POD (Pay on Delivery) is a cancer which might end up destroying e-commerce in Nigeria if nothing is done about it. I think e-commerce companies should either stop it in it’s entirety or start charging a sort of extra-fee on POD orders to discourage customers.
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Majority of banked Nigerians are card holders, which is how the withdraw from ATM. I think it will be a nice thing if all of them used their cards for online transactions. There are even more people doing POS transactions than web payments.
So it is something about them not trusting web terminals. And my point with the betting argument is that it’s not only ecommerce that is affected. Digital products sales is almost dead so I think it is a good thing that Jumia and Konga have COD alternative. The guys suggesting they should drop it for the love of cashless society almost sound like they are hating. They are not offering a mandatory/government service, they don’t get to set those kind of rules.
I’m running a web service that requires payment and I’m feeling the pinch too. Until card payment becomes mainstream, I’m seeking alternatives that will keep me in business.
Those of us who are literate about it always feel like it should come to other people naturally. We impatiently chide those who aren’t making web payments. There are trust issues involved with these things and if you try to shove it down people’s throat, it will come off the wrong way. We need to find other ways to get people in the habit of cashless payments.
Hearsay without actual stats from these companies.
It doesn’t work with the argument at hand though.
‘Hating’, really? On who? If Person A chooses to buy with Cash on Delivery it doesn’t affect me in anyway. A cashless society would benefit you the e-commerce person more than me. But okay, hating.
We’re aware it doesn’t happen naturally, which is why some people here have said it needs to be pushed more aggressively. Waiting patiently is equally fruitless. When it comes to changing habits, people would rather NOT. Even when it’s not efficient. Kind of like the Law of Motion.
Newton’s first law states that every object will remain at rest or in uniform motion in a straight line unless compelled to change its state by the action of an external force.
To give another example with my folks and cards, my mother would stand in the crowded heat of UBA and come home and complain about it and I would always ask her why she just wouldn’t use her card. She said it wasn’t working. It was. By the UBA started the whole use ATM for this amount or pay a fine thing, she eventually started using the card. No more banking halls, no more looking for the nearest branch.
This is something that benefits everyone, we’re not asking them to give up their life savings.
There are trust issues involved with these things
No smoke without fire. All it takes, when it comes to such things, is one or two people saying, ‘Well I tried using gospoteric and they debited me without giving me what I paid for’ to shatter trust. Which all takes me back to my initial post. Retailers need to step up and rebuild trust. Imagine if there had never been a cash on delivery option, and Jumia kept disappointing people instead of stepping up their game. People would just stop using them entirely. Imagine instead of sinking millions into promos boasting about Cash on Delivery, they invested more in teaching people about online payments and the benefits or even ramping up customer service. Imagine if many local e-commerce sites didn’t look like they were going to give your computer an obscure virus just by loading it.
Someone said POS payments are doing better, which is ironic as I’m more likely to encounter POS failure (as recently as last week, that was fun) than online payment failure. But anyway. The banks helped with that. They tried to get POSes in as many shops as possible, they give you cashback rewards for using it. These kinds of initiatives help.
Card payment won’t become mainstream on its own. It certainly won’t become mainstream if we keep giving people other alternatives.
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We’ve been talking about cards and POS, what about digital curreny, alternative means of payment. What if there is another direction we’ve not seen that may actually be a fit for Nigeria.
Its obvious we need change. 
I’m not sure anyone implied that you should drop other alternatives - I didn’t. We are saying that there are alternatives doesn’t necessarily mean card payments be relegated to the background. Online payments are the future regardless of the state of affairs today. Besides the burden of accounting, there is the risk associated with handling cash - what your example businesses aren’t telling you is how much cash they lose to rogue agents, delivery people, or even human error.
I mean, we wouldn’t have this thread if we didn’t consider the apparent proliferation of the “cash on delivery” option odd.
The next 7 days fasting and prayers I will do would be for Baba God to give me @onyeka’s gift of breaking down points in a clearly articulated manner.
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@gaphy did!
@xolubi It makes business sense to relegate card payment to the background if your customers don’t use it.
…sales is the state of affairs today. I know a company that spent #150,000 on payment gateway integration but none of their customers used it for over 5 months, customers still chose cash.
Cash has problems but i think it’s better to have #10 naira and loose #3 than to have #2 and loose nothing. …or maybe I’m just being an Igbo man!
