Learn how to sell cash on delivery (COD) on your Shopify ecommerce site

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✨ Post actualizado el 12/12/2023 por David Costarrosa

How to do cash on delivery

If you are struggling to find a way to be profitable and increase your conversions on your Shopify store, or even if your business is doing well and you want to give it an extra boost, COD is the perfect solution for you.

For a few years now, I have been implementing it and it has really marked a turning point for each of my stores.

It is also a great opportunity for you to generate an injection of confidence in the customer that would be impossible with just the usual payment methods.

In this article I will show you, step by step and from the very beginning, how to create your Shopify store, find a winning product and sell it using cash on delivery (COD).

To give you a better understanding of each of the points I discuss, I will leave you with the complete video course I have launched on YouTube about COD so that you can refer to it when applying the different strategies for your business.

What is Cash on Delivery?

Cash on Delivery is the method in which, unlike using your credit card or bank transfer, your customer pays for the item they have purchased, in cash, when they receive it at home.

The cycle is as follows: the customer places the order in your store; you, as the seller, validate their data and send the product; finally, the transport company delivers and collects the money in cash and then transfers it to your bank account.

Can this method be applied in all countries?

The answer is that as long as you have the product in the country and you have a logistics company that offers this service, you can do it without any problems.

Moreover, you will find the link to the guide on How to do dropshipping cash on delivery step by step in which I explain the way we do it.

In my particular case, I use a warehouse like Beeping where all COD orders are handled with delivery in 24/48h in Spain and with delivery to most European countries.

However, I must admit that in the case of ecommerce, I think it would not be feasible if you try to do it via dropshipping from China.

Which are the most attractive countries to start with?

Generally, the countries where you will have more success when implementing this payment method are those with lower penetration of traditional ecommerce, with more informal economies and also less economically developed.

Countries like Spain, Portugal, Italy, France or Belgium can be real gold mines if you have a good strategy based on cash on delivery.

This is primarily because people are still very wary of entering their credit card details online or even fear that they will pay and the product will never arrive.

On the other hand, Latin America is also a perfect region to take that first step. Companies such as Dropi, in Colombia, are at the forefront of cash on delivery and are very successful.

Similarly, Panama, Chile, Ecuador and Mexico, are also fruitful locations where there is still a lot of room for development.

What about the United States?

Unlike the countries I mentioned above, in the United States the cash on delivery method is practically extinct.

According to an article published by UpgradedPoints, in 2020 only 0.7% of online transactions were made through this method. And by 2024, it is predicted to be only 0.1%.

This is mainly due to the fact that Amazon, the undisputed leader in the sector, has decided to remove Cash on Delivery (COD) from its payment options.

It should also be noted that the economy and the relationship of the American population with the Internet, with almost 90% penetration, is much larger and closer than in Europe or Latin America.

The American economy is very strong and users are well accustomed to carrying out their transactions by paying in advance and using their credit card or other digital means.

Advantages and disadvantages of cash on delivery

Now that you know what cash on delivery is, the next step is to address the different scenarios that can arise when including this payment method in your Shopify store.

Increased conversion rate

Since it is such a secure payment method for the customer, it is very common for the conversion ratio to increase x2 and even x3 compared to the other payment methods in the store.

No sales commissions

This is a very important point since by using COD you will avoid Shopify’s commissions and also those of the payment gateways. If on average we are talking about a total of between 6-8%, at the end of the month this will be a very interesting amount that will undoubtedly come in handy.

No more disputes

As the customer pays for the product upon receipt, there are no credit card chargebacks or online gateway disputes.

Avoids companies withholding money

This is another very important point. You can stop worrying about the continuous money withholding issues that all companies like PayPal, Stripe or Shopify Payments apply.

Amazon does not offer it

As of 2020, Amazon has stopped offering cash on delivery on its platform. This opens up a very interesting niche for you to be able to penetrate and take on the internet giant.

Failed sales

As the payment is made after the order is placed, there will be a percentage of sales that will not be completed. There may be several factors: the customer rejects the package, withdraws from the purchase or the customer is not at home.

False or duplicate orders

You may also receive a percentage of false orders, with erroneous or even duplicate data. In many cases, the customer makes a mistake when filling out the purchase form regarding their address, email, or cell phone number and there is no way for us to validate the information.

