COD accounts for 60-65% of D2C orders in India. The average RTO rate on those orders is 28-35% - compared to just 4-8% for prepaid. Each returned COD order costs ₹180-240 in forward shipping, reverse logistics, and processing while generating zero revenue. For a brand shipping 10,000 COD orders per month, that's roughly ₹7 lakh lost every month to RTO alone.
Removing COD isn't the answer - 58-65% of first-time buyers choose it for trust reasons, and cutting it can tank your conversion rate. The real solution is converting COD orders to prepaid after the customer has already committed to buying.
This guide covers seven methods to do that on Shopify, starting with the highest-impact ones. Each method includes how it works, realistic conversion numbers, and when to use it.
How it works: Immediately after a customer places a COD order on your Shopify store, they receive an automated WhatsApp message offering a small discount (₹50-100 or 5-10% off) if they switch to prepaid before dispatch. The message includes a direct payment link (via Razorpay, PayU, or UPI) that the customer can tap and pay without leaving WhatsApp.
Why it works: The customer has already committed to buying, they just chose COD at checkout. Catching them within the first 1-2 hours, while their purchase intent is still high, gives you the best window to convert. WhatsApp's 98% open rate ensures the message is actually seen, unlike email (20% open rate) or SMS (which gets lost in spam folders).
Realistic conversion rates: D2C brands running WhatsApp COD-to-prepaid flows report 15-30% of COD customers converting to prepaid, depending on the discount offered and the message timing. Absolute discounts (₹50 off) tend to outperform percentage discounts (5% off) for orders under ₹1,500, because the fixed amount feels more tangible.
Best practices:
Sample message flow:
Message 1 (30 minutes after order):"Hi [Name]! Your order for [Product] is confirmed. Pay now and save ₹100 instantly ; offer valid for 2 hours. [Payment Link]"
Message 2 (6 hours after order, if no action):"Last chance to save ₹100 on your order, [Name]. Your ₹[discount] offer expires soon. [Payment Link]"
Tools that support this: Most WhatsApp marketing platforms for Shopify offer COD-to-prepaid automation, including BotSpace, DelightChat, Interakt, QuickReply.ai, and LimeChat. Look for native Razorpay or PayU integration so the payment link is generated automatically.
How it works: After a COD order is placed, an AI voice agent calls the customer to verify the order (confirming name, product, address, and intent to pay). During the same call, the agent offers a discount if the customer agrees to switch to prepaid, and sends a payment link via WhatsApp or SMS immediately after the call.
Why it works: Voice calls solve two problems at once they verify that the order is genuine (eliminating fake orders before they ship), and they create a natural moment to offer the prepaid conversion. A phone call feels more personal and urgent than a text message, and the real-time conversation lets the AI agent handle objections ("I don't have my card right now" → "No problem, I'll send you a UPI link on WhatsApp that you can pay anytime in the next 2 hours").
Realistic conversion rates: Voice-based COD verification typically catches 15-25% of fake or unserious orders before dispatch, saving the entire shipping cost on those orders. On top of that, the prepaid offer during the call converts an additional 10-20% of genuine COD customers to prepaid. The combined impact on RTO reduction is significant.
When to use voice vs. WhatsApp alone:
What to look for in a voice agent: The key differentiator is whether the voice agent has pre-built ecommerce workflows or whether you're building from scratch. Platforms like BotSpace offer AI voice agents with ready-made ecommerce campaigns - COD verification, COD-to-prepaid conversion, NDR follow-ups, that you can deploy without hiring a developer. Generic voice bot platforms (Retell AI, Bland AI) require you to build these workflows yourself, which adds weeks of setup time.
Before choosing which methods to prioritize, it helps to match them to the actual reasons your COD orders are returning. No single method solves everything, the most effective strategy layers multiple interventions.
Social media traffic is particularly COD-heavy - Instagram and Facebook ad referrals show 72-79% COD rates versus 34-41% from organic search. If your brand runs heavy social ads, Methods 1 and 2 will have the highest impact.
How it works: Before the customer even selects COD, you surface compelling reasons to choose prepaid directly on the checkout page. This includes prepaid-only discounts, free shipping for prepaid orders, COD surcharges, and trust signals.
Why it works: This is the earliest intervention point - you're influencing the payment decision before it's made, rather than trying to reverse it after.
Tactics that work:
Prepaid discount (most effective). Display a prominent banner or inline message: "Pay online and save ₹100" or "5% off on prepaid orders." Studies show that ₹50-100 absolute discounts convert 31-38% of COD-preferring customers to prepaid, compared to 18-23% for percentage-based discounts. The discount should be visible immediately, not hidden behind a coupon code.
COD surcharge (use carefully). Charging ₹50-100 extra for COD discourages casual COD orders. An Indian D2C footwear brand that implemented a ₹60 COD charge saw a measurable shift toward prepaid within three months. However, this can hurt conversion rates for price-sensitive customers in Tier 2/3 markets. Test before rolling out broadly.
Free shipping on prepaid. If you charge for shipping, waiving it for prepaid orders is a powerful nudge. Psychologically, "free shipping" often outweighs an equivalent discount amount - customers hate paying for shipping more than they love saving on the product.
Trust signals at checkout. "100% refund within 7 days if you're not satisfied" displayed prominently next to prepaid options addresses the core fear: "What if the product isn't what I expected?" Showing customer reviews, security badges, and a clear refund policy at the payment selection step reduces the perceived risk of paying upfront.