Besides trust and security issues/concerns, this tweet resonates –
To be honest, I only choose Cash-On-Delivery because its faster to click that button than type in all my credit card details
— Mark Essien (@markessien) July 28, 2014
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@onyeka I agree that refunds and issue resolutions need to get better – in fact it seems like a prerequisite to making any dent in the customer trust issue. (But I’ve heard stories of issues with Paga where its taken 2-3 months to get a refund because of reconciliation issues with banks…so while I’m sure retailers/providers share blame, my gut tells me the major challenge with timely refunds once approved is with the banks.)
In terms of moving towards more online payments, I’m not sure @onyeka endorses @Lamidi_b_a / @gaphy s view that “Jumia and the likes yank off” cash on delivery, although I hesitate to speak for anyone. I’m guessing COD is anywhere from 60-90% of the business for those guys, and if that’s the case @Obi_Ik’s view that such a move is closer to activism than a rational business decision makes sense to me, especially given their struggle for market leadership.
But overall I’m hearing a few things as far as options for e-retailers/providers:
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Shut Off COD Completely (and hope your business doesn’t die)
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Make COD More Painful: Extra fees, Extra checkout steps to rival paying online, etc.
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Make Paying Online Less Painful: Quicker returns/issue resolution; discounts for paying online vs COD (just heard of Payporte and saw that they do this); get people to trust you enough to store card details so checkout is easier (Uber does this successfully but not sure who else does)
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Embrace COD & Associated Problems (and hope that macro changes in bank & card adoption make things better and/or customers magically start preferring paying online)
In terms of diagnosing the problem (for card/account holders), sounds like:
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Trust Issues (Service Provider):
Will I get what was promised on time? If something goes wrong, will it get resolved on time and to my satisfaction? Will I have to chase people for my money? -
Trust Issues (Financial/Security):
Will my account and $$$ be compromised as a result of this transaction? Is this an invitation for fraudsters? -
Ease of Use:
Why should I fumble with my card numbers and OTPs, etc. when I can just click COD and be done?
Interesting.
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hi @thought,
I like your summary of the issues. I have had a client experiment with making COD more painful on a customer’s wallet. They added a “processing” fee for COD, which went away if the customer paid online. Results? There was a drop in COD orders, and an increase on prepaid orders. Customers were less likely to reject items at the point of delivery (they had already paid for it, and there was no need to
The processing fee bumped up their revenues a small bit. Month to month revenues and orders didn’t stop growing because they added this fee. In their own case, using this method worked for them. I can’t say it claim that it will work for everyone, though.
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Pls this has no substance, how many seconds does it take to type in card details? There are people who know all their card details by heart
How do we solve bank reconciliation issues? Companies should be willing to use their cash to refund customers when the banks/ interswitch are making things difficult. Also, there can be dedicated personnel to follow up with banks or interswitch to make sure these processes are accelerated.
For security issues, once these sites have put the necessary in place, all they have to do is continue to educate customers and ensure them that their financial details are safe.
Like I said previously, companies will step up once more people start making payments before receiving goods. If they don’t they will run out of business
COD must be nightmare for the likes of Konga, Jumia & co. If you imagine the working capital requirements, inventory risk and associated cash flow impacts, it is no-brainer that it must be a huge drain on resources for an already thin margin business.
Consumer protection
Not having the requisite consumer protection adds a significant roadblock for mass ecommerce adoption in Nigeria. As far as I am aware, there are no laws stipulating the rights of respective parties in ecommerce transactions. There is a consumer protection act – however this was last updated in 1992 as far as I am aware. The world has since moved on.The CPC also has nothing on ecommerce.
As a consumer, I certainly want to know what protection (and redress) I have should things go wrong (and they often do). This is even more pertinent with electronic transactions where I am unable to touch or feel what I am buying – the trust factor.
If you review terms and conditions of the two big players Konga and Jumia, there is little insight into their responsibilities or even the rights (express or implied) of the customer. I am no legal mind, however both documents point to more terms and conditions on the ‘use’ of their site rather than the ‘service’ they provide - aka goods & services… For example I could not see a clearly articulated refunds policy. I also could not see a complaints procedure on both sites. How do I get redress as a customer? What are the various levels within the organisation I can escalate to? How long will it take? Is there an independent adjudicator or ombudsman?
Now if I were a customer, I certainly will be opting for the least risky option that protects ME - COD.
