Is he right or wrong? My personal feeling is in the comments of the story
I shared some of my perspective on Twitter already
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If it is not cost effectively for a startup to do cash on delivery or it burdens the startup, need to figure out a way to reduce the friction. Not all startups have cash to burn like Jumia and Konga, they need to reset their thinking
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One way to start to reduce the dependence cash on delivery to give disocunts (lower price + free delivery) to encourage pre-payment vs. cash on delivery. Initially they are not going to helpful to your bottomline but will reduce amount of un-comfirmed sales order
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We don’t really have a credit culture and I find it funny how we are effectively buying on credit. Clearly there needs to be more trust within the system to encourage pre-payment. Must be hard fought through superior customer service, favourable returns policy to reduce the preceived benefit of cash on delivery
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Finally Banks / Payment Gateways need to do more to promote pre-payment.
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The first players in the ecommerce scene had to do that to breed trust. Since there’s no such thing as free lunch, whoever is offering such services to the customer will have to bear the cost. If you’re bootstrapping, this might be a big no-no. Some things are better left until you’ve got a lot of money. I remember the whatsapp guy talk about how SMS verification of phone numbers was expensive for them. Now, they can afford it.
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I believe that with this, as with everything else, there is a growth curve to be expected. We will eventually get to the point where there is saturation in the number of people with cards and an internet banking presence, and over time purchasing something online via prepayment will not bring the head-rush (read ‘excitement due to the idea being in its novel phase’) that it is often accompanied by in contemporary times.
This will, of course, lower the entry bar and more startups will spring up and we would be one step closer to the throbbing tech vein we are destined to be.
In the meantime, startups can leverage on the numerous opportunities this seeming ‘irritating disadvantage’ brings to the Nigerian marketplace. A simple SWOT analysis will show this, and @remi has already touched on a few of these.
God bless us!
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I understand his grievance with “cash on delivery” but pouting at the ‘generosity’ of free delivery?
Here I was thinking it was either that or a discount on shelve price, or some other sale’s ‘scam’. I mean what difference would it make if he is using, what is supposed to drop from discounts to offer free delivery?
Or maybe drink.ng is also against discounts?
In between, there’s a brazen nature about his customer service philosophy as hinted from my read; the no bullshit stance on pre-delivery payment. I don’t think that ever helps.
I don’t blame the guy though, its a war zone out there.
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This is one very interesting and funny interview
One weird thing I’ve noticed is people buying and paying for things from strangers on Instagram. These Instagram accounts only exist on Instagram(maybe Twitter) and have a phone number. That’s all. But people still transfer money to these guys waaay before delivery.
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Yes, I love that this debate is surfacing. The online delivery space can NEVER work with payment after purchase. You’re essentially asking the service provider to pay salaries, fuel vehicles, etc before the business gets money from you. This business model also leads to a lot of wasted deliveries. I confess I’ve done this before…I ordered something on Jumia and when they came to my house I said I wasn’t buying again. And there were NO consequences for that. If I had my debit card hooked onto their platform like UBER I would have been charged for a false order.
To the people saying things about trust, e-commerce cannot exist without e-payment. For the foreseeable future paying cash on delivery will ALWAYS be easier than paying with a card for an average Nigerian. Simple PHASE OUT this business model of paying cash for an online service.
Also the online service providers have a role to play. They should provide incentives to people who pay with cards… 1 day deliveries? Discounts? Membership points? Again phase out cash on delivery.
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These instagram accounts usually tend to be very personal and people identify with them for some reason. It’s really interesting.
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Good point. I actually know a few folks in this line of work. It is more profitable than one imagines. Effectively it is a personal shopper type service.
Also all those websites for buy products “aboard” and deliver to Nigeria. Most, if not all are pre-paid.
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i work in a logistic company that deliver for KAYMU,DEALDEY,KONGA,TRACLIST.i processes orders from buyers and i can say for sure that the rate of returns orders is alarming and not profitable for merchants that sell on the platform. i think the big e-commerce used cash on delivery to break into the Nigeria market going forward they should come up with a solution e.g KONGAPAY to kill it becus it isnot sustainable for small businesses.
Also, the issue of trust and network problems in the payment ecosystem in Nigeria is a bigger challenge that hinders prepayment of orders…
Thirdly, the e-commerce companies should educates their buyers and merchants that sell on their platform so as to reduces the incidence of return orders becus sometimes they shuld leave them to roast.
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All well and good, but why should the big guys care about the little ones? If its in their best interest to continue burning cash to get more of the market, I find it hard to argue with that. Small businesses should decide on what works for them and stop complaining, unless of course they are complaining about the state of electronic payments in Nigeria.
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I will still keep doing cash on delivery. Return policies in Nigeria are questionable and there is a lot of “wasted time”. I ordered something from asos and it didn’t get delivered, I informed them and immediately I got my cash back (with interest …FX tinz)… that won’t happen that quick wiv any Nigerian e-commerce firm.
