Cash on Delivery on Shopify in India: Setup and RTO
How to turn on cash on delivery in Shopify, what it saves in fees, how to work out what returned orders cost you, and practical ways to reduce them.
Turning on cash on delivery takes a few minutes in Shopify. The harder job is knowing whether each COD order makes money once failed deliveries are counted.
How to turn on COD in Shopify
- Go to Settings > Payments in your Shopify admin.
- Find the payment providers section and select Cash on Delivery (COD) from the manual payment methods.
- Add any details and payment instructions you want the customer to see.
- Activate the method and place a test order.
COD orders arrive as unpaid, and someone has to mark them paid after the money comes in, so agree who does that. Shopify’s manual payments guide has the current steps.
What COD saves and what it costs
Shopify does not charge third-party transaction fees on manual payments, and there is no gateway fee on that order. Your courier’s COD charges take the place of those fees, and they vary by courier and plan, so check your rate card.
Cash flow is the second cost, because the money reaches you later. Some shipping platforms sell faster payouts. Shiprocket, for example, advertises 70% of the COD amount within 24 hours of shipping. Check what that service costs before you add it to your sums.
Work out what RTO costs you
RTO, or return to origin, is an order that ships and comes back undelivered. You lose the shipping both ways and any packaging, and the stock is tied up while it travels. To test whether COD pays, use this sum with your own numbers:
Profit per COD order
(Delivered share × profit on a delivered order) minus (RTO share × loss on a returned order)
With made-up figures, take a ₹400 profit per delivered order, a ₹100 loss per returned order and 20% of orders returned. That gives (0.8 × ₹400) minus (0.2 × ₹100), or ₹300 per COD order. Run this for your top products and pincodes separately, because a healthy average can hide a loss in one part of your catalogue.
Ways to reduce returned orders
- Confirm COD orders by WhatsApp or phone before you pack them
- Limit COD on the pincodes and products your own order history shows are losing money
- Offer a small discount for paying online, and test whether it beats the cost of the returns it avoids
- Add a COD fee or minimum order value where small orders do not cover the risk
- Check addresses and phone numbers at checkout, and call about anything incomplete
- Send shipping updates so the customer expects the delivery attempt
Change one at a time and compare RTO share and total orders before and after, since a stricter rule can also lose good orders. Our WhatsApp on Shopify guide covers order confirmations, and our payment gateway guide has the prepaid side of the sum. For help with the store itself, see Shopify development.
