Article
Cash on Delivery in Malaysia: Pros, Cons and How to Reduce Failed Orders
Cash on delivery, or COD, is still popular with many Malaysian online shoppers. Some do not have a card, some do not trust online payment with a new shop, and some simply prefer to see the parcel before handing over money. Marketplaces offer COD on many listings, and some couriers provide COD services for independent sellers too.
For sellers, COD can be a double-edged sword. It can increase orders from cautious buyers, but every parcel that is rejected or not collected costs you shipping both ways, plus the time spent packing it. This guide looks at when COD makes sense and how to keep failed deliveries low.
Why shoppers choose COD
Understanding the reasons behind COD helps you decide how to handle it:
- Trust: first-time buyers may not want to pay a shop they have never heard of.
- Access: some shoppers do not use cards or online banking regularly.
- Control: buyers like knowing they will only pay if the parcel actually arrives.
- Habit: for some, it has always been the way they shop online.
If many of your customers are first-time buyers or you sell in areas where card use is lower, COD can noticeably widen your market.
The real costs of COD
The obvious cost is a COD fee, which some couriers or platforms charge. The less obvious costs come from failed orders:
- Outbound shipping for a parcel nobody pays for
- Return shipping back to you, depending on the courier's terms
- Packaging that may be damaged and need replacing
- Stock tied up in transit for days or weeks
- Your time answering courier questions and processing the return
Key takeaway: a COD order is not a sale until the cash is collected. Track your COD success rate separately from your prepaid orders.
Why COD orders fail
Failed COD deliveries usually come from a handful of causes. Impulse buyers change their mind. Buyers place the order and forget about it. Addresses are incomplete, especially in large apartment complexes, kampung areas without clear house numbers or industrial estates. Some customers are simply not home when the rider arrives and the parcel gets returned after failed attempts.
Occasionally, orders are fake or placed as a prank. These are rarer but painful, especially for higher-value items.
How to reduce failed COD orders
You cannot remove the risk completely, but you can reduce it a lot.
Confirm before you ship
For your own store or social selling, send a quick confirmation message on WhatsApp or SMS before shipping COD orders. Repeat the item, total amount and address, and ask the buyer to reply to confirm. Many sellers find that orders with no reply are the ones most likely to fail.
Collect a complete address
Make your address form ask for the details riders need: unit number, block, building name, landmark and a working phone number. On marketplaces, check the address before packing and message the buyer if something looks incomplete.
Set sensible limits
Some sellers only offer COD up to a certain order value or only for repeat customers. Others disable COD for products that are often bought on impulse. Use your own data to decide where the line should be.
Make prepaid more attractive
Offer a small incentive for paying online, such as free shipping above a threshold or a small discount. Keep it modest so you do not lose margin, but enough to nudge buyers who are on the fence.
Using COD on marketplaces
On Shopee and Lazada, COD is managed by the platform and its logistics partners, and the rules on who can offer it and how failures are handled are set by the platform. Read the current seller policies, because they change. Watch your shop data for buyers or areas with repeated failed deliveries, and use the tools the platform gives you to manage them.
Keep good records
Create a simple spreadsheet or use your order system to track COD orders: date, area, value, product and outcome. After a few months, patterns appear. You may find that certain products, price ranges or areas fail much more often. That information lets you adjust your COD rules with confidence instead of guessing.
FAQ
Should a new online store offer COD?
It depends on your customers. If buyers are cautious and your product is not too expensive, COD can help early sales. Start with limits and track results closely.
How quickly should I confirm a COD order?
As soon as possible after the order comes in, ideally the same day. Quick confirmation catches mistakes and impulse orders before the parcel leaves.
Can I blacklist customers who reject COD parcels?
On your own store you can decline future COD orders from repeat offenders. On marketplaces, use the tools and policies the platform provides rather than your own blacklist.
COD can open doors to buyers who would never pay online with a new shop. Used carefully, with confirmation, good addresses and sensible limits, it becomes a trust builder rather than a cost leak. Pair it with a clear returns policy so buyers know exactly what to expect.