customer service in the local language, use local phone numbers, and communicate with customers through WhatsApp, Line, etc. as local customer service to increase consumer trust.

. Direct shipping and local warehouse delivery at the same time, pay attention to delivery time. Too long delivery time will lead to higher refund rate.

Procedures of COD dropshipping mode

1. COD dropshipping solution
The COD logistics and distribution solution for cross-border e-commerce is a comprehensive service system, including order processing, warehousing management, transportation and distribution, payment collection and other links. By optimizing these links, we can achieve fast, accurate and safe COD distribution services to meet the diverse needs of cross-border e-commerce.

2. Order processing

Order processing is the first step in COD logistics and distribution. We will establish an efficient order processing system to achieve rapid entry, processing and tracking of order information. Through this system, consumers can check the order status in real time, and sellers can also obtain order information in a timely manner to ensure that both parties have transparent information.

3. Warehousing management

Warehousing management is a key link in COD logistics and distribution. We will establish modern warehousing facilities and adopt advanced warehousing management systems to realize the automation and intelligence of commodity classification, storage, inventory and outbound delivery. At the same time, we will strictly monitor the inventory of commodities to ensure that commodities are sufficient to meet consumer needs.

4. Transportation and distribution

Transportation and distribution is the core link of COD logistics and distribution. We will cooperate with a number of international logistics companies to establish a global logistics network. Through customized logistics solutions, we can achieve fast and accurate transportation and distribution services. At the same time, we will use advanced logistics tracking technology to ensure that consumers can check the transportation status of goods in real time.

5. Payment Collection

Payment collection is a unique link in COD logistics distribution. We will cooperate with local banks or payment institutions to establish a safe and reliable collection system. After the goods are delivered to consumers, consumers can choose to pay in cash or by bank card transfer. We will ensure the security and accuracy of the payment and settle the payment to the seller in a timely manner.

6. Risk Management

Cross-border e-commerce COD logistics distribution has certain risks, such as payment disputes, refusal to accept returns, etc. We will establish a complete risk management mechanism to reduce the probability of risk through strict order review, product quality inspection, delivery tracking and other measures. At the same time, we will establish a customer service team to handle consumer complaints and disputes in a timely manner to ensure the smooth progress of transactions.

5 Key Points of COD Dropshipping

1. Product selection

Every seller knows that a best seller product equals profit. When a product becomes a hit product, there are two characteristics: first, the price is attractive enough, and second, the product is attractive enough. The hit products of single-page advertisements are more due to the uniqueness of the product, which is generally not available offline or on other local e-commerce comprehensive websites. Therefore, the importance of product selection to cross-border e-commerce sellers is self-evident.

For cross-border e-commerce to produce a best seller product, 70% depends on product selection and 30% on operation! Hot products that sell well are also prone to follow-up sales. Once followed, sales and prices will decline.

2. Delivery rate

In addition to product selection, the signing rate can be said to be the lifeline of single-page COD e-commerce. The cost of advertising investment is the same, and the purchase price of goods is the same. The difference between a signing rate of 80% and a signing rate of 50% is that an 80% signing rate will earn advertising costs and purchase costs plus a certain profit after each launch, while a 50% signing rate may result in advertising costs and purchase costs not being covered. Carry out sales under the premise of being able to hold your profits, and calculating all costs by signing for cards is the best way. List several sets of data

Payment collection refers to the percentage of the payment collected by the logistics company after deducting the logistics fees to the COD amount of the goods shipped. The payment collection rate indirectly explains the logistics costs (first-leg and last-leg delivery costs) and the signing rate indicators. The payment collection will deduct the freight and reduce the financial pressure on the seller.

3. Secondary delivery and forwarding

Single-page COD e-commerce has been squeezed for a long time by some rejected goods. If it can cooperate with local logistics companies and forward goods quickly, it can revitalize assets and reduce storage fees. COD dropshipping model that does well will use forwarding as an additional source of profit, which is also the best profit generation node, provided that the vitality of the product and the conversion ability of the back-end processing rejected parts are guaranteed. Reasonable high conversion not only brings a large wave of profits, but also is a way to attract private domains at a low price, feedback to private domains, and an important channel for cultivating private domains.

4. Payment Collection

It goes without saying that the importance of fund collection in COD dropshipping is self-evident. Since logistics companies collect payment on behalf of customers, they are responsible for payment collection. Generally speaking, the better ones can collect payment every week, while some countries with difficulty in remittance need payment collection in 1 month.

5. Streamline operation

The successful COD e-commerce companies are basically the result of careful cultivation and gradual optimization operation in streamline. Hot products require in-depth observation and testing of local consumers. The receipt rate, payment collection and forwarding business require in-depth cooperation with reliable local logistics companies.

