Polish e-businesses trying to establish themselves with their offerings in the Baltic countries should be prepared for certain implications that characterize this region. Various factors can influence the behaviours, shopping habits, and preferences of local consumers. These factors may include socio-cultural, economic, or infrastructural conditions. Each component of online sales will, therefore, have varying degrees of significance. Even though cash-on-delivery payment might not be the most commonly chosen option in the Baltic countries, it is essential to note that if a store does not offer this method, it could result in lower trust from e-customers towards the online seller. Similarly, returns play a significant role. If the return policy is poorly described, some users may simply decide not to take advantage of such an e-store’s offer.
What is cash-on-delivery payment?
Cash-on-delivery payment, also known as COD, is a method of payment where the customer pays for the ordered product or service at the time of its delivery by the provider. In this case, the customer does not make any advance payment or use other forms of electronic payment or credit card when placing the order. The customer pays for the order either in cash or, for example, with a card upon receiving the shipment from the courier.
The main advantage of this type of payment is that the customer has the opportunity to verify the contents of the shipment before making the payment. This way, the buyer can check if the goods are in accordance with the order and are free from defects. If the customer is not satisfied with the product or service, they can refuse to pay and return the goods to the provider. Unfortunately, there is a certain risk associated with this method. Some customers may place orders without intending to make the purchase, leading to losses for the seller.
Is this form of order payment popular in the Baltic states?
Both in Estonia and Lithuania, mobile payments are by far the most popular method of paying for orders, with a respective usage rate of 48% and 51%. On the other hand, Latvians most commonly choose credit card payments, accounting for 43% of the market share for online payments. In the Baltic countries, these two payment methods are essentially the most frequently used.
It is worth noting that neither Latvians nor Lithuanians use prepaid cards, which make up only 1% of the payment market share in both countries. It is also noteworthy that, like in other European countries, there is a noticeable increase in interest in electronic wallets as a preferred payment method in the Baltic countries. Year by year, more people are opting to use this type of wallet. Currently, e-wallets constitute around 10% of the payment market in the Baltic countries.
It is challenging to find a report or study proving the greater popularity of cash-on-delivery payments. In the top three most popular methods of paying for online orders, cash on delivery is not present. However, when it comes to the relevance of offering COD payments, one should consider the e-brand image, trust factor, and habits of slightly older customers. An interesting observation is that even younger customers, when not seeing the option to pay “cash on delivery,” may be discouraged from a store that, in their eyes, appears untrustworthy.
Should every store offer cash-on-delivery payment?
In the European Union, including the Baltic market, there is a directive on consumer rights that includes provisions regarding distance contracts, such as online purchases. According to this directive, consumers have certain rights, including the right to choose different payment methods.
While an increasing number of Europeans are using electronic payments and digital wallets, it does not mean that cash-on-delivery payment has ceased to exist.
The final decision on whether an online store in the Baltic market should offer cash-on-delivery payment should be carefully considered. Let’s analyse customer preferences, industry characteristics, the e-store’s business strategy, and the legal regulations in the specific country. We should also not forget about the mentioned aspects of brand image.
Returns in the Baltic markets
Residents of the Baltic countries pay close attention to the returns policy used by various online stores. The returns policy can have a significant impact on the choice of an online store and the overall customer satisfaction with online shopping.
Consumer expectations regarding returns are increasingly higher, and the ease and convenience of the returns process are key factors influencing how customers perceive a store. A well-designed returns policy can attract new customers and increase their loyalty. On the other hand, a poorly described policy will undoubtedly have negative consequences for any e-commerce business.
What consequences do Polish e-businesses have to face?
Regarding cash-on-delivery payments, they undoubtedly come with additional costs for logistics and payment processing. E-commerce stores collaborating with courier companies must implement a service for collecting payments for the delivered goods. These associated costs are often passed on to the customers, who have to pay more for this service. Furthermore, the customer has the option to refuse payment at the time of delivery, and the product returns to the warehouse, but the e-seller is still obligated to pay for the courier service.
Many customers, who vividly remember the pre-e-commerce era, still prefer traditional shopping and, if they order something online, they want to “touch” the product. Hence, cash-on-delivery payments are still necessary. Consumers often prefer to pay for the product upon receiving it, ensuring that the ordered product is exactly what they expected.
Polish e-businesses aiming to establish themselves in the Baltic market must also deal with the consequences related to the returns policy. However, this aspect is essentially no different from how it is organized in Poland. Values such as the period in which the consumer can return the product and whether additional fees are associated with it are essential (here, e-stores offering free returns have a clear advantage). The store should also have precisely described rules regarding the condition of the returned product. The return procedure itself is of utmost importance and should be straightforward, preferably in an online form, through a simplified form. The speed of refunding money is also not to be underestimated.
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