Cash-on-delivery or COD is still the most preferred payment option among e-commerce users with the difference between cash payments and the popular UPI (Unified Payment Interface) option pegged around 30 per cent in the second quarter of 2022, according to a latest analysis by GoKwik, a start-up specialising in providing check-out solutions to digital players.
Data from GoKwik showed that 64 per cent of all orders that were placed on its network were through COD in the second quarter of 2022, although preference for UPI also increased by nearly 20 per cent in the last one year.
Founded in 2020, GoKwik uses AI/ML technologies to solve problems like Return to Origin (RTO) – failed delivery with the product being returned to the seller - and improve COD conversion rates for e-commerce players, including direct-to-consumer or D2C platforms.
Further, the average order value (AOV) for both COD and UPI payment modes increased on the GoKwik network in the last one year thought the AOV for COD stayed higher than that for UPI in the last two quarters of 2022.
This, as per the start-up, hints at a lack of trust in e-commerce websites deterring consumers from buying high value commodities through prepaid payment modes.
Incidentally, desktop users showed a higher preference for UPI compared to mobile users, who had the lowest preference for UPI in Q2 of 2021 at 15.6 per cent though it more than doubled to 36.7 per cent by Q2 2022. It, however, is still lower than desktop users at 42 per cent.
Meanwhile, Android users had the highest COD preference in Q2 of 2021 at 85 per cent compared to Mac users though the trend subsided to 64 per cent by Q2 of 2022.
As per the study, Mac users showed an upward trend for COD preference from 55 per cent in Q2 of 2021 to 75 per cent in Q2 of 2022, while iOS users displayed a declining trend for COD preference in the same period.
“Transactions made on our network over the last one year clearly show that COD isn’t going away anytime soon but customers are also growing comfortable to use pre-paid options,” said Chirag Taneja, Co-Founder & CEO, GoKwik.
“With increased penetration of mobile phones and faster Internet connectivity, customers' preference to make payments on D2C websites via UPI is increasing year on year. The trend can also be attributed to the several interventions rolled out on our checkout to improve prepaid conversions,” he added.
GoKwik is backed by Matrix Partners India, RTP Global, Sequoia Capital, Think Investments and other marquee angels. The start-up boasts of staffers who have previous experience of working in well-known start-ups including Flipkart, Razorpay, Swiggy, Myntra, Nykaa and PayU among others.
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