One-click UPI payment. Friction at the payment step is a major reason people default to COD. If your checkout requires entering card details, navigating to a bank site, and waiting for an OTP, customers will choose COD just to avoid the hassle. UPI with payment apps like GPay, PhonePe, or Paytm reduces payment to a single tap. Make sure your Shopify checkout supports UPI prominently, not as an afterthought buried under credit card options.
How it works: Instead of offering full COD, require a small upfront payment (₹49-₹99) at checkout, with the remaining balance collected on delivery. This is sometimes called "partial COD" or "token payment."
Why it works: Even a small financial commitment dramatically changes customer behavior. One Reddit seller reported that requiring a ₹99 upfront payment reduced overall order volume by a few percent (some impulse buyers dropped off), but delivery success jumped to almost 99%. The logic is simple: anyone willing to pay ₹99 upfront genuinely intends to accept the delivery.
Implementation: Several Shopify apps support partial COD, including COD King and similar tools. Configure the token amount based on your average order value - ₹49-99 works well for orders under ₹2,000; ₹149-199 for higher-value orders.
The trade-off: You will lose some orders at checkout. Customers expecting full COD may drop off when they see the partial payment requirement. Test this carefully - run it initially on high-RTO pin codes or customer segments with repeat cancellation history before applying it store-wide.
How it works: Instead of offering COD to everyone, restrict it based on data - specific pin codes with high RTO history, first-time customers with no purchase record, or orders below a minimum value.
Why it works: RTO isn't uniform. Data from 142 Indian D2C brands shows that Tier 3 and rural areas have RTO rates of 40-45%, while Tier 1 cities hover around 15-20%. By hiding or restricting COD for consistently problematic segments, you eliminate the worst offenders without affecting your overall customer base.
Tactics:
Implementation: Shopify apps like COD King allow rule-based COD gating by pin code, order value, product, and customer tags. For more advanced logic, custom checkout scripts or third-party checkout solutions (GoKwik, Shiprocket Checkout) offer AI-driven risk scoring that dynamically shows or hides COD based on real-time signals.
How it works: When a delivery attempt fails (generating a Non-Delivery Report), immediately contact the customer via AI voice call, WhatsApp, or SMS to reschedule delivery, update the address, or convert the order to prepaid.
Why it works: Not all failed deliveries are rejections. Many are logistics failures, the customer wasn't home, the address was incomplete, or the courier couldn't locate the building. These orders are recoverable if you act quickly. The window between the first failed delivery attempt and the order being returned to origin is typically 24-48 hours. Proactive contact during this window saves orders that would otherwise become RTOs.
The layered approach:
Why voice is particularly effective for NDR: When a delivery has already failed, the urgency is high, the package is sitting in a warehouse and will be sent back if the customer doesn't respond. A phone call cuts through in a way that a WhatsApp message may not. AI voice agents built for ecommerce can handle these NDR follow-up calls at scale without manual effort from your team.
How it works: For customers who have successfully received and kept a COD order, follow up with a message encouraging them to pay prepaid on their next order, positioning it as a faster, smoother experience with exclusive benefits.
Why it works: Trust is the primary reason customers choose COD. Once they've received a good product from your brand and had a positive experience, the trust barrier drops significantly. Data shows that 64-71% of customers who switch to prepaid after an incentive-driven first order maintain their prepaid preference in subsequent purchases. The goal is to graduate COD customers into prepaid customers over time.
Tactics:
No single method will convert all COD orders to prepaid. The most effective approach layers multiple methods across the customer journey:
At checkout: Prepaid discount banner + free shipping on prepaid + UPI prominently displayed + COD surcharge (optional). This catches 31-38% of customers who would have chosen COD.
After order placement (0-2 hours): WhatsApp payment nudge with ₹50-100 discount and payment link. Converts 15-30% of remaining COD orders.
After order placement (2-6 hours): AI voice call for COD verification + prepaid offer during the call. Catches fake orders and converts an additional 10-20% to prepaid.
After failed delivery (NDR): Immediate WhatsApp + voice follow-up to reschedule or convert to prepaid. Recovers orders that would otherwise RTO.
After successful delivery: Prepaid incentive for next order to gradually shift repeat customers away from COD.
Pin code and customer-level gating: Running continuously in the background, blocking COD for high-risk segments.
Together, these methods can reduce your effective COD rate by 40-60% and cut RTO losses by a corresponding amount, without removing COD as an option for genuine customers who need it.
Let's run the numbers for a mid-size D2C brand:
Before optimization:
After implementing layered COD-to-prepaid strategy:
The cost of running these tools (WhatsApp API conversations, voice agent calls, Shopify apps) is typically ₹15,000-50,000/month - a fraction of the savings.
If you're starting from zero, here's the priority order:
Week 1: Checkout optimization. Add a prepaid discount banner, enable UPI prominently, and consider a small COD surcharge. These are free or nearly free to implement and show immediate results.
Week 2: WhatsApp automation. Set up a WhatsApp marketing platform with COD-to-prepaid flows. BotSpace, QuickReply.ai, and Interakt all offer this. Connect your payment gateway (Razorpay or PayU) so payment links generate automatically.
Week 3: Voice verification. Add AI voice calls for COD verification on high-value orders or high-RTO pin codes. Scale to all COD orders once you see the impact.
Week 4: Pin code gating. Pull your RTO data, identify the worst pin codes, and restrict COD for those areas. Set up customer-level rules for repeat cancellers.
Ongoing: Monitor your prepaid/COD ratio weekly. Set a target, if you're currently at 35% prepaid, aim for 50% within 90 days. Review which methods are driving the most conversions and double down.
The new age of AI-first customer engagement starts here
