The verdict in three sentences
Last-mile delivery is the first line item that eats an online store's margin in Lagos, and a flat rate loses money on every distant order. The right 2026 decision is not free vs paid delivery, but charging by zone and weight with a free-shipping threshold. A 12,000 FCFA (roughly 20 USD) average cart with free delivery costing 3,000 FCFA of real cost is 25% of margin gone before you even count packaging.
What the last mile actually costs in Lagos
The last mile is the final leg between your warehouse or shop and the customer's door. It is the most expensive part of the whole logistics chain because it is individual, un-pooled and hostage to Lagos traffic. Here are the 2026 order-of-magnitude figures by zone and mode (NGN, with FCFA equivalents for regional comparison).
| Zone / mode | Cost per delivery (NGN) | Avg. delay | Note |
|---|---|---|---|
| Okada / intra-area dispatch | 1,500 - 2,500 | 30-60 min | Best for small parcels |
| Intra-city (Ikeja, Lekki) | 2,000 - 4,000 | 2-5 h | E-commerce standard |
| Outskirts (Ikorodu, Ajah) | 3,500 - 6,000 | 4-8 h | Distance + bridge traffic |
| Guaranteed same-day express | 3,000 - 5,000 | < 3 h | Urgency surcharge |
| Bulky item (appliances) | 5,000 - 10,000 | 1 day | Needs van/keke |
| Pickup point / in-store | 0 - 800 | Customer comes | Margin preserved |
The key point: the gap between 2,000 and 6,000 NGN by zone is bigger than the margin on many products. Charging a single 2,500 NGN flat rate means subsidizing far-away customers with money from nearby ones.
Flat rate vs zone grid: the margin impact
Compare two models on an average cart of 20,000 NGN with 25% gross margin, i.e. 5,000 NGN of margin before delivery.
| Scenario | Real delivery cost | Charged to customer | Net margin left |
|---|---|---|---|
| Flat 2,500, nearby customer | 1,800 NGN | 2,500 NGN | 5,700 NGN |
| Flat 2,500, outskirts customer | 5,500 NGN | 2,500 NGN | 2,000 NGN |
| Free delivery, outskirts | 5,500 NGN | 0 NGN | -500 NGN (loss) |
| Zone grid, outskirts | 5,500 NGN | 5,500 NGN | 5,000 NGN |
| Free over 45,000, cart 50,000 | 5,500 NGN | absorbed | ~6,000 NGN |
The free-shipping threshold model pushes average cart value up while protecting margin. The threshold is simple to compute: average delivery cost divided by margin rate. At 3,000 NGN average cost and 25% margin, you need 12,000 NGN of margin, i.e. a cart around 40,000-45,000 NGN to absorb delivery without loss.
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Mini case study
Blessing runs an online cosmetics store in Lagos, average cart 24,000 NGN, 200 orders a month, 28% gross margin. She offered free delivery everywhere at her own cost. Average delivery cost: 3,800 NGN. Across 200 orders that is 760,000 NGN of delivery absorbed every month, against 1,344,000 NGN of total gross margin — delivery ate 57% of her margin.
She switches to a grid: free above 45,000 NGN, otherwise charged by zone (2,500 intra-city, 5,500 outskirts). Three months later: average cart rises to 31,000 NGN (customers bundle purchases), 30% of orders hit the free threshold, and net delivery cost she absorbs drops to 250,000 NGN/month. She recovers roughly 510,000 NGN of monthly margin.
FAQ
Should you always charge for delivery? No. Free delivery is a powerful marketing lever if conditioned on a threshold that guarantees positive margin. Below a low cart value in Lagos, offering it usually destroys profit.
How do you set the free-shipping threshold? Divide your average delivery cost by your margin rate, then add a safety buffer. With 3,000 NGN cost and 25% margin, aim for a threshold around 45,000 NGN to stay profitable.
Does a pickup point really cut costs? Yes, sharply: in-store or pickup-point collection costs 0 to 800 NGN versus 2,000-6,000 NGN door-to-door, up to 90% saved on the last mile.
Is okada dispatch reliable for e-commerce? For small intra-area parcels, yes: 1,500 to 2,500 NGN and 30-60 minutes. The main risk is tracking and proof of delivery, secured via a photo or SMS confirmation.
What software handles a zone grid? A well-built store automatically computes fees from the area entered at checkout. It is a standard module we integrate into every e-commerce site we deliver.
Let's talk about your project. We configure your zone-based delivery grid and free-shipping threshold to protect your margin from the very first order. 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.
