Cash on delivery: how to stop losing money on refused parcels

Cash on delivery is the reason e-commerce works at all in half of Europe — and simultaneously the most expensive habit on the market.

The arithmetic is brutal. A €25 parcel that nobody collects:

• Courier leg out: about €2
• Courier leg back: another €2
• Packaging you don't get back: €0.75
• Your handling time: ten minutes
• The stock spent three days travelling instead of selling

That's roughly €5 gone. If your margin is €6, one refused parcel eats the profit from another order. At a 15% refusal rate you are working for free.

Here is what actually moves that number.

1. Confirm by SMS, not just email

Emails drown in the promotions tab. SMS gets read. One message right after checkout:

Order received. €25 including delivery, to the pickup point on Main St. If this wasn't you, reply STOP.

That single line catches the two main cases: the person who ordered by mistake, and the one whose phone number someone else used.

2. Call the suspicious ones — not everyone

Calling works, but it's expensive in time. So only call the orders that glow red:

• Value well above your average order
• Address and phone that don't match geographically
• A name typed as obvious nonsense
• Three orders from one IP in five minutes
• An email like asdf@asdf.com

If your system can flag those automatically, even better. In Brandolog that's what the fake-order shield does — it flags the suspicious ones instead of blocking everybody.

3. Show the final total as early as possible

A large share of "refusals" are not fraud, they're surprise. The buyer expected €25, the counter says €29, and they walk away on the spot.

Show the total including delivery in the cart, not at the last step. Then repeat it in the confirmation SMS. Zero surprises at the counter.

4. Discount prepayment; don't surcharge COD

The psychology here is everything:

• "Cash on delivery costs €1.50 extra" → feels like a fine, people bail.
• "Pay by card and save €1.50" → feels like a win, some switch.

Same money, different outcome. With a 5–7% discount, typically 15–25% of customers move to card. Those are parcels that cannot be refused.

5. Cap cash on delivery by value

A simple threshold: above a certain amount, prepayment or a partial deposit only.

The logic is that risk scales with value. A €150 parcel coming back hurts ten times more than a €15 one. Set the threshold around twice your average order.

6. Keep a blacklist

If a phone number has refused two parcels, the third one doesn't ship on COD. Full stop.

You don't need a fancy system — a spreadsheet does the job at the start. What matters is checking it before you pack.

7. State delivery times honestly

"Delivery in 1–2 days" while the parcel actually leaves on day three is the single biggest reason people buy the same thing elsewhere and then refuse yours.

Better to say "ships within 48 hours" and ship in 24 than the reverse. Overestimate the promise, beat the expectation.

8. Pack so it doesn't open in transit

Some refusals happen at the counter, when the box looks like it has been through something. Tight packaging, a sticker on the outside, nothing rattling. It costs 20 cents more and saves an entire courier leg.

The realistic numbers

If you apply all of the above:

• Starting point for most new shops: 12–18% refused
• After SMS confirmation: about 9–12%
• After calling risky orders + a blacklist: 5–7%
• With a prepayment discount and a value cap: 3–5%

Below 3% is very hard and usually means you've raised the barriers so high that you're losing normal orders too. The goal isn't zero — the goal is not working for free.

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Cash on delivery isn't the enemy. It's the reason a person who has never heard of you will hand over €25. You just have to manage it as a risk instead of hoping.