Sub-Segmenting Cash-on-Delivery

I’m sure we must have all read enough about the immense COD business in India. Estimates of this market’s size vary between 50% to 70% of the entire eCommerce opportunity in India. Interestingly enough, I’ve seen many businesses talk of this segment as just One segment. How can two-thirds of your market be just one segment? It seems natural to peel layers here. There could be various gaps and opportunities to be unearthed if we stop seeing this entire COD opportunity as one market, with similar consumers, needs & wants, drivers & barriers etc. 

India is supposed to be amongst the most cash-intensive economies in the world. India has more than twice the number of bank notes in circulation compared to the US, at a fraction of the GDP. The bank-notes to GDP ratio stands at 13% - which for most countries is 2.5-8%, and this proportion is rising in India.

Too add further perspective, India has also not had a history in catalog shopping. Far from it, India’s traditional retail has been next-door. Most commodities were bought on touch-and-feel - the current pre-weighed flour and pulses is a very recent and marginal phenomenon, and paid-for after a month’s free credit. Banks have always ‘rewarded' savings with sub-inflation interest rates. Tax avoidance has been, and is, common. Retailers commonly charge more for card transactions over cash. Just the amount of India’s black-money stashed abroad runs into billions. There’s more stored in real-estate, gold and sometimes just wads of notes buried underground. The phenomenon is bigger than the broad cash-for-convenience label that’s put on it. 

Specifically for eCommerce, I think there are various subsegments including, but not limited to, the following:

• offline buyers: These are genuinely financially-disconnected buyers who do not have access to instruments needed for online transactions - they may have internet access but not online banking, credit or debit cards, or digital wallets. 
• cash economy buyers: There are people who earn and store money in cash, and for whom a digital transaction involves first depositing cash into an account.
• convenience-led buyers: The most-well known segment perhaps, but to note, there are two key sub-segments here. For these buyers, either the use of cash, OR the process of cash-payment is convenient. COD is often if not always a faster transaction with lesser steps. The trade-off on convenience is of-course that (some)one has to be present at the time of delivery, which is inconvenient to some, but everyone defines convenience differently. Particularly of note is the case of the mobile buyer, who finds it hard to input 16 digits, sometimes twice, then the CVV, then exit the app and go to his SMS inbox for the OTP, then come back and complete the transaction- often on a small screen and sketchy bandwidth. COD is a single-click option in comparison. 
• trust-deficit buyers: These are people trying out a platform that they’re not sure about. Maybe they don’t trust the product that they are buying, or the service that the platform will deliver. Once it’s delivered properly, and the packet is opened, they feel comfortable paying.
• post-paid buyers: These are people who simply prefer paying after. Simple. These could technically do a card-on-delivery transaction as well if incentivised to. Unlike the trust-deficit buyers who won’t pre-pay for a specific reason, these buyers are on a default setting of post-paying. They need a strong reason to even consider pre-paying. 
• impulse-buyers: These are buyers who are not sure if they want to buy the product. They often click on buy, sometimes to check the final price, and they don’t take it seriously enough to cancel the transaction (for them refusal of delivery is as good as cancelling the transaction. The subsets of people ordering expensive things for ‘fun’, or to try out the experience belong here
• remorse-affected-buyers: Let’s be real. Many a buyer continue their price-research even after their purchase is done. More often than not, a buyer either discovers a cheaper source or worse, the price of the same article on the same website drops. It is tough to feel like a fool. It is easier to order post-paid COD so that one retains the right of refusal, and the bargaining power.   

Naturally, all these segments are similar symptoms of different diseases with different treatments. If one wants to expand or reduce or even understand the COD phenomenon, one needs a finer lens.   

What do you think?