The verdict in three sentences
Cash on delivery (COD) looks great at checkout but bleeds margin through delivery refusals. In Dar es Salaam, prepaid M-Pesa or Tigo Pesa cuts non-deliveries by 25 to 30 % versus COD; in Yaoundé, COD converts 55-70 % but suffers 20-35 % refusals at the door. On net margin per order, prepaid mobile money almost always wins.
The real hidden cost of COD
COD shows a strong checkout conversion because it asks for no commitment: the customer clicks and "will pay later." But one order in four or five is refused at delivery — customer absent, change of mind, no cash. Each refusal costs the round-trip transport, the handling, and the tied-up product.
Prepaid mobile money converts slightly less at checkout, but every order is real: the parcel ships to a customer who has already paid.
| Indicator (Dar es Salaam) | COD | Prepaid M-Pesa/Tigo Pesa |
|---|---|---|
| Checkout conversion | 60-72 % | 52-60 % |
| Non-deliveries | 22-32 % | 3-6 % |
| Non-delivery reduction vs COD | baseline | -25 to -30 % |
| Cash tied up (collection) | high | near zero |
Yaoundé: MTN MoMo and Orange Money against COD
In Yaoundé, COD converts 55-70 % at checkout but faces 20-35 % refusals, while prepaid MTN MoMo or Orange Money converts 50-60 % with under 5 % returns. The reasoning matches Dar es Salaam: a customer who has already paid does not refuse the parcel.
| Method (Yaoundé) | Checkout conversion | Refusal/return rate | Logistics cost/order (FCFA) | Net margin/order (FCFA) |
|---|---|---|---|---|
| COD (pay on delivery) | 55-70 % | 20-35 % | 2,500 | 3,800 |
| MTN MoMo prepaid | 50-58 % | 3-5 % | 1,200 | 6,400 |
| Orange Money prepaid | 50-60 % | 3-6 % | 1,200 | 6,300 |
| Mixed (MoMo + COD fallback) | 62-70 % | 10-15 % | 1,700 | 5,200 |
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Mini case study
Mireille sells homemade goods in Yaoundé, 500 orders a month. On COD at 65 % conversion she books 325 orders but 30 % are refused: 227 delivered at 3,800 FCFA net margin = 862,600 FCFA. Switching to prepaid MTN MoMo at 55 % conversion, she gets 275 orders, 4 % returns, i.e. 264 delivered at 6,400 FCFA = 1,689,600 FCFA. Nearly double the margin, with less converted traffic.
FAQ
Should I drop COD entirely? Not necessarily. A mixed model — mobile money by default, COD offered as a fallback on large baskets — keeps conversion high while capping refusals around 10-15 %.
How do I push customers toward prepayment? Offer a small discount or free delivery on prepaid orders: the logistics savings easily fund the gesture.
Doesn't prepayment scare hesitant buyers? A tracking SMS and a clear return policy reassure as much as COD, without carrying its cost.
What margin gap should I expect? In the example above, monthly net margin rises from about 863,000 to 1,690,000 FCFA — nearly double — thanks to the drop in refusals.
Let's talk about your project. We calibrate your mobile money / COD mix to maximise net margin, not just headline conversion. 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.
