Critical factors influencing online consumer preference towards cash on delivery method in Sri Lanka

Abstract

With the rapid technological advancements, E-commerce deliveries in Sri Lanka have been flourishing tremendously. However, payments have still been identified as one of the main obstacles to the developments of the E-commerce sector. The Cash on Delivery (COD) method has played a significant role in driving the growth of the E-commerce industry and accounts for more than 60% of all E-commerce transactions in Sri Lanka. Although COD is so important, many companies still waver with its processes as it has become a notoriously problematic area in terms of on-time and successful deliveries. Hence, the purpose of this study was to investigate the critical factors influencing online customers' preference of cash on the delivery method to provide insights into the management of E-commerce and logistics industries on the usage of appropriate payment methods for E-commerce transactions. This empirical study is based on the primary data obtained through a survey conducted among Sri Lankan online customers. The data were analyzed using the Partial Least Squares–Structural Equation Modelling technique. Consequently, 'Sri Lankan origin of the online seller,' 'Selling specialized products by the online seller,' 'Availability of wide choice of payment methods,' 'Offering a wide assortment of foreign products by the online seller,' 'Lack of trust on online payments' has been identified as the critical factors influencing Sri Lankan online customers' preference of cash on delivery method.