COD means cash on delivery. In recent years, in order to increase the order rate of customers, a large number of cross-border e-commerce merchants have deployed COD services on their websites, which has greatly improved the trust of their stores and the shopping experience. The same is true for knockoff brand independent website. A considerable number of our customers have deployed this business in the Middle East, Southeast Asia, Japan and other countries. This business has also been integrated into our company’s independent website system payment solution.
COD merchants generally rely on two methods to achieve their goals. One is the single-page e-commerce operation method, and the other is the shopping mall operation method, each with its own advantages.
COD first became popular in Southeast Asia and Taiwan, such as Vietnam, Malaysia, Thailand, Taiwan, etc. As early as a few years ago, some e-commerce companies in Shenzhen, China, used social media such as Facebook and Instagram to promote COD business in Southeast Asia, covering a social media market of 4 billion. For example, Cuckoo Cross-border, an old COD seller in the industry, had an annual turnover of more than 3 billion at its peak, indicating that the COD market has unlimited potential.
The general operation process of COD is as follows: get the goods from the factory or wholesale website, make a product listing, increase traffic through advertising and other means, make the SKU of a single listing a hot sell product, and launch it in large quantities on social media. After the buyer places an order, he confirms the order through customer service or email, and then transfers the goods to the freight forwarding company for delivery and entrusts the collection. Therefore, the core and difficulty of the COD business lies in the signing rate. Your signing rate determines your profitability.
The COD e-commerce model still maintains strong market potential in Southeast Asia, Taiwan and the Middle East. This is due to two reasons:
①. Trust issue: Although overseas buyers no longer have trust issues with cross-border e-commerce online shopping, the COD model is more convincing for some non-local e-commerce platforms. It can at least solve common online shopping problems such as “goods do not match the pictures” and “products do not match the descriptions”. The model of “paying after seeing the goods” and “paying on delivery” is obviously more advantageous;
②. Payment issues: In a considerable part of Southeast Asia and the Middle East, the basic supporting facilities such as network, payment and logistics are still not perfect. Especially in the six Gulf countries in Southeast Asia, mobile payment is not popular yet, so the COD payment model is naturally popular.
③. De-platforming: With the high threshold of third-party platforms (Amazon, AliExpress, etc.) and the soaring traffic costs, it is difficult for cross-border e-commerce merchants to make profits on them. Since 2018, the trend of de-platforming has intensified. Independent site has become an inevitable trend in the future post-era of cross-border e-commerce, and COD model e-commerce is one of the fastest and most effective ways to switch to stand alone site for cross-border e-commerce.
So, the core question is, what is the operating model of COD?
Social e-commerce Ads + high conversion pages + localized customer service
Social e-commerce traffic mainly comes from the two main platforms of Facebook and Instagram; high conversion pages mainly depend on the design structure of a single page, which is simple, clear, fast and convenient, and it is best to use a waterfall conversion page; local customer service emphasizes pre-sales service in the local language, local service numbers connected to WhatsApp or customer service chat windows for interactive communication, and increases trust.
How to make the COD e-commerce model?
A. Product selection
30% depends on operation, and 70% depends on product selection. This is the magic weapon for cross-border e-commerce, and the COD e-commerce model is no exception! Unlike general goods, imitation brand products have their own traffic attributes, and imitation brand products have the “three highs” characteristics: high market, high conversion, and high profit. The selection of general goods is generally found with the help of big data and evaluation methods, and has a complete set of processes. According to statistics, the SKU of popular products generally have two characteristics: the price is attractive enough and the product is attractive enough. This type of popular product is generally practical and in high demand, such as adult products.
B. Acceptance rate
The acceptance rate is the lifeline of COD. We assume two sets of data to illustrate its importance. Assuming that the advertising cost and product procurement cost of Group A are the same as those of Group B, the acceptance rate of Group A is 80% and the acceptance rate of Group B is 50%, then the profit result of Group A is: it can earn back the advertising cost + procurement cost + additional profit (actual profit), showing a profitable state, and the profit result of Group B is: it is difficult to balance the advertising cost + procurement cost, showing a loss state.
C. Payment Collection
COD payment collection is mainly done through company collection. The amount of payment collected after deducting logistics costs is the actual payment collected by the merchant. A reliable local logistics partner is crucial. A good partner can pay back weekly. Some countries with difficulty in remittances need a month to pay back. Be careful to prevent the payment from being swept away.
Sometimes, collecting payment is more important than selling.
D. Forwarding and secondary shipment
The problem of COD refusing to sign for goods is inevitable, including returns. If these goods are unsalable in the warehouse for a long time, it will cause additional storage fees. If you can cooperate deeply with local logistics companies and forward them quickly, you can revitalize assets, reduce storage costs to a large extent, and increase additional profits.
In short, COD is a sophisticated e-commerce model, starting from the construction of the e-commerce system at the source, to product selection, advertising, customer service, and then to the later signing, collection, forwarding, etc., to control the risks of capital rupture and the loss of payment, and choose a reliable logistics company, all require systematic operations, and refined operations are the key to doing a good job in COD cross-border e-commerce.