Increased operating costs: 

To counteract the problem of uncompleted sales, it is essential to have a good customer service team that manages to convert as many orders as possible. For that reason, you will have to factor in additional expense in terms of manpower.

Profitability control: 

Since this is a business model in which many variables are involved, it is likely that at the beginning you get a little dizzy and do not know exactly what the real profit margin was. For that reason, it is key that you keep an exhaustive control of how many of the orders received have ended in a sale.

💡 Tip:

To verify an address, you can check it using Google Maps. By doing so, you can confirm for yourself whether the address really exists or not.

How to know if a product has sales potential

This is one of the most common queries I receive from all over the world. For this reason, I have made a checklist in which I have summarized a series of key points that I believe are fundamental to be able to consider a product as a potential winner or not.

This is a step that goes hand in hand with the search for winning products that I will explain later. In other words, while you are looking at and selecting the items that catch your attention, you should apply and answer the questions on the checklist before deciding to invest in it.

First of all, you can download the free checklist HERE.

Once you have the file on your smartphone or computer, let’s go through it point by point.

✈ Can you transport it by plane?

By this I don’t mean whether the product can literally be transported by plane, but rather what the cost would be in case of importing it from China. Let’s keep in mind that a large and heavy product will have a much higher shipping cost than a smaller product. For that reason, I recommend you start off with small products that will allow you to speed up the shipping and have them in your warehouse within 7 to 15 days.

💸 Profit margin

In this case you will have to calculate what the real profit you will get with the chosen product will be. Of course, this will be a fictitious scenario. Later I will explain in detail how to calculate the margin with the COD calculator.

🛍️ Individual sale or in packs

Another important point is to know if the chosen product has the potential to be sold in packs. As your first target will be to sell small products, it would be interesting to be able to take advantage of the option of selling in packs.

🖼️ Ease of finding creatives

The creatives are one of the main weapons to be used when it comes to selling the product. For this reason, if you can’t find quality creatives, move on to the next option.

“Many people tend to fall in love with a product believing it is perfect, but what is really important is that it meets a certain number of requirements and answers as many of the questions on the checklist as possible to make it worth investing in”  

↩️ Repeatability

This aspect is not very important in this case as it corresponds more to a private label product, so we will not take it into account.

🧑 Audience size

The audience size is key to be able to estimate the scalability of the product. In other words, the larger the audience, the higher the percentage of scalability. It is not the same to sell a tennis racket, which will logically interest only people who practice the sport, than it is to sell leggings, whose potential customers are millions of women throughout Europe or Latin America.

❄️ Evergreen or trend

Here we classify the product within the 2 main groups that exist. Evergreen products are those that are sold all year round. For example: a blender, a toaster or a pair of shoes. Trend or seasonal items, are those whose peak sales occur during a specific period of the year. For example: a stove or an air conditioner.

Google trends

❌ Solves a problem

This is one of the biggest myths out there. From my experience I can tell you that if the product solves a problem it is an advantage, but that in no way invalidates the possibility of testing a product that does not solve one.

📦 High return rate

Returns will depend on the quality of the product. What is certain is that, in the case of electronic or fragile products, the risk of returns is much higher.

👕 Variants and sizes

In case you are starting out, I do not recommend testing products with sizes or variants. Mainly because the investment will be much higher and, in addition, you will have no way of knowing exactly how much of each size or variant you will need.

⌚ Feasible to create a private label

The goal of this point would be to imagine whether the product you have chosen has the potential to be scalable through private labeling. However, at the beginning, we don’t need to take this into account.

🧴 Associated with a consumable

This point is not so relevant since, due to its complexity, it is best to start with products that are not consumables.

Product search methods

There are several tools focused on finding winning products. However, since this article is geared towards people that are just getting started, I’ve chosen to showcase free tools so that you don’t have to spend extra money.

Of course, doing a search with a zero-cost tool will take more time than doing it with a paid tool, but that does not mean that it is less effective.

In short, it is a matter of training your eye so that little by little the percentage of success in finding winning products will be higher.

My AD Finder

One of the Google Chrome extensions that I use the most is My AD Finder. With this excellent tool you can hide your personal Facebook feed so that only advertisements appear.

The goal is to browse through the different products and creatives that appear in the feed until you find one that catches your attention.

