The verdict in three sentences
In Lagos, cash on delivery (COD) reassures but costs dearly: 15 to 35 % rejections and returns, plus cash-handling overhead. Prepaid mobile money drops returns below 5 % and near-eliminates fraud. The hybrid model — a 20-30 % deposit then balance on delivery — captures the best of both.
COD, prepaid or hybrid: the real cost
Each model shifts the risk. Look at the numbers before choosing.
| Criterion | Full COD | Prepaid momo | Hybrid (deposit) |
|---|---|---|---|
| Rejection / return rate | 15-35 % | < 5 % | 6-10 % |
| Fraud / non-payment | High | Near zero | Low |
| Cash-handling overhead | 500-1,500 FCFA | 0 | Reduced |
| Conversion impact | Positive | Negative if sole | Neutral to positive |
| Collection timing | On delivery | Immediate | Split |
| Cash flow | Late | Immediate | Partly immediate |
COD boosts conversion but explodes returns; prepaid alone reassures fewer buyers; hybrid keeps trust while filtering out non-serious orders.
Choosing by product category
The right model depends on basket size and return risk.
| Product category | Recommended model | Deposit |
|---|---|---|
| Fashion / apparel (try-on) | Hybrid | 20-30 % |
| Electronics (high basket) | Prepaid or hybrid | 30-50 % |
| Groceries / fresh | COD or prepaid | 0-20 % |
| Cosmetics / small baskets | COD accepted | 0-20 % |
| Custom / special order | Prepaid | 50-100 % |
A clearly displayed COD surcharge of 500-1,500 FCFA gently steers customers toward prepaid without alienating them.
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Mini case study
Chidi sells tech accessories in Lagos: 200 orders per month, average basket 30,000 FCFA, gross margin 35 % (10,500 FCFA). On full COD, 28 % fail: 56 returns, each costing 1,200 FCFA of lost run plus tied-up stock, i.e. about 67,200 FCFA in direct costs and 1,176,000 FCFA in evaporated sales. By requiring a 30 % momo deposit (9,000 FCFA), failures fall to 8 %: only 16 returns. He recovers 40 more delivered orders, i.e. 420,000 FCFA of extra margin per month, and his cash flow banks 1,800,000 FCFA of immediate deposits.
FAQ
Is COD still essential in Lagos in 2026? For many customers, yes, trust still runs through paying on receipt. But offering it alone exposes you to 15-35 % returns: frame it with a deposit or surcharge.
How do I cut delivery rejections? A 20-30 % mobile deposit removes non-serious orders and drops the failure rate from 15-35 % to 6-10 %. Confirm every order before dispatch.
Does prepaid scare customers away? Used alone, it can make cautious buyers hesitate. That is why hybrid works better: a small deposit to commit, balance on delivery to reassure.
Can I charge a COD surcharge? Yes, a 500-1,500 FCFA surcharge shown at checkout is common and legitimate. It covers cash-handling cost and nudges toward prepaid.
Which model for high-basket electronics? Prepaid or hybrid with a 30-50 % deposit. The return risk on a 100,000 FCFA COD basket is too costly for margin.
Let's talk about your project. We configure COD, prepaid and hybrid deposits per category. 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.
