The verdict in three sentences
Cash on delivery (COD) lifts checkout conversion 15-25 % among first-time buyers, but 15-30 % of those deliveries fail or are returned, on top of 3-6 % cash-handling cost. Prepaid mobile money drops failed delivery below 5 % and costs less, but scares the first purchase. The hybrid deposit (20-30 % prepaid) is often the best compromise: it halves no-shows.
Three models, three risk profiles
| Model | Checkout conversion | Failed/returned delivery | Cash cost | Best for |
|---|---|---|---|---|
| Full COD | +15-25 % | 15-30 % | 3-6 % | New, distrustful customers |
| Prepaid mobile money | Baseline | <5 % | ~1-1.5 % (MoMo fees) | Loyal customers, thin margin |
| Hybrid (20-30 % deposit) | +8-15 % | ~7-12 % | 2-3 % | Medium/high baskets |
COD is not "free": every refused parcel is a paid round-trip, a tied-up product and sometimes damage. That is the hidden cost eroding the margin of stores that swear by COD.
Cost per fulfilled order: the real comparison
On a 20,000 FCFA basket, 40 % gross margin (8,000 FCFA):
| Line (per 100 orders) | Full COD | Prepaid MoMo | Hybrid |
|---|---|---|---|
| Converted orders | 120 | 100 | 112 |
| Failed delivery rate | 25 % | 4 % | 9 % |
| Delivered & paid orders | 90 | 96 | 102 |
| Lost-delivery cost | High | Low | Medium |
| Payment fees | 3-6 % cash | 1-1.5 % | 2-3 % |
| Relative net margin | Base 100 | ~115 | ~125 |
Read it this way: despite lower gross conversion, prepaid and especially hybrid win on net margin thanks to the collapse in lost deliveries.
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Mini case study
Fatou sells apparel in Lomé. On full COD she converts 120 orders per 100 "prepaid-equivalent", but 25 % fail: 90 delivered, with ~90,000 FCFA/month of lost transport cost. Moving to a 25 % hybrid deposit, no-shows fall to ~9 %, she delivers 102 orders on the same base and saves ~60,000 FCFA/month in transport, while collecting cash earlier.
FAQ
Does COD really convert better? Yes at the funnel top: +15-25 % at checkout for new customers, because it removes the fear of paying before receiving. But the "delivered and paid" conversion is far lower.
Why is prepaid cheaper? Failed delivery drops below 5 % and mobile-money fees (1-1.5 %) are lower than cash-handling cost (3-6 %) and COD returns.
What is the hybrid deposit? The customer prepays 20-30 % via mobile money and settles the balance on delivery. That financial commitment roughly halves no-shows.
Should I drop COD entirely? Not necessarily: keep it for new, low-basket customers and push prepaid or hybrid on high baskets and repeat customers.
How do I reduce COD delivery failures? Confirm by WhatsApp before shipping, require a deposit on large baskets, and blacklist numbers that repeatedly refuse.
Let's talk about your project. We configure COD, prepaid and hybrid deposit based on your margin and delivery zone. WhatsApp +221 77 596 93 33.
Mohamed Bah
Fondateur, Kolonell
Passionate about digital and entrepreneurship in Africa, Mohamed has been helping Sénégalese businesses with their digital transformation since 2020. Founder of Kolonell, he believes every SME deserves a professional and accessible online présence.