Data protection/privacy
Data privacy remains another roadblock to ecommerce adoption in Nigeria. Everyone seems to want to collect your data, however to my knowledge there is no legislation mandating:
- how they use and store your information
- how they transmit your information
- who has access to your information and who they share this
- how long they hold this information for
I looked at Jumia’s privacy policy and it had this…
WTF does this mean?
Again in the absence of data protection laws, I can see why people will opt for COD as a preferred option.
As with many things Nigerian, we somehow expect people to ‘behave’ without having the requisite controls and frameworks to MAKE people do so.
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This is what I mean when I say that some people chide those who aren’t up to speed with online payment like they are doing something horrendous. You can’t make business decisions under this kind of premise. Even though many of us use card payment and internet banking without any stress, it is unthinkable for many of our targets.
As a business person (not a tech enthusiast), you have to decide if getting money from your customer, no matter how, is more important to you than insisting on card payment. Like i said in an earlier post, those who are doing COD are lucky to have that option. If you are offering a digital product or ticketing service, how do you manage? Like @thought stated, COD is 60-90% of these guys’ revenue. To operate just within the margin of card payment customers is placing unnecessary limitations on your business. The revenue from cash can fund the wahala that comes with it. Me I’ve decided that if the customer says it is cowrie he/she has, as long as I’ll have some profit after going through the process of converting the cowrie to proper money, we’ll find a way to get that cowrie.
Many people have never used online payment at all and worse, they’ve heard horrible stories about card hacks and scam. So now they are playing “better safe than sorry”. Getting them back will take some time. If we want to speed it up, we need to come up with innovative ways to encourage people to use card payments or we get the government to strong-arm them.
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Start charging some sort of extra-fee? Really? I think you need to stop for a second and try to think about why people choose to do POD as against paying with their cards.
I do transactions online and I pay with my various cards all the time, but NOT on our Konga/Jumia/Dealdey. I think Dealdey is the worst by the way, and that’s largely due to the involvement of the third party sellers. We all want convenience and that explains why we choose to buy online in the first place. But what’s convenience when I have to wait for 2 weeks, burning my call credit to talk to a machine (Dealdey), and all other nonsense.
While I agree that POD may not be very good for our e-commerce on the long run, I strongly believe yanking it off or slapping an extra fee on it is NOT the solution, instead the real reason for introducing it should be looked into. The following needs to be done; Improve service delivery, better inventory tracking system, better customer support, be more active on social media and respond to complaints quickly (Konga is doing very well here), seamless refund process, and above all, communicate delivery hitches to the customers. Only then will people start trusting them enough to pay for their purchases upfront.
PS: I still use my cards on dealdey to pay for vouchers though. As long as nothing is to be delivered physically.
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Some customers view the Payment on Delivery option as an opportunity to inspect goods before choosing to pay for them. This can go the extent that a customer might order three products, with the clear intent to select the best one and not accept delivery of the other two.
For me, the clear argument is that Payment on Delivery completely alters the dynamics of logistics, money management, risk, and accounting. It comes with more troubles than perceived digital solutions.
Hence, if we must move forward, then we will have to dump Payment on Delivery and embrace digital payment 100%. While we give Payment on Delivery a hard look, we must come up with compelling alternatives.
If I need to sale anything digitally today, or own an e-commerce system, I do not think I will add PoD as a payment method. If I should, then there must be a huge processing fee.
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I think one of the challenges is that with logistics so bad and time consuming, it’s really hard to send back products that don’t meet the order specs or are damaged. I suspect that as logistics gets better, PoD will be less crucial, assuming credit card use grows and consumers have the fraud protection that card companies currently offer.
Every comment here seems to be pointing accusing fingers at poor logistics and lack of trust as the reasons why PoD is surviving in our e-commerce space, it will be important that e-commerce operators make it a point of duty to improve their logistics and make it more efficient and seamless. Then, it can be possible to deal with PoD as @thought having rightly suggested.
The point is, if logistics is great and satisfactory, users will not mind measures imposed by operators to curtail or even end the use of Payment on Delivery.
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Not all are blessed with semantic memory kind sir. 
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I haven’t read the other comments so I’ll just come in and explain why I’m beginning to dread electronic payments.
Came into Nigeria a few weeks ago and wanted to pay my Swift Subscription. The bank kept debiting my account till there were no funds for transaction. I had to call them everyday for 3 weeks before they refunded.
Now, I think twice before making an online payment. I’ll rather spend the time in a queue somewhere than be broke for 3 weeks.