Stakeholders in Nigeria’s e-commerce space have raised serious concerns over the continued use of pay-on-delivery (POD), describing it as a fundamental error made at the early stage of the industry that has now become a major obstacle to its growth and sustainability.
Speaking at the E-commerce and Payment Forum organized by the Lagos Business School (LBS), industry leaders noted that although the POD system was introduced to encourage early adoption and trust, it has now become deeply entrenched and difficult to phase out. The practice, which allows customers to pay for online purchases only upon delivery rather than at the point of ordering, was initially adopted to allay consumer fears but is now causing significant operational challenges.
Chief Operating Officer of Konga Group, Dave Omoregie, emphasized that while pay-on-delivery may work in other markets, it is proving unsuitable for Nigeria and much of Africa due to unique market dynamics. He explained that the assumption that customers would always follow through with their purchases often clashes with economic realities in the country. As he put it, a typical scenario involves a customer placing an order and, when contacted for delivery, responding that they haven’t received their salary or are no longer interested, creating a burden for the business.
Omoregie further highlighted that such inconsistencies place e-commerce platforms in a difficult position. The fear of losing market share to competitors keeps major players like Jumia and Konga locked into the practice, even though it undermines the financial sustainability of their operations.
Echoing his sentiments, the Managing Director of Bayobab Nigeria, Josephine Sarouk, attributed the persistence of pay-on-delivery to a deep-rooted lack of trust among Nigerian consumers. She observed that many Nigerians prefer the assurance of walking into a physical store over the uncertainty of online shopping. According to her, the challenge of building trust requires more than just convenience — it demands collective action and consistency across the entire e-commerce landscape. Sarouk argued that disabling pay-on-delivery would not be effective unless all industry players adopt the change simultaneously.
Opening the forum, Executive in Residence at Lagos Business School, Mr. Olu Akanmu, set the tone for the discussions by outlining the broader pressures currently confronting the Nigerian e-commerce industry. He pointed to the entry of global competitors like Temu, which has intensified market competition and shifted customer expectations. Coupled with the economic strain from the naira’s devaluation and shrinking consumer purchasing power, these pressures are forcing e-commerce businesses to re-evaluate their strategies.
Akanmu also noted that the industry is witnessing increasing commoditization, where many players are offering similar services and competing primarily on price. This trend, he warned, is eroding profit margins and threatening long-term viability. According to him, it is imperative for Nigerian e-commerce operators to adopt innovative strategies that can distinguish them in a crowded market and improve operational efficiency.
In conclusion, the forum brought to light the urgent need for a collective rethinking of the e-commerce model in Nigeria, particularly with regard to trust-building and the gradual phasing out of pay-on-delivery, if the industry is to achieve sustainable growth.
