What is COD (Cash on Delivery) order business? COD (Cash on Delivery) order business review

1. Market situation of COD model

COD (Cash On Delivery) means cash on delivery. For buyers in the Middle East market, the question of "what is the sign-in rate" is not uncommon. However, the situation of each seller is different. Currently, under the COD model, the sign-in rate of large sellers is higher, while for small and medium-sized sellers who are just starting out, the average sign-in rate is only about 60%-65%. In some remote areas, the sign-in rate is even lower than 50%.

For those goods that are rejected by buyers/have quality defects/cannot be delivered, whether they are destroyed in a centralized manner, transshipped, or reprocessed, it will increase a lot of financial expenditures, causing endless troubles for many sellers.

Sellers mainly face the following four problems

01. High rejection rate

Unlike the high delivery efficiency in China, it usually takes two weeks for Middle Eastern people to receive their goods after placing an order on the website. During this waiting period, buyers are very likely to change their minds; in addition, after receiving the goods, if the actual product is too different from the online picture, buyers are also very likely to return the goods, which makes the product signing rate and successful delivery rate low.

02. High cash management costs and long settlement cycles

Generally speaking, domestic sellers will entrust the delivery of goods to courier companies based in the Middle East after the goods are delivered. After the package is successfully signed for, the logistics company will collect the funds and then pay the seller. However, from the delivery of the goods to the successful delivery, to the collection of the funds, and finally to the conversion into RMB, the order is considered to be successfully completed. It usually takes more than half a month to achieve a closed loop of the capital chain. This greatly reduces the liquidity of funds and cannot increase the seller's capital turnover rate. Therefore, it is also necessary to find a professional payment company to solve pain points such as payment collection.

03. The number of courier companies to choose from is very limited

For sellers, it is also very important to choose a courier company that they can get along with. Currently, most of the well-known logistics companies in the Middle East have bad tempers, low efficiency, and high prices, which can easily lead to unpleasant cooperation. But when choosing a small company, you need to consider its credit safety to prevent the logistics company from "taking the money and running away".

04. Big bottleneck in logistics delivery

Take Saudi Arabia as an example. Different express delivery companies have different address databases for different local areas according to different translated names. Therefore, within the scope of the order, it is necessary to circle the correct location. In addition, many houses in Saudi Arabia do not have house numbers, which adds a lot of difficulty to delivery. At the same time, for orders in remote areas, if the scope is not divided in time, it will be useless in most cases. The order is easy to be returned due to non-delivery, which also leads to hidden costs.

2. How to respond to the general trend?

01. The first thing is to find a reliable local express company to ensure the efficiency of the last-mile delivery. Evaluate the current logistics service provider's carrying capacity and distribution capabilities. Only with basic transportation capacity guarantees can we discuss signing and profit.

02. Establish technical barriers and enhance communication efficiency. Use big data and artificial intelligence to improve the order tracking system so that customers can track the progress of their orders; communicate with customers in advance before delivery to ensure the success rate of signing, improve the delivery rate and customer trust.

03. For goods rejected by buyers, the Middle East currently has four main ways of handling them: destruction, unpacking and reselling, re-ordering and transshipment. Buyers should give timely and appropriate handling methods based on the type and value of the goods to reduce storage costs caused by the accumulation of goods, so as to minimize cost expenditures.

04. Build your own address database to solve the "last mile" problem. Build a logistics network, divide the delivery range of different orders, increase the efficiency and delivery rate of dispatch, thereby increasing capital recovery and achieving a closed-loop capital chain.

In recent years, going overseas has become a hot topic, and many domestic e-commerce companies have set their sights on the Middle East. With the increase in the number of players, the competition is becoming increasingly fierce. For now, the development prospects of the Middle East are still very promising. If you want to profit from it, you must not act rashly, but make targeted adjustments and changes after understanding its operation. For sellers who are new to the Middle East, there is still a long way to go to open up this business model.