India’s festive season can transform an ordinary sales month into a record-breaking one. But alongside rising order volumes comes another predictable trend: a surge in Cash on Delivery orders. While COD remains a powerful trust-building payment option, it also carries significantly higher delivery-refusal and RTO risk, making payment-mix planning just as important as inventory planning during peak season.
This shift in the COD-prepaid mix during India’s festive season affects cash flow, courier planning and delivery risk all at once, right when a seller can least afford disruption.
This post explains why COD spikes during festive months, how that connects to return-to-origin risk and what sellers should do before demand peaks rather than after.
TL;DR
Festive season increases both order volume and the share of Cash on Delivery orders, largely driven by first-time buyers in Tier 2 and Tier 3 cities. During Diwali 2025, COD order volume grew 22% year-on-year even as prepaid orders grew faster at 26%, according to Unicommerce. Because COD orders carry structurally higher RTO rates than prepaid, this seasonal shift raises COD RTO risk in India exactly when courier networks are most stretched. Sellers should build their COD to prepaid conversion in India plan, including payment-link nudges, pin code risk rules and prepaid incentives, before the sale window opens rather than during it.
Why COD Orders Spike During Festive Season?
Festive sales attract a different type of buyer than a regular month. Discounts and marketing pushes pull in first-time online shoppers, especially from Tier 2 and Tier 3 towns where digital payment habits are still forming. Many of these buyers have not saved a card or built a UPI habit for online shopping, so they default to paying at the door.
The scale of this shift shows up clearly in industry data. During the 2025 Diwali festive period, Unicommerce recorded a 24% year-on-year rise in overall order volumes across more than 150 million transactions processed on its platform. Tier II and Tier III cities together accounted for about 55% of total orders, meaning more than half of all festive demand came from outside major metros.
This pattern drives the festive season COD orders in India trend directly. Even as digital adoption grows nationally, COD order volume climbed 22% year-on-year during the same period, and COD GMV rose 35%, indicating buyers placed higher-value COD orders as well as more of them.
Diwali 2025 Order and Payment Trends (Year-on-Year)
Metric |
YoY Change |
Overall order volume |
+24% |
Overall GMV |
+23% |
COD order volume |
+22% |
COD order GMV |
+35% |
Prepaid order volume |
+26% |
Tier II city order growth |
+28% |
Tier III city order growth |
+23% |
Source: Unicommerce 2025 Diwali festive season report, based on over 150 million transactions.
How This Raises COD RTO Risk in India?
COD orders carry a structurally higher return-to-origin rate than prepaid orders, because a COD buyer has made no financial commitment and can refuse a package at the door without any cost to themselves.
India’s average RTO rate sits near 23%, based on GoKwik’s analysis of transactions across more than 180 million shoppers, and prepaid RTO stays in the 4–8% range while COD RTO runs 28–35% on average, per Pragma’s analysis of 142 Indian D2C brands. Every COD order that returns also carries a COD handling charge that is never recovered, one of five cost components broken down in Amazon Shipping India’s guide on What Is the True Cost of Shipping Per Order?. For the full set of causes behind India’s RTO gap and a seller checklist to close it, see RTO Explained: How Indian SMBs Can Reduce It.
Festive season compounds this exposure in three specific ways:
• More first-time and impulse buyers enter through discount-driven traffic, and this group refuses delivery more often than repeat, trust-built customers.
• Courier networks operate at peak load, so delivery windows narrow and address issues take longer to resolve before a shipment is marked failed.
• Volume concentrates into a short 25-35 day window, so any RTO spike hits cash flow at the exact moment sellers are reordering inventory and paying suppliers for the next cycle.
Should Sellers Reduce COD or Manage It More Carefully During Festive Season?
Festive season does not make COD irrelevant; it makes COD management more important. The rise in festive season COD orders in India is tied to the same buyer segments sellers cannot afford to lose, especially first-time shoppers and Tier II and Tier III customers who still see COD as a trust-building payment option.
That is why the prepaid vs COD in Indian e-commerce decision should not be treated as a simple switch from one model to the other. Sellers need to separate reliable COD demand from high-risk COD demand. COD can remain open in pin codes, categories and buyer segments with better delivery outcomes, while prepaid nudges, order-value limits or partial prepayment can be used where COD RTO risk in India is consistently higher.
Amazon Shipping India’s guide COD vs Prepaid Shipping: Cost Guide for Indian Sellers explains the cost gap between the two models. During festive season, that cost gap should guide a more active peak season payment mix in India: allow COD where it supports conversion and use prepaid incentives where they can reduce avoidable RTO before dispatch.
