Common tactics are a prepaid discount or cashback, free shipping for prepaid only, a partial payment upfront, and a message after a COD order offering a small saving to pay now by UPI.
The incentive you can afford is the RTO cost carried by the average COD order. If each COD order carries ₹40 of RTO cost, a ₹30 prepaid discount pays for itself on every order that switches.
Formula
Affordable prepaid incentive ≤ Cost of one RTO × COD RTO rate
Example
A ₹200 cost per RTO at 20% COD RTO means each COD order carries ₹40 of RTO cost.
What cash-on-delivery returns cost you each month, per RTO and per COD order, and the prepaid incentive that pays for itself.
Related terms
- Cash on delivery (COD)Cash on delivery is a payment method where the customer pays the courier in cash…
- RTO (return to origin)RTO is an order that is shipped but not delivered and returns to the seller, most…
- Payment gateway fee (MDR)A payment gateway fee is the percentage a gateway such as Razorpay, Cashfree or…
Part of the growth marketing glossary by Shiva Sharma.