Cash on Delivery: When It Wins Orders and When It Costs You
COD removes the buyer's risk and hands it to you. It's worth offering for some products and some buyers — and a slow leak of money for others. Here's how to decide, per product.
8 July 2026 · 2 min read
Cash on delivery exists because trust has to start somewhere. A buyer who has never heard of your store may not want to transfer money and hope. COD lets them check the parcel first — and that single concession sometimes converts the order nobody else could.
The short version
- COD moves risk to you
- Refusals cost two trips
- Start with cheap, unreturnable items
- Cap the order value
What a refusal actually costs
A refused parcel is not a wasted stamp. You paid to ship it out, you pay again to bring it back, the item spends a week in transit, and it may come back unsellable. On a RM40 item with a RM10 delivery, one refusal can wipe out the margin of three completed orders.
| Prepaid | Cash on delivery | |
|---|---|---|
| Who carries the risk | The buyer | You |
| Money timing | Before dispatch | Days after delivery |
| Refusal cost | Rare | Two courier trips plus handling |
| Works best for | Repeat buyers, higher value | New buyers, low value, simple items |
Some products should never be COD
Anything perishable, customised, bulky or high-value. The return trip either destroys the item or costs more than the sale was worth.
Rules that keep COD from leaking money
Before switching COD on
- A maximum order value for COD orders
- Only simple, resellable products eligible
- Delivery cost priced to absorb one refusal
- A confirmation message before dispatch
- Refusing buyers flagged for prepaid next time
- COD volume reviewed monthly
The confirmation message is the cheapest protection there is: one message before dispatch asking the buyer to confirm the address and that they'll be there. Most refusals are people who forgot, not people who changed their mind.
Take payment the way your buyers want to pay
A Tokoo store supports manual transfers, an online gateway and cash on delivery — you choose per store, not per platform.
See plansFrequently asked questions
Should a new Malaysian store offer cash on delivery?+
It can help win first-time buyers who are wary of paying upfront, especially on low-value items. Set a maximum order value, restrict it to simple resellable products, and price the delivery to absorb an occasional refusal.
Who pays for a refused COD parcel?+
You do — outbound and return shipping, plus handling. That is why COD should be capped by value and limited to products that can be resold if they come back.
How do I reduce refused deliveries?+
Confirm the order and the delivery window in one message before dispatch. Refusals are more often forgetfulness than refusal to pay, and a reminder the day before delivery prevents most of them.
Sources
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