Exactly my thoughts. Jumia and Konga can afford to do that, and it’s a competitive advantage.
If you can’t play, go home.
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Your comment highlights my point exactly. Lack of trust. There lies the opportunity. Improve customer service by introducing some more friendly policies and customers will follow.
I’m looking forward to the Nigerian equivalent of zappos from a customer experience perspective.
- 365 days returns
- funny emails
- next day delivery etc
I agree refund/return is a killer in retail but where there is still limited trust in the system. You need something to catalyze a customer order
- pay when you see the product
- pay in advance and trust that you can get your money back if you don’t like the product, no questions asked. That’s why folks are hooked on Amazon etc
For merchants selling on these platforms, it must be rough. I’m not even sure how you solve that problem today given we are still in the early innings of e-commerce growth in Nigeria
I must say that I’m so privileged to have come across this interview.
I’m working on an e-commerce idea and one of important considerations for the business model is the revenue stream. And for an e-commerce venture, revenue stream equals payment for orders. Whenever, I think about Cash on Delivery (COD), shivers run down my spine. I begin to think about how the entire value chain of the business (including those of the vendors and 3rd party logistics providers) will depend on a customer whose committment to the order I’m not sure of. For a venture whose pre-delivery processes which could take up to 3 weeks for some orders, how will we bear and treat the enormous risks while bootstrapping the company?
I remember my first e-commerce purchase from Dealdey over two years ago. I paid online. Dealdey wasn’t even popular then. I remember my first purchase from Jumia over two years ago. I paid online. Jumia just commenced then and was so slow in delivery that I had to pickup the order at their Lekki office. But I trusted all of them enough to pay them for goods that took up to 7 days before delivery.
This is what I’ve come to realise. A company must understand her customers’ behaviour and tune her services for those customer segments who are must likely to contribute positively towards are cashflow. Just like drinks.ng, I’m not going to operate with COD. It’s either you trust the e-commerce platform or you leave it. E-commerce is here as an alternative to physical shopping, so if customers aren’t comfortable with e-commerce, they can continue with physical shopping.
But I can tell you that, there are a million and more Nigerians who are ready to pay online for orders and those are the ones we’ll direct our energy to.
COD is not sustainable; new e-commerce startups must lead the way for the eradication of the COD payment model in Nigerian e-commerce ecosystem.
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I primarily buy stuff online. From fashion items to Home electronics, If however there is no COD, I’ll never shop online in Nigeria. Jumia or Konga, I don’t care. I’ll just use them to merely know the price of items and go to a real shop.
There are have been several instances both ecommerce houses bring items that are very different in perceived form or quality from what I order online, my only grace is that I haven’t paid. What did I do?! You guessed it.
I certainly won’t like to have my 25k(or whatever amount) hanging and needing to exchange 100 emails for my cash refunded.
So, yea. No
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I’m having this problem with a very large, very popular UK shop at the moment. My order got lost in the mail and I’ve been trying to get a refund for days. I’ve lost orders from Amazon. On the flipside, I’ve never lost my package with a local e-commerce retailer.
My point is, this fear that is being limited to Nigerian shops doesn’t make a whole lot of sense to me. You’re just as likely to have issues here as abroad. That’s the risk of online shopping. 
Like I mentioned in the last thread this was discussed, it’s up to companies that find COD a burden (and I’m pretty sure it’s all of them, even the big ones), they should phase it out and up their refund/customer care game. As with all things that change, people will whine and moan and eventually they’ll get over it, especially if they know they can get their order/refund.
I’m generally a lazy person that rarely carries cash, however, so I’m always going to be more willing to pay for stuff online than to get up and look for it and/or go to an ATM, so YMMV.
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Your perspective is very valid @akindolu. The e-commerce vendor is totally liable for such a case and you can simply reject it and ask for a refund. If the e-commerce company knows their game, they will plead for your patience (and even offer some palliative - in form of discount on your next shopping) while they work towards replacing the order. E-commerce comes with inherent risks for both customers and vendors.
I’ve once ordered for a $50 item from Ebay and when it arrived wasn’t up to the ‘quality’ I expected. Now what would I have done in that case? Begin to process the return of the item back to France? All I could do is fill the review and feedback form for that order (and hope to save another person from the same experience). This is the risk that comes with virtual shopping when you cannot feel the item you are purchasing. So a customer should be ready for such risks or avoid e-commerce. However, an ecommerce venture should put in place systems to ensuring that such risks are reduced to the minimum thereby building trust and confidence in their customers. They should also be a very convenient return and refund policy in place.
Jumia and Konga could afford the COD risks because most of their merchandise are finished goods which they basically dropship, but when a company is going to operate with made-to-order system, then COD model would be too risky. The customers, however, would be fully educated on the reasons why COD isn’t accepted and would be guided to make the right decisions.
It seems the COD issue is not limited to Nigeria/Africa. http://businesstoday.intoday.in/story/cash-on-delivery-impact-on-e-commerce-companies-customers/1/202680.html
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