Pros and Cons of COD dropshipping mode

Advantages of COD model:

Single-page page structure is simple, single product is highlighted, and loading is fast;
Users do not need to pay first, which makes it easier to trust and has a high conversion rate;
High average order value;
Simple product upload process and fast expansion;
The payment cycle is generally faster than online payment, and there is no platform transaction fee;
Convenient to change sites and low cost.
(Currently, the independent station COD vertical gameplay is also gradually gaining popularity)

Disadvantages of COD model:

The impact of the signing rate is a key factor, and the choice of logistics service providers and signing strategies will have an impact;
The single-page cod model is not easy to pass the account opening review

Therefore, there are two major problems with the COD model:

1. How to improve the signing rate?

Because it is cash on delivery, and the delivery cycle in emerging markets is relatively long, when the goods travel thousands of miles to overseas, it has been half a month when they reach the hands of customers, and the possibility of rejection is much greater.

As mentioned above, the signing rate is closely related to advertising costs and procurement costs, so many sellers are troubled by it.

2. What should the rejected packages do?

When the delivery rate is low, a large number of returns will be generated. How to deal with these returns?

Countries available for COD dropshipping

The COD dropshipping model has a broad market in Southeast Asia and Central and Eastern Europe. These markets have a common feature, that is, the local network, payment and logistics infrastructure are relatively backward. Especially in payment methods, mobile payment is not yet popular in Vietnam, Indonesia in Southeast Asia and the six Gulf countries in the Middle East. The mainly countries available for COD dropshipping model includes: Taiwan, Hong Kong, Malaysia, Singapore, Thailand, Indonesia, Japan, Hong Kong, UAE, Saudi Arabia, Oman, Russia, Philippines, Vietnam, etc., as well as Eastern Europe.

FAQs for COD dropshipping model

1. How to increase COD packaging delivey rates?

For buyers in the South East Asia and Middle East market, the question of “what is the signing rate” is not uncommon. However, the situation of each seller is different. At present, under the COD model, the signing rate of large sellers is relatively high, while for small and medium-sized sellers who are just starting out, the average signing rate is only about 60%-65%. In some remote areas, the signing rate is even lower than 50%. So how to improve the COD signing rate? Here are some suggestions:

‍Advertising: The more remote the area, the harder it is to control the signing. Merchants can try to reduce the number of orders in sparsely populated towns
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Order review: 1) Review basic information: Before delivery, merchants can make a simple review of the address and telephone information. For example, some customers’ delivery addresses simply write “Dubai” or “Riyadh No. 25”. The delivery of incomplete addresses is like finding a needle in a haystack. If the phone number is correct, the logistics company can also contact the customer by phone for verification, but if the phone number is wrong, even if the customer is willing to sign, such an order will not be delivered successfully. If the address is complete, the first delivery acceptance rate can be increased by at least 20%; 2) Review the willingness to buy
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Product: Ensure product quality. The product quality of different sellers varies. Buyers will refuse to accept because the product quality is lower than their psychological expectations. Product quality has a great impact on the acceptance rate and return rate. The Middle East has passed the pioneering stage, and only good quality products can gain a foothold in the market
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Appropriate rejection handling: For goods rejected by buyers, if possible, contact them, and encourage buyers to accept by offering discounts or issuing coupons. In addition to local tycoon customers, there are also many Indian, Pakistani and Philippine customers in the Middle East. They may refuse to accept due to economic conditions. You can give a discount, and buyers may accept. Discounts are better than failure to accept
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Find a reliable local express company to ensure the efficiency of the last leg of delivery. There are many logistics companies in the Middle East, but their levels vary. It is recommended that sellers do not only focus on price when choosing a logistics company. Timeliness, track, service, etc. are also important assessment criteria. The relatively excellent local ones include Aramex, iMile, DHL, UPS, etc.
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Keep communicating with logistics companies and provide feedback on order status: high-quality logistics companies will monitor the order status of each day in real time. Each unsigned order will give a clear reason for unsigned, and give sellers a certain amount of time to provide feedback on the unsigned status. If the seller can handle the exception in time, it can greatly improve the signing rate
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Build your own address database to solve the “last mile” problem. Shorten the stocking cycle as much as possible, and do overseas warehouses if conditions permit. Build a logistics network, divide the delivery range of different orders, increase the efficiency and delivery rate of dispatch, thereby increasing the recovery of funds and achieving the effect of a closed loop of the capital chain.

2.How to deal with the return packages?

When you select COD dropshipping model, you will need to find a reliable dropshipping agent which has local warehouse service, once the client in this country rejected or return packages, they can help you proceed and repacking for new clients order fulfillment if no product flaws.

3. How long time to withdraw money?

Currently the COD dropshipping agent in different countries offers different money withdraw time from 7 days to 30 days based on the transaction, you may need to inquire for details before applying their service.

4. Which countries are better to apply COD dropshipping model?

COD dropshipping model is suitable for the countries mobile Internet is developing rapidly, the network penetration rate is growing rapidly, e-commerce is underdeveloped, and the online payment coverage rate is not high.

You are welcome to inquire ShipAnt if you need COD dropshipping in South East Asia and Middle East countries.