Hi everyone, recently some buyers ask me whether I can reduce my price if COD at his/her convenience? and then ask me for discount coz minus shipping cost. (But obviously I can't COD for nuts as I m not in boleh-land). It seems like it is a common practice that people reduce price when COD?

Now the question is: What is the cost of COD of buyer and seller?

(in my humble opinion)

Seller point of view:

1. Need to arrange time to meet up (must be convenient to both, but mostly cater to buyer), and this is opportunity cost.
2. Travel cost, whether by driving or public transport to certain location (even if it is on the way), it is still cost.
3. Time cost, now you have to add in all the arranging time, travel time, and time to wait if the buyer is late.
4. Potential loss, what if your buyer take a look then say, "sorry, i don't think it is good for me!", then just walk away, and seller just lost all the effort and time.
5. Some buyers know that the seller incur cost to meet him/her to somewhere, so he/she will purposely get the seller out to meet, and then bargain for lower price on the spot, else threaten not to buy (it happens in kiasu land).

Buyer point of view:

1. Need to arrange time to meet up (must be convenient to both, but mostly at buyers' convenient), and this is opportunity cost because a buyer has limited time to meet all the other sellers, so he/she has to be selective.
2. Travel cost, whether by driving or public transport to certain location (even if it is on the way), it is still cost.
3. Time cost, now you have to add in all the arranging time, travel time, and time to wait if the buyer is late.
4. Buyers' potential gain as (4) above, if he/she didn't like it then don't have to buy.
5. Buyers' optional gain as (5) above, the buyer's choice to bargain.
6. Afraid the post will lost if by postage.
7. Can get the thing instantly.

Analysis:

1. I assume that most of the sellers' and buyers' time worth is higher than the postage on hourly basis. Example, if one person hourly pay is actually RM15, together with travelling cost RM5 plus opportunity cost at RMx, then to COD is good if only postage cost higher than 2 times (RM15+RM5+RMx) minus (potential loss of item + satisfaction of getting the item instantly).
2. However, there could be some moral hazard problem that people choose to cheat, or not selling the same thing as posted.
3. Because of problem (2), the seller and buyer actually prefer to incur higher cost to COD rather than post.

Solution suggested:
1. Better post service, reduce the probability of loss.
2. Seller accept return of good, if it is not suitable for the buyer, but of course, the good must be in good condition for sale, and buyer has to bear the cost of shipping both way.

Conclusion:
I think COD is very costly and inefficient

This post has been edited by huangyong: Nov 30 2010, 07:29 PM

totally agree!!!
but of coz there must be some way to verify seller la...
what do you suggest?

that happened becoz a lot of scammer out there, and people don't know know how to differentiate who is seller who is cheater....

Thanks for sKyWiR3pT3lTd feedback, really appreciate it.

One thing I neeed to clarify is, the reduction of price is requested by the buyer, their reason being postage fees is free.

In my opinion, after looking those considerations from different parties, it is either the online prices become uncompetitive (taking account for COD), or those cost should be incur on buyer when they request for COD? since the benefit is very high to the buyer.

good comments... thanks