My ad finder

Sell this Now

Sell this Now is an excellent YouTube channel where they upload a video every day with 5 or 6 products that they consider winners and, best of all, each one of them includes the link to the item on AliExpress as well as the creative on Facebook. I encourage you to subscribe to their channel and keep an eye out.

EcomHunt

Although it is a paid tool, EcomHunt has a free subscription where you will have access to a limited daily amount of winning products. Like the Sell This Now channel, it will show you both the product link on AliExpress and the creative on Facebook Ads. It’s another good option I can recommend without having to spend a penny.

If you want to see an example of a product search with each of the tools I have shown you, I recommend you watch my Cash on Delivery Ecommerce Course on my YouTube channel.

Aliexpress

AliExpress is one of the most famous sites in China and the world. All of us who started out Dropshipping took our first steps looking for winning products there.

For that reason, I recommend you go to their DropShipping Center to look for any products that catch your attention. You will be able to split them by category, trend or quantity of sales.

To show you an example of how I perform a search in the AliExpress DropShipping Center, I’ll leave you an excerpt from my course on how to find winning products.

Thieve

Thieve is another tool for finding winning products with a twist. Every day new AliExpress items are launched on the platform. Thieve users themselves are the ones who “Like” those items based on their experience as dropshippers.

Therefore, the product becomes a trend according to the interaction of the tool’s users. Thieve has a 14-day free trial period.

How to calculate the viability of a COD product

Calculating the profit margin for a COD product will be a key point for the success of the business. For that reason, I’m going to give you access to my free COD calculator so you won’t make any missteps.

With it you can easily find out the net profit you will make on the sale of each item. It will also give you the VAT cost, the percentage of profit margin, the ROI, the cost in case there is a return, costs associated with shipping and also the percentage of the company that performs the cash on delivery service.

In addition to all this information, there are two very important sections that make this calculator a fundamental tool. On the one hand, the percentage of orders shipped over the total number of orders; and on the other hand, the percentage of orders delivered over the total number of orders.

These two percentages are variable, as they depend on the work of the customer service team. However, the overall profit will also depend on them, since the higher the shipping and delivery rate, the higher the bottom line will be.

How to install Shopify and Debutify

Once you’ve chosen the item, it’s time to get to work with the store. Remember that giving the customer a good first impression will give you an advantage when selling the product.

The first thing you should do, if you don’t have a Shopify account yet, is to create one. I’ll leave the link here so you can do so quickly and easily and with a 14-day free trial.

The next step is to download the Shop theme. In my view, the best of all for this type of business is the Debutify theme, especially because it is perfectly suited to pack sales.

To install the theme, I’ll explain it step by step:

  • Log in to the Debutify website.
  • Once inside, in the top right corner you will see the option “Try for Free”.
  • Fill out the form and enter the name of your Shopify store.
  • Once inside the Debutify platform, click on “Download Theme”.
  • Once the download is finished, it’s time to add it to the Shopify library, to do that, click on “Add to theme library”.
  • Finally, once added to Shopify, it’s time to publish the theme to activate it in your store.

Once the theme is active, you must remove the additional options that come by default so that no additional costs are added and you can use it for free.

To do this, go to the theme settings and uncheck all the options in the right sidebar.

If you also want to add aesthetics to the store, I will leave you my course on how to create your Shopify store from scratch. In this video I show you the most important design aspects to make it look professional.

Why Debutify?

As I mentioned before, one of the main reasons I choose Debutify for COD products is because it’s perfect for sales in packs.

And selling products in packs is one of the best ways to increase the average ticket. These kinds of small products fit perfectly with that. So, although in the next point I will show you how to create the product landing page, I will leave here an example of what I mean.

As you can see, the pack buttons are perfectly clear and very intuitive for customers.

Creating the COD product landing page

Now it’s time to create the product page. To do so, simply go to the Products section in your Shopify store and click on Add Products.

Once inside, fill in the Product Name, the description, the multimedia elements, such as photos or videos, and also the prices and variants.

It is very important that when creating the product page, you focus on the benefits and not so much on the features.

Although the features of a product are important, the customer will value the benefits much more and will relate much more to the advantages they will see when they buy that item.

Keep in mind that customers who visit the store will do so impulsively, so it is essential to combine good text with attractive graphics.

How to set up COD shipping with Shopify

Setting up the shipping is very simple. Go to the Shopify store settings and from there to Shipping & Delivery.

