Domino's Teachs E-commerce Companies about COD!

Yeah, so this is my first contribution to The Strategist of the Business Standard (10.9.2012)!
Cash on delivery has been identified as one of the culprits responsible for the troubles of e-commerce establishments.

But the experience of Domino's Pizza (Meal Delivery) shows why this line of argument is all wrong!
I have been reading the horror stories about how the cash on delivery model of payment touted by the e-commerce companies in India is the root of all their troubles and may ultimately lead to their ruin. It is almost funny how one of the most innovative ideas of our time is getting blamed for the things it is not really responsible for.

I would say cash on delivery is actually one of the best things that has happened in e-commerce, or for that any form of commerce. Here is why:

I just flipped through the 2011 balance sheet of the publicly listed company that operates Dominos India and was amazed to note some jaw dropping statistics.
• This company shipped about 3.7 crore pizzas in the year, equaling to 1 lakh pizzas sold per day.
• The pizzas sold for a total of Rs 600 crore, translating into an average price of Rs 162 per pizza.
• The business operated via 380 stores in 90 cities; that is, approximately four stores per city.
• Each store sold approximately 1 lakh pizzas a year or about 300 pizzas a day. That's about 25 pizzas an hour.
• The company recorded a net profit of Rs 90 crore. This equals to Rs 25 per pizza or a 15 per cent margin on the sale price.
I think this is awesome, considering that this business is entirely managed as a cash-on-delivery business. Also, if you review the size and scale of the operations they have, it resembles any gigantic e-commerce business.

So how can anyone blame cash on delivery as the culprit that ruined a business?
Actually, the pizza business in India teaches five important lessons to those who intend to execute the cash on delivery business model.
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Source: Afaqs
http://www.afaqs.com/community/blog/234_5-lessons-that-Dominos-can-teach-e-commerce-companies-about-COD!