Cash Out Cash on Delivery

Problem: Drysdales wanted to reduce the number of refused cash on delivery (COD) orders returned to its fulfillment center while still allowing customers to pay in cash.
Solution: It implemented Western Union’s Cash Payment Solutions as a part of its catalog management software.
Results: COD orders were reduced by about 50 percent.

Drysdales, a multichannel merchant of western apparel and gifts, started using Western Union’s Cash Payment Services in November 2004 to reduce the amount of time and money spent dealing with COD orders that had been refused by recipients.

Western Union’s Cash Payment Services enable merchants to accept cash as payment for items when customers lack credit cards or other payment methods.

About 165 of Drysdales’ COD orders were refused annually, either because no one was home when the packages were delivered or because customers didn’t have the money, says Monday Ebigwu, traffic manager for the Tulsa, Okla.-based company. He estimates a yearly cost of $1,200 to $2,000, without factoring in carrier costs, for the returned merchandise.

Ken Proctor, Drysdales’ manager of information services, notes the company is recognized as the only mail-order western outfitter to allow its customers to pay cash (via COD). So Drysdales’ officials were reluctant to remove the cash-payment option entirely. Proctor reconsidered the option after attending a conference held by Drysdales’ catalog management software (CMS) provider Sigma-Micro. At the conference, Sigma-Micro unveiled an interface it built for another client allowing it to accept Western Union transactions from customers.

Here’s how it works: Using a virtual private network, Drysdales’ system is polled every 15 minutes for orders that have a Western Union payment type. The data are sent to a central Western Union server, and the customer number and order number are sent to every Western Union agent in the country. The customer goes to a Western Union agent, provides the order’s number and exact amount of the purchase in cash. The transaction is fed to the Western Union server where the network feeds the data back to Drysdales. Once the transaction is verified, Drysdales ships the order. Drysdales paid a one-time fee of $5,000 to Sigma-Micro to set up the real-time connection with Western Union and to integrate the service with Drysdales’ CMS, says Proctor.

The results? “It’s cut back on about 50 percent of our CODs, and we anticipate that going higher,” says Proctor.