Once inside, simply add your country and place a small additional fee to raise the average ticket. For Spain, it can be as low as 1 or 2 euros.

Form for cash on delivery purchase

I have been selling products with cash on delivery for almost three years. I have tried with Shopify checkout and also with other similar tools. However, the best way to do it and the one that converts the most is through a form.

The one I recommend is the COD form from the company Releasit. It is very intuitive and easy to configure.

Its main features are the following:

  • The possibility of placing the form directly on the product page.
  • Choosing which are the optional and mandatory fields to be filled in by the customer.
  • Choosing the option to have it integrated or as a pop-up.
  • Customizing the colors, purchase button and text details.

Next, I will explain the differences between the integrated form and the pop-up form. 

I encourage you to test each of them to decide which of the two versions has the better delivery rate.

Integrated form

Formulario integrado
Advantages Disadvantages
Being on the product page, it is simpler and more impulsive for the customer to complete.
It is not possible to add shipping methods to the form.
The conversion rate will be higher than with the pop-up form.
You cannot add an upsell.
As it is so impulsive for the customer, you run the risk of increasing the rejection of orders.

Pop-up form

Formulario popup
Advantages Disadvantages
Includes different shipping methods and thus, with the express shipping option, increases the average ticket.
By having to go through two steps to complete the order, it is possible that the customer will think about it a little more and abandon the purchase.
Adds an upsell before finalizing the order.
Unlike the integrated form, the customer will have to take an extra step to complete the order; first click on the product button and then complete the form. This way, with those two steps, we will increase the "quality" of the customer since someone who is willing to take that extra step is more likely to be interested in the product.

Each time a customer completes the form, they will enter the store as an order pending payment. From there, the process of confirming the data and shipping the product begins.

If you need more information, I’ll leave here a video with a practical example on how to create the COD form in Shopify.

How to make a creative for a product COD on Facebook Ads

Facebook Ads will be the basis of your marketing strategy. When making the creatives to test the product, you must take into account the recommendations of the Facebook Advertisers Guide, as they are very strict when it comes to validating a video ad or not.

Some of their recommendations are:

  • MP4, MOV or GIF format
  • Aspect ratio 1:1 (Computer and Mobile) or 4:5 (Mobile Only)
  • H.264 video compression
  • Stereo AAC audio compression
  • Minimum resolution 1080×1080 pixels
  • Incorporate subtitles

To these recommendations, and from my experience, I would add:

  • Try different angles: product only, video review, video testimonial, etc.
  • Search for creatives in English through YouTube, Pinterest or Tik Tok to use as additional material.
  • Test, test, test, test…

By way of example, I’ll leave you with three options of creatives that we made for the product testing of my video. You can download them here. The goal is for them to inspire you to make your own.

Testing the product on Facebook Ads

With the creative ready, the next step is to test the product on Facebook Ads. To do this correctly and in order to be as profitable as possible, I’ll give you access to my exclusive video on how to advertise on Facebook Ads.

The main objective will be to test the product for 24 or 48 hours to be sure that it has a sales potential that justifies your investment.

Once that is confirmed, pause the advertising and proceed with the purchase and import of the product.

When the item arrives at the warehouse, re-activate the advertising and continue with the sale as usual.

Conclusions

In this article I have shown you what cash on delivery is and how to set up a business that sells via this system using Facebook Ads as a tool for customer traction.

I consider COD an ideal way to take the first steps in the world of ecommerce. Although it is a method oriented to less developed countries in terms of the Internet, that doesn’t mean you shouldn’t try it.

Many times these countries, which still do not have the infrastructure or penetration of the great powers, become a real springboard to then make the leap to the United States, Canada or the United Kingdom.

From this point on, all you have to do is repeat the process over and over again until you have trained your eye to recognize a winning product as soon as you see it.

That way you will reduce the failure rate and your profitability will be higher and higher.

Contenidos 📋
Do you want to know more about the advantages of selling cash on delivery with Beeping?

2 thoughts on “Learn how to sell cash on delivery (COD) on your Shopify ecommerce site”

    1. David Costarrosa

      Yes, it is possible to do so, but you’ll need supliers that are local, national or from very close countries to yours so that the shipments are fluid. Doing dropshipping from China is practically unfeasible, because the customer has not paid the order yet, and having to wait so long may cause them to regret tthe purchase and refuse the package.

      Thanks for the feedback!

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