- Double Shipping Costs: When a customer refuses a COD package, the seller must pay for both the initial shipping and the return transit, effectively doubling the logistics expense without making a sale.
- Impulse Cancellations: Because there is no financial commitment upfront, customers frequently cancel orders on a whim or if they find a lower price elsewhere while the item is in transit.
- Inventory Inefficiency: Products tied up in the return process are unavailable to genuine buyers, leading to potential stockouts and lost revenue.
- Additional Processing Fees: Logistics companies often charge extra “COD handling fees” for the added risk and effort of collecting cash, which either eats into profit margins or increases costs for the customer.
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