Though consumers are utilizing digital currency more frequently, according to e-commerce enabler GoKwik, cash on delivery transactions still account for around $30 billion of India’s e-commerce market.
“We live in a low trust society. It’s not that these people have not done UPI ever. We have in fact seen that there is a 50% overlap in people using UPI or credit cards and COD. It is also a generational thing, and it will take another 10-15 years to move away from COD similar to other markets like Japan,” said Chirag Taneja, co-founder of Gokwik. “COD has withstood the shock of demonetization, and Covid wave and cash in circulation (CIC) has come back in the economy.”
It predicts that the COD and RTO percentages will increase with the industry expansion as e-commerce penetration in India reaches double digits due to improved accessibility and affordability in tier 3 and beyond cities.
Currently, COD makes up approximately 25-30% of all e-commerce transactions. Gokwik expects that if brands make back-end interventions, COD will halve and remain at about 10-15%. Also, higher COD orders typically lift the possibility of the Return to Origin (RTO) rate, effectively the rate of orders that are cancelled even before delivery. RTO is worth around $9 billion, according to GoKwik.
“Companies have built payment infrastructure from the payment lens and not from the ecommerce lens, which merchants want us to solve. Similarly, the entire check out propositions, including log in, address and discounts, have deep problems, and we address these shopping experience issues for brands,” added Taneja.
Taneja, Ankush Talwar, and Vivek Bajpai established GoKwik in 2020 to solve problems with e-commerce firms, such as optimizing the customer experience, recovering from abandoned carts, boosting conversions, raising GMV, and minimizing the return to origin (RTO). Their solutions cover the entire customer journey—before, during, and after the sale. They recently reported that their network had processed over $1 billion in orders and had experienced a 520% rise in transactions year over year.