In Nigeria today, a growth-oriented economy of a globally competitive e-commerce grocery, CoD has assumed central and immense importance as a payment option that has harmonized and integrated the traditional cash system into the digital world trade. This paper focuses on the operation of how the Cash on Delivery Work, its relevance to Nigeria, and the issues and prospects involved.
What is Cash on Delivery?
Cash on Delivery is a system of payment whereby the buyer pay for goods or services to the seller at the point of delivery. It also gives the buyers a chance to access their purchases before they make payment thus enhancing the trust between consumers and retailer.
The Popularity of CoD in Nigeria
Currently, Nigerians have embraced CoD to a great extent. “E-commerce adoption: The Nigeria perspective” found that out of 1000 people surveyed in 2018, 70% of the respondents chose CoD over online payments, showing the high and relay on this method.
By 2022, the picture was also different, with bank transfers dominating 29%, debit cards also popular with 21%, as well as credit cards with 17% and CoD was also chosen by 17% of consumers.
This change has portrayed an overall trend of diversification in the mode choice of payments, although CoD continues to be a useful method for the buyers.
How Does Cash on Delivery Work?
- Order Placement: Customers buy things on the internet and pick CoD as the payment mode while checking out.
- Order Confirmation: Upon agreement, the retailer proceeds to actualization of the order and has it ready for delivery.
- Shipping: The product is delivered at the customer’s preferred location.
- Delivery and Payment: The adapted payment structure entails the customer paying in cash, in most cases, after the product has been delivered and examined by the customer or through mobile POS systems.
- Payment Collection: The delivery agent takes the payment and forwards it to the retailer.
Advantages of CoD
- Trust Building: It enables customers to check products before they make payment – this erases much of the fear of the unknown.
- Accessibility: Serves the population that still does not use or mistakenly refrains from using digital payments.
- Market Expansion: Let retailers base where electronic payment methods are not common to access the market within and outside their region/area easily.
Challenges Associated with CoD
- Logistical Complexities: The overall control of cash, as well as returns, can be quite challenging for both the retailers and the logistics companies.
- Higher Return Rates: Consumers may decline to accept products delivered to their doorstep implying higher returns rates and consequently; the costs.
- Cash Handling Risks: Presents security risks in making cash deliveries by delivery personnel and is thus not advisable.
E-commerce Platforms and CoD in Nigeria
Just like Jumia, a leading e-commerce platform, CoD has been recently adopted by giant organisations as one of the available payment options. This has been rather helpful in getting the customers who, at some point, do not want to or are not in a position to pay for something online.
Also, there is Selligate, which provides CoD logistics services that help organizations deal with CoD orders in Nigeria.
The Future of CoD in Nigeria
Although other modes of payment are increasingly becoming popular in Nigeria, CoD cannot be swept aside in the Nigerian e-commerce sector. Its future may include the inflow of advanced technologies, such as integration with digital systems, for the purpose of increasing its effectiveness and durability. For example, there are businesses that are using mPOS as a strategy where customers have to pay through cards on delivery which combines digital modes of payments with the safety of COD.
Conclusion
However, Cash on Delivery has continued to be an element of Nigerian e-commerce platforms due to its reliability and acceptability amongst the populace. Familiarity with its working, advantages, and disadvantages is crucial for organizations that want to operate and thrive in this thriving economy. As more forms of commerce go digital, CoD remains in the position to extend the legacy of cash-based business into the realm of the digital economy.
