Dropshipping Vs Cash On Delivery

Dropshipping Vs Cash On Delivery

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If you have bought something online before, chances are you are familiar with the terms drop shipping and Cash On Delivery. These two methods are quite different, but yet, they have some overlapping similarities that seem to work.

Today, we will compare the two payment methods to see which one is better. In dropshipping, the buyer pays the seller before the product arrives. For Cash On Delivery, you will receive your product, and then only pay then to the delivery person. As you can see, these methods are opposites of each other as in one is in favor of the buyer, while the other is preferable for the seller. We will see how each one works for which party and how it works.

Cash On Delivery

Cash On Delivery is a form of payment offered by an online product or service providers. Food delivery services also offer this form of payment as more flexible options for customers. You order an item via a service or product provider and select the Cash On Delivery option. Then, you wait for your item to arrive and pay either by cash or by card to the delivery personnel. Understandably, the simplicity and safety of this payment method is a popular one, especially in places where online businesses are flourishing. These places are such as Bangladesh, Thailand, and Turkey, so on. Nevertheless, Cash On Delivery also has its shortcomings.

Advantage of Cash On Delivery

An advantage for the customers

Customers love options. Offering this payment option gives them flexibility, for example, if they were ordering an item that costs between $1 to $10 and would prefer to pay via cash when their item arrives instead of paying to go through the payment process for a few bucks. Some customers are also more careful about fake suppliers or scammers. Cash On Delivery offers them safety that they can see their items with their own eyes before paying. Customers can ensure that their item is correct and arrives with no damages. If a customer notices any damages or mistakes, they can reject the order without paying.

Avoid online payment frauds

Since everything is settled via cash, customers won’t have to worry about putting their financial records at stake should they need to pay online instead. With a cash transaction, there are no financial records. No bank information revealed to the seller who might be untrustworthy. You will be surprised that many people are uncomfortable with putting their personal information on the internet as it puts them at risk of hackers or fraud.

Disadvantages of Cash On Delivery

Opportunity for losses

Cash On Delivery is not favorable for sellers in some cases. For example, when a customer returns their item without payment. Or, it could also happen that a customer intentionally keeps the item without paying. Any of these occurrences will cause you a lot of problems. Never mind that you have already spent all your money on the products and paying for shipping while you do not make any profits. Instead, you might be losing more than you earn if you keep encountering these problems.

Higher costs

Cash On Delivery services are sometimes offered, but courier companies might also charge higher prices as security. If you do a lot of online shopping, this little extra charges will eventually add up, and you will be paying more than you think.


Dropshipping is a type of eCommerce business that functions on advance payment more. So a customer pays while they shop online, and just waits for their items to arrive. All this ensures that the delivery process is seamless for both parties. Unless, however, in certain exceptional cases, which we will discuss later on. Dropshipping, does, however, offer faster shipping as shipping is arranged immediately after payment is made.

Advantages of drop shipping

Low costs

A drop shipping business is good because you won’t be managing any physical products, so you won’t need a physical store or a warehouse to store inventory. Doing this will save you a lot of money as your costs are mostly spending on running advertising campaigns or dropshipping courses. However, the risk of starting a company that might fail is always there.

No warehouse costs

Managing inventory can be a pain, especially if your products are large items. You will need a special place to store it. With drop shipping, your products are coming directly from suppliers, so you do not have to think about inventory space.

No delivery problems

Since you are not handling the Delivery, you won’t have to interfere with the delivery process unless problems occur. Of course, you would have to monitor that your customer’s item arrives and they are satisfied, but besides that, you can sit back and relax.

More time for everything else

Since you do not have a physical store or warehouse, you will have plenty of time, resources, and budget to focus on building your successful dropshipping site.

Disadvantages of dropshipping

Low margins

Unfortunately, the drop shipping business brings only low margins. It does, of course, depend on the products that you sell. However, the chances of selling small-ticket items of working are higher than selling high ticket items.

Unreliable suppliers

Since you are not handling the logistics, your supplier will be doing it. A reliable supplier will ensure that the product is properly packaged and sent to the customer. If you face an unreliable supplier, you will risk customers complaining of damaged goods, unproperly packaged products, or worse yet, and they never receive anything.


So far, dropshipping and Cash On Delivery remain favorable payment options for customers. Offering a variety of payment options to customers will increase your store ratings and gain customer’s trust. Whereas for drop shipping, it is an accessible business to set up but comes with low-profit margins.

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