Pay-on-Delivery Hindering Nigeria’s E-commerce Growth – Industry Stakeholders Raise Concerns

Stakeholders in Nigeria’s e-commerce sector have identified the Pay-on-Delivery (POD) system as a key factor stalling the industry’s growth, describing it as a “fundamental mistake” made at the early stages of online shopping in the country.

Speaking at the E-commerce and Payment Forum organized by the Lagos Business School (LBS), experts argued that the continued use of POD, though once necessary, now poses a major threat to the sustainability and profitability of local e-commerce giants like Jumia and Konga.

Why Pay-on-Delivery Is No Longer Working

According to Dave Omoregie, Chief Operating Officer at Konga Group, while POD may be effective in some global markets, it has proven inefficient in Nigeria due to the country’s unique consumer behavior.

“One of the early mistakes made when e-commerce launched in Nigeria was introducing Pay-on-Delivery,” Omoregie said. “Outside Nigeria, POD works. But here, people change their minds at the point of delivery, telling you they haven’t received their salary or no longer want the item.”

He explained that this cultural behavior significantly increases order cancellations and reduces business efficiency.

Josephine Sarouk, Managing Director of Bayobab Nigeria, stressed that lack of consumer trust remains a major challenge for online retailers.

“Many Nigerians still prefer visiting physical supermarkets over shopping online. Trust is a big issue, and sometimes, even the retailers are afraid to take risks,” she said.

Sarouk added that eliminating POD will only be successful if all players in the industry agree to move in the same direction.

In his remarks, Mr. Olu Akanmu, Executive in Residence at LBS, outlined a number of external threats to Nigeria’s e-commerce landscape, including:

Entry of global players like Temu

Devaluation of the Naira leading to reduced consumer purchasing power

Commoditization of services, where businesses compete mainly on price, eroding profit margins

“These factors require local e-commerce companies to rethink their strategies,” Akanmu emphasized.

The Future Still Looks Bright

Despite the hurdles, a 2025 PYMNTS Intelligence report projects that Nigeria’s e-commerce transactions could hit $33 billion by 2026, up from $15 billion in 2023.

The report noted that although online sales currently represent only 6% of total retail in Nigeria, this is one of the highest figures in the Middle East and Africa region.

It also revealed that Account-to-Account (A2A) payments, Cash on Delivery, and Debit/Credit cards remain the top payment methods used by Nigerian online shoppers.