A Simple If-Then Framework for Festive Payment Risk
If (condition) |
Then (action) |
A pin code has a history of high COD RTO |
Cap the COD order value for that pin code or require partial prepayment above a threshold |
A COD delivery attempt fails once |
Send a prepaid payment link by SMS or WhatsApp before the second attempt is scheduled |
A category such as fashion or accessories shows high COD refusal rates |
Apply a small prepaid discount at checkout specifically for that category |
Prepaid share sits below 35-40% ahead of the sale window |
Start incentive campaigns three to four weeks before the event, not during it |
Preseason Checklist: Managing the Festive Season Order Surge in India
Managing COD volume for Indian SMBs during a surge starts weeks before the sale, not during it. Sellers can prepare for the festive season order surge in India with a short set of operational steps, ideally completed weeks before the main sale event begins:
• Segment pin codes by RTO history and set COD limits accordingly before the sale begins.
• Launch a prepaid discount or cashback campaign three to four weeks ahead of the main festive event.
• Add address verification or a WhatsApp/IVR confirmation step for high-value COD orders.
• Book additional courier capacity in advance for Tier 2 and Tier 3 regions expecting surge volume — Handling Festive Season Order Surges covers the full warehouse-and-courier readiness playbook.
• Set up automated payment-link nudges for COD orders stuck in a non-delivery report.
• Track COD share daily through the sale window and adjust risk rules in real time rather than waiting for a post-season review.
Improving COD to Prepaid Conversion in India During the Festive Window
COD to prepaid conversion in India works best as a series of small nudges rather than one hard switch. The checkout discounts, payment-link timing and messaging tactics that convert best are covered in full in COD vs Prepaid Shipping: Cost Guide for Indian Sellers. The one nudge that is specifically festive-relevant: sending a payment link at the point of a failed delivery attempt captures buyers who still want the order but missed the courier during a peak-load week, when a second attempt may be days away.
Festive volume also makes COD remittance delay sharper. A courier that normally takes days to consolidate and remit COD cash is stretched further when parcel counts rise sharply during a 25-35 day window, so cash gets tied up exactly when sellers are reordering stock for the next cycle. Amazon Shipping supports this payment mix management with transparent COD remittance, real-time tracking that keeps buyers informed during festive delays and OTP-secured delivery that reduces disputes at the door. None of these tools eliminate COD; they make it easier to manage at scale, which is what festive season actually demands.
Common Misconceptions
Misconception: cutting COD during festive season fixes RTO.
In reality, this also cuts off Tier 2 and Tier 3 buyers who make up more than half of festive order volume — the same trade-off explained in RTO Explained: How Indian SMBs Can Reduce It. Managing risk by pin code and category protects margins without losing that demand.
Misconception: rising COD volume means COD is winning.
During Diwali 2025, prepaid orders actually grew faster in percentage terms than COD (26% versus 22%), according to Unicommerce, showing that digital payment trust is rising even as COD stays dominant in absolute volume.
Ship Through Festive Season with Amazon Shipping
Managing the COD-prepaid mix is only part of festive readiness. Sellers also need a shipping partner that can support peak demand with reliable tracking, COD remittance visibility, and secure delivery options. Amazon Shipping helps sellers ship across 14,000+ pin codes with real-time tracking, transparent COD remittance, and OTP-secured delivery—so they can manage festive demand with greater confidence
Festive sales attract many first-time online shoppers, especially from Tier 2 and Tier 3 cities, who have not yet built a habit of paying online. During Diwali 2025, COD order volume rose 22% year-on-year, according to Unicommerce, even as prepaid orders grew faster at 26%.
Yes, indirectly. The surge itself does not cause RTO, but it brings more first-time and impulse buyers who refuse COD deliveries more often, while courier networks are simultaneously under peak load, which extends delivery windows and raises failure rates.
No. COD unlocks Tier 2 and Tier 3 buyers who make up more than half of festive order volume, per Unicommerce data. Removing it outright can cost more revenue than it saves. Managing COD by pin code and category works better than eliminating it.
India’s average RTO rate is close to 23%, based on GoKwik’s analysis of over 180 million shoppers. Prepaid RTO commonly stays at 4–8%, while COD RTO averages 28–35%, per Pragma’s analysis of 142 Indian D2C brands.
There is no fixed national benchmark, since it varies by category and geography. A practical goal is to raise prepaid share incrementally each festive cycle using payment-link nudges and checkout incentives, rather than targeting one fixed ratio in a single season.
At least three to four weeks before the main sale event. Prepaid incentive campaigns, pin code risk segmentation and courier capacity bookings all need lead time. Starting during the sale window is usually too late to shift meaningful volume.
Yes. Most sellers apply COD limits or partial prepayment requirements to pin codes with a history of high RTO, while keeping COD fully available elsewhere. This protects margins in high-risk areas without losing conversions in reliable ones.
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