How COD works
Cash on delivery lets the customer order without paying. The shop confirms the order, the courier carries the goods and collects the money at the door, and the cash is remitted back to the merchant after the delivery run is reconciled. Nothing is guaranteed until that handover happens — the customer may refuse the parcel, be absent, or simply have changed their mind.
That single difference ripples through the business. Money arrives days after the order rather than at the moment of sale, so cash flow depends on the courier’s settlement cycle. Stock is committed to orders that may come back. And every operational number that a prepaid shop can take for granted — revenue, returns, margin — has to be recalculated after delivery rather than at the point of order.
Why COD matters
In Nepal and much of South Asia, COD is the default rather than an alternative. Many customers do not hold a card usable online, and among those who do, plenty still prefer to see the product before parting with money. Refusing COD in these markets is not a payments decision; it is a decision to sell to a much smaller audience.
It also changes what your advertising reports mean. A conversion fires when the order is placed, so the platform sees revenue that has not yet been collected and may never be. Bidding on that figure means bidding on orders that will be refused at the door.
Common mistakes with COD
The biggest is treating a placed order as a completed sale. Refusals and failed deliveries are far more common with COD than with prepaid orders, and a business that plans stock and ad budget on order value alone will keep wondering where the money went.
The second is doing nothing to confirm intent. Orders placed casually, sometimes with a wrong number or a joke address, are cheap to place and expensive to deliver. A confirmation call or chat message before dispatch removes a good share of them. The third is a reporting one: reporting COD revenue in the same column as prepaid revenue hides which channels bring buyers and which bring browsers.
How to act on it
Keep COD, but stop treating it as free. Confirm orders by phone or chat before dispatch, especially first-time customers and higher-value baskets. Where you can, nudge towards prepayment with a small incentive or faster delivery rather than by removing the option.
Then get the measurement right. Send a separate delivered or paid event once the cash is actually collected, and optimise campaigns on that rather than on orders placed — this is exactly the kind of gap a careful analytics and tracking setup is meant to close. Track your return rate for COD and prepaid separately, and review it by product, by city and by traffic source, because refusals are rarely spread evenly across any of the three.