Stakeholders in Nigeria’s e-commerce sector have raised concerns that the widespread use of pay-on-delivery (POD) is undermining the industry’s growth and long-term sustainability.
At the recent E-commerce and Payment Forum hosted by Lagos Business School, industry leaders highlighted how POD, a payment method allowing customers to pay upon receiving goods, has become a costly challenge in the Nigerian market.
Dave Omoregie, Chief Operating Officer of Konga Group, said POD works well in other countries but not in Nigeria due to local market peculiarities. “When customers receive calls on delivery day, many say they were expecting their salary but it hasn’t come yet,” Omoregie explained. This leads to high rates of order cancellations and returns, increasing operational costs and losses for e-commerce companies.
Josephine Sarouk, Managing Director of Bayobab Nigeria, pointed to a deep-rooted lack of trust in online payments. “Many Nigerians prefer shopping in physical stores because they fear online transactions,” she said. Sarouk noted that eliminating POD would require a collective agreement among all e-commerce players to avoid losing customers to competitors.
The forum also discussed external pressures such as the entry of global players like Temu, currency devaluation, and reduced consumer purchasing power, all of which intensify competition and squeeze profit margins.
Despite these challenges, Nigeria’s e-commerce market is projected to grow significantly, with transactions expected to surpass $33 billion by 2026, up from $15 billion in 2023. Payment methods remain diverse, including account-to-account transfers, cash on delivery, and card payments, reflecting a transitional phase in consumer preferences.
Industry experts agree that while POD has helped build initial trust in online shopping, moving toward prepaid models is essential for the sector’s future viability. This shift, however, hinges on cooperation among e-commerce companies to ensure customers do not defect to rivals still offering POD.
