More than a decade after e-commerce began to take root in Nigeria, industry leaders now say one of the sector’s earliest features—Pay-on-Delivery (POD)—has become a major barrier to growth, profitability, and long-term sustainability.
This concern was a central theme at the E-commerce and Payment Forum, hosted by the Lagos Business School, where operators and analysts stated that POD, initially introduced to win over skeptical consumers, is now hindering progress and deepening losses for platforms.
At the heart of the problem is a lack of trust, a long-standing challenge in Nigeria’s digital commerce space. From concerns about delivery delays to fears of receiving counterfeit, damaged, or entirely different products, many Nigerian consumers have embraced POD not just for convenience but as a defensive strategy.
Against this backdrop, POD serves as the only quality-control checkpoint in a market where return policies are often weak or poorly enforced, and customer service systems are not always responsive.
A Legacy Feature That Refuses to Go Away
Dave Omoregie, Chief Operating Officer at Konga Group, said POD was a strategic decision made when e-commerce was still unfamiliar to many Nigerians. But he admitted that the decision has created operational headaches and unsustainable costs.
“At the point when e-commerce was introduced to the Nigerian market, there were some fundamental mistakes, and one of them was putting forward pay-on-delivery,” he said.
“Pay-on-delivery works outside Nigeria, but doesn’t work here because by context, the way we think is very different. Somebody orders a product, and on the day of delivery, you hear excuses like, ‘I was expecting my salary yesterday, and it hasn’t come.’”
Omoregie noted that outside Nigeria, where digital payments and trust are stronger, POD has been phased out. But in Nigeria, even major players like Konga and Jumia have been unable to ditch the model due to competitive pressure and customer expectations.
For stakeholders, eliminating POD is not just a business decision—it is a coordination challenge. Josephine Sarouk, Managing Director of Bayobab Nigeria, argued that one company alone cannot switch it off without risking mass customer loss.
“Turning off Pay-on-Delivery won’t work unless all the players in the industry agree to do it at the same time,” she said.
“The problem is trust. People would rather go to a physical supermarket and hold the product in their hands than take a risk online. And we sometimes underestimate how deeply that distrust runs.”
The issue, Sarouk explained, is not limited to buyers. Even retailers and delivery agents, many of whom operate informally, often lack trust in the platforms themselves or fear not being paid on time.
The problems run deeper than customer psychology. The forum also highlighted how external shocks are compounding pressures on e-commerce businesses. According to Olu Akanmu, Executive in Residence at Lagos Business School, operators are now grappling with the effects of the naira devaluation, which has shrunk consumer purchasing power. Soaring inflation has reduced the size of shopping baskets. Meanwhile, the aggressive entry of global players like Temu is flooding the market with cheap imports and tech-driven logistics.
Akanmu also warned of the increasing commoditization of the sector, where most platforms now sell the same items, focus heavily on price competition, and lose margin strength in the process. This, he said, is weakening the industry’s profitability and placing even more pressure on local e-commerce operators.
Still a Growing Market
Despite these issues, Nigeria’s e-commerce sector continues to expand. A new report by PYMNTS Intelligence projects that business-to-consumer (B2C) online transactions will hit $33 billion by 2026, up from $15 billion in 2023.
While e-commerce accounts for just 6% of Nigeria’s total retail activity, it’s one of the highest rates in Africa and shows strong potential given the country’s young, mobile-first population.
The report notes that Nigeria’s e-commerce payments landscape remains fragmented. Consumers still rely heavily on account-to-account (A2A) transfers, debit and credit cards, and cash on delivery. Although digital wallets and Buy-Now-Pay-Later (BNPL) options are emerging, they haven’t yet gained enough trust or traction to displace more traditional preferences.
While stakeholders say the time to act is now, it is believed that the needed change will require more than abandoning POD. It will demand a full reset in how platforms build trust, manage logistics, and enforce quality assurance as the e-commerce sector braces for more competition and tougher economic conditions.
