Cash on Delivery Needs To Die Already

I am not claiming to be the alpha and omega in this but having run an eCommerce startup and tested both methods – with COD and without COD – I think Nigeria’s eCommerce space will be a better place without the Cash on delivery option. More sales will definitely be made.

Here is my personal experience, we introduced Cash on Delivery with the launch of MobiGadgets because everyone was doing it and we didn’t want to lose sales because we refused to do a delivery until payment was made. Some months down the line, we realised that we can’t sustain this as people kept returning items at the slightest excuse. It didn’t help that we sold only gadgets and there are few gadgets below the 5k line. We had several discussions and decided to stop COD entirely but with a twist. If you place an order and make your payment before 12noon, you will get your order before the day is over but if you make the payment after 12noon, you will get it the following day guaranteed. That applied to customers in Lagos. Customers outside Lagos are usually guaranteed 72hours from time of payment. New customers have the initial distrust but we insisted on not making a delivery if payment was not made.

The first few weeks were quite terrible but word began to spread and soon we had more orders than we could handle and had to implement drop shipping to cater for the increase in orders. A few customers within the tech circle said our address (which was CcHub) helped in convincing them. Unfortunately, we had to shut down MobiGadgets due to entirely different reasons but we learnt more than a few valuable lessons while the ride lasted. There is only one lesson greater than our COD lesson – supplier management.

With every passing day, it is easier to make payments online in Nigeria so why remain in the past? The consumer/customer is supposed to be king but sometimes you need to influence consumer behaviour for the survival of your business. Only the major players can do this. Sales may be lost in the beginning but slowly habits will change and all the small fry will have to follow especially if it ensures growth for them, in terms of cash flow. The support of the banks and payment gateways will be essential as well because part of the reasons we have this issue was the high cost of implementing the gateways. There is also the need to make it easier to track and stop suspicious payments especially in a situation where there is card fraud and other card-related issues.

With all these in place and more, all the figures we quote when pitching our various e-commerce startups will finally begin to ring true and not seem so far-fetched.