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If you are running a D2C brand in India, COD is not something you actively choose. It is something you operate with every day. Even today, 60% of D2C orders are paid via Cash on Delivery. You could reduce it, push prepaid, or add nudges at checkout, but once you remove COD completely, conversions dip. Most founders have seen this first-hand. So COD stays.
What usually does not get the same attention is what happens after the order is placed. As per our data, across brands, only about 75% of COD orders shipped actually get delivered, and the rest turn to Return to Origin (RTOs). In India, average RTO rates hover at 28-35% for COD transactions compared to 4-8% for prepaid orders. This impacts margins, cash flow, and operational efficiency.
Why Most COD Controls Stop Working
Most brands try to control COD using simple rules.
- COD for everyone
- Block COD for some pincodes
- Block COD above a certain order value
These rules are easy to set up, and they work for a short period of time. Then they stop, because COD failures do not happen for one single reason.
Based on our internal data, RTO typically arises from four broad areas.
- Customer intent issues account for 10–15%, driven by impulse buys, fake orders, or customers being unavailable at delivery.
- Address and cart quality contribute 20–25%, often due to incomplete addresses, wrong pincodes, or missing details.
- Delivery experience issues make up 30–35%, including courier delays, failed delivery attempts, and poor coordination.
- The remaining 25% comes from seller-side issues, such as wrong item shipment, packaging problems, or product quality concerns.
No single rule can capture all of this.
Two COD orders of the same value can behave very differently depending on who the customer is, where they are ordering from, and what they are buying. When COD is controlled using blanket rules, these differences are ignored. This is where most COD setups start leaking money.
RTO Intelligence: Understanding Risk Order by Order
At the core of the COD & RTO Suite is RTO Intelligence. Its job is simple: identify which COD orders are likely to become RTOs and flag the risk early, while the customer is still at checkout.
Each COD order is evaluated and assigned a risk level. This is not guesswork or a static rule. The model behind it is trained on 2.5B+ logistics data points, covers 18K+ pincodes, and evaluates risk across 12+ parameters. The outcome is a prediction engine that works with 87% precision, ensuring genuine customers are not blocked unnecessarily.
Poorly designed COD filters often reduce conversion because they block good buyers along with bad ones. High-precision risk scoring allows brands to act only where risk is real, instead of applying blanket restrictions.
What You Can Do Once Risk Is Identified
Once an order is classified as low, medium, or high risk, merchants get clear, configurable control over how COD should behave.
For low-risk orders, COD can be allowed normally with no added friction. For medium-risk orders, brands can choose safer alternatives, such as offering partial COD or nudging customers towards prepaid. For high-risk orders, COD can be hidden entirely, preventing the order from entering the logistics flow.
In cases where brands want visibility without blocking COD, orders can also be allowed while being tagged as risky in Shopify for operational follow-up.
This flexibility is critical. It allows merchants to protect margins without taking an aggressive or one-size-fits-all approach to COD.
Partial COD: Confirming Intent Without Killing Conversions
One consistent pattern across Indian D2C is that customers choose COD largely because of trust concerns, not because they are unable to pay.
Our study further reflects this clearly. 71% of customers want to see the product before paying, 67% worry about fraud or payment failures, and 38% are concerned about refund hassles.
This is where partial COD works well.
By collecting a small upfront amount, partial COD confirms intent while still keeping COD available. Customers who genuinely want the product complete the order smoothly, while fake or low-intent orders tend to drop off at this step. It is a small change in checkout behaviour, but it has a meaningful impact on order quality.
“With One Click Checkout, we didn’t just bring RTOs down to 3% from 30%. We also saw a clear improvement in the number of shoppers who completed their purchases. Partial COD helped us confirm intent early, without slowing down genuine buyers.”
– Khushboo Jain, Founder, Auranic
This is exactly why partial COD performs differently from blanket COD restrictions. Instead of blocking buyers upfront, it filters intent at the moment that matters most — checkout — protecting margins while keeping conversions intact.
Address Quality: The Silent Driver Behind RTO
Address-related issues are among the least discussed contributors to RTO. Some of these issues include address and cart quality issues, such as incomplete addresses, incorrect PIN codes, or missing delivery details.
The COD & RTO Suite addresses this early in the checkout flow. Customer details are validated, addresses are auto-filled using 120M+ verified addresses, and serviceability checks are run before the order is placed.
Catching these issues before shipping significantly reduces failed deliveries, without adding friction to the checkout experience. It is a quiet fix, but one that consistently reduces avoidable RTO.
Why Smarter COD Control Also Improves Prepaid Share
A common concern among founders is that tightening COD controls will hurt prepaid adoption. In practice, the opposite tends to happen.
When COD is handled intelligently, risky users are filtered out early, genuine users feel more confident completing their purchase, and prepaid nudges feel contextual rather than forced.
With checkout optimisation, brands typically see prepaid share move up to 65%, even while continuing to offer COD. This aligns closely with customer expectations. Prepaid adoption improves when trust improves. Smarter COD control helps create that trust.
How COD Behaviour Changes Across D2C Categories
One of the biggest mistakes brands make with COD is assuming that customers behave the same way across categories.
They don’t.
The reason someone chooses COD for a kurta is very different from why they choose COD for a phone or a skincare product. And that difference matters a lot when you are trying to control RTO without hurting conversion.
This is why category-aware COD control works better than blanket rules.
| Category | Why COD Is Chosen | Typical COD Issues | How OCC’s COD & RTO Suite Helps | Outcome |
| Fashion & Apparel | Size and fit uncertainty, impulse buying, and decision deferred to delivery. | High COD share, frequent doorstep refusals, and drop-offs post-checkout. | Flags risky orders early, uses partial COD to confirm intent, and validates addresses to avoid easy refusals. | Fewer “trial” orders, cleaner COD flow, conversion intact. |
| Electronics | COD is used for reassurance against damage, wrong items, or delays. | Late cancellations, refusals due to packaging concerns, and precautionary orders. | Partial COD for intent, stricter controls on high-value SKUs, risk tagging for ops follow-up. | Better order quality without removing COD where it helps conversion. |
| Beauty & Personal Care | COD was used early to test brand trust, and prepaid acceptance over time. | COD overuse despite prepaid readiness in repeat buyers. | Keeps COD frictionless for low-risk users, nudges prepaid once trust is built, and uses partial COD selectively. | Gradual prepaid lift without forcing behaviour. |
| Non-Metro & Older Segments | Higher comfort with COD, delivery confidence matters more than payment. | Address gaps, unclear landmarks, and higher delivery failures. | Early address validation, serviceability checks, and smarter COD control for repeat failures. | Lower RTO from delivery issues without alienating COD-first users. |
COD Is Not Going Away. The Leaks Can.
COD will continue to drive conversions in Indian D2C. But unmanaged COD quietly erodes margins, logistics efficiency, and customer experience.
Intelligent checkout control changes that equation. Instead of reacting to RTO after orders fail, brands filter risk, confirm intent, and improve order quality at the moment it matters most — checkout.
The result is simple: cleaner orders, healthier margins, and growth without friction. The brands scaling fastest today are not fighting COD. They are controlling it.
Reach out to our sales team to understand how the COD & RTO Suite in One Click Checkout can be tailored for your category and customer mix.