The verdict in three sentences
Cash on delivery (COD) reassures the buyer but eats 6 to 9 margin points through failed deliveries and returns. Prepaid mobile money settles instantly and removes the risk, at the cost of purchase friction. The right answer is not binary: it depends on product category and often resolves into a 30% partial deposit.
The real cost of COD
COD looks free: it is not. Here is what it truly costs a Nairobi store in 2026.
| Item | COD | Prepaid mobile money |
|---|---|---|
| Delivery failure rate | 22 to 30% | 3 to 6% |
| Return fee per failed parcel | 2,500 FCFA | 0 FCFA |
| Collection delay | 7 to 21 days | Instant |
| Transaction fee | 0% (but cash to secure) | 1% |
| Margin impact | -6 to -9 points | -1 point |
| Working-capital need | High | Low |
| Fraud / fake numbers | Frequent | Rare |
A 25% failure rate means one parcel in four comes back: the round trip, repackaging and courier time turn a nominally profitable sale into a dead loss.
Which model by category
The right trade-off depends on basket and return risk. Here is a 2026 decision grid.
| Category | Average basket | Recommended model |
|---|---|---|
| Fashion / textile | 15,000 FCFA | COD tolerated (easy resale) |
| Electronics | 120,000 FCFA | Prepaid near-mandatory |
| Cosmetics | 20,000 FCFA | 30% deposit + balance on delivery |
| Food / fresh | 12,000 FCFA | Prepaid (perishable) |
| Furniture / bulky | 250,000 FCFA | 30% deposit minimum |
| First-time customer | Variable | Prepaid or deposit |
A 30% mobile-money deposit filters fake orders while keeping the psychological comfort of paying the balance on delivery.
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Mini case study
Ibrahim sells electronics in Nairobi, 120,000 FCFA average basket, 100 orders/month. On COD at 28% failure, 28 parcels return: 28 x 2,500 FCFA = 70,000 FCFA in returns, plus capital tied up for 3 weeks. Switching to a 30% deposit (36,000 FCFA collected), fake orders drop to 6%: only 6 returns, or 15,000 FCFA. Monthly saving: 55,000 FCFA, plus ~1,000,000 FCFA of freed working capital. Mobile-money fees (1% on the deposit) cost just ~10,800 FCFA.
FAQ
Is COD really more expensive than prepaid? Yes, once failures are counted. At 22-30% failure and 2,500 FCFA return per parcel, COD cuts margin by 6 to 9 points, versus 1 point for prepaid at 1% fees.
How do I convince a customer to prepay? Offer a 30% deposit rather than 100%, give a small discount (-5%) for prepayment, and show verified reviews. Trust is built with social proof.
What is the COD collection delay? From 7 to 21 days, the time for the courier or aggregator to remit cash. With prepaid mobile money, the money hits your wallet in seconds.
Which categories should stay COD? Fashion and textile, where returns resell easily. For electronics and large baskets, require at least a deposit.
Are mobile-money fees worth it? Absolutely. A 1% fee (1,200 FCFA on a 120,000 FCFA basket) is trivial against a 2,500 FCFA COD return and fraud risk.
Let's talk about your project. We configure your Nairobi checkout with partial deposits and prepaid mobile money to protect your margin. 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.