Cash/Collect On Delivery (COD) is not a new thing, that is, the logistics company collects the payment when the goods are delivered. “One hand for money and one hand for goods” has long existed, and China has also experienced this process. The COD model of cross-border logistics is mainly concentrated in markets such as Southeast Asia, the Middle East and India, catering to the consumer environment where local online payment is immature and the online credit foundation has not been fully established. There is also a wide demand for COD in Japan.
The core problem of COD is the low signing rate. The average signing rate in most markets is only 70%~80%, which means that 20%~30% of the goods are returned. A large number of returns are likely to cause the accumulation of old goods in the warehouse. The subsequent processing of returns is costly, and many returns can only be destroyed. Even if the package is delivered properly, many consumers will directly ask the logistics company to return and refund offline due to product quality problems. In order to balance the additional costs caused by the low signing rate of cash on delivery, major e-commerce companies will charge a COD transaction fee and set a customer unit price threshold. Only when the customer unit price reaches a certain amount can the COD method be selected. For ordinary shipments, logistics companies have to consider the advance payment costs of the contracted account period and the risk of bad debts. If there are problems with transportation and distribution, the freight payable may be delayed. The logistics method of collecting payment on behalf of the seller is to reverse the operation of the entire cash flow, and the logistics company has to refund the merchant. Usually, if a logistics company certified by the e-commerce platform is used, the local logistics company will remit the payment to the e-commerce platform after receiving the payment, and then settle with the seller. As shown in Figure 4-10, if the seller ships the goods by himself, the overseas logistics company will collect the payment and freight on the spot after delivering the goods to the overseas customer, and then settle with the e-commerce seller, turning the passive into active. After the logistics company collects the payment for the seller, it generally promises to return the payment to the domestic seller within two or three weeks. How to return the payment to the mainland in a formal, legal and fast manner is a big problem, and most of the funds can only be remitted to Hong Kong, China. For cross-border e-commerce parcel COD delivery, the last mile is also mainly outsourced to local delivery companies, and the handover and payment cycle will inevitably be further extended. Returns can usually only be returned to local overseas warehouses, and then shipped back to Hong Kong or the mainland of China regularly after the goods are collected.