Cash on Delivery: Pros and Cons for Online Sellers in Pakistan

Cash on delivery, usually shortened to COD, means the customer pays the person who hands over the parcel. For many Pakistani buyers it is the preferred way to shop online because they see the product before they pay. For sellers it is both the reason many orders happen and the source of many headaches. This guide lists the honest advantages and drawbacks so you can plan around them.

Why customers like COD

• They do not have to trust a stranger with money before the product arrives.
• They do not need a bank card or a mobile wallet to buy.
• They can look at the item and decide at the door.
• If something is clearly wrong, they can refuse the parcel instead of chasing a refund.

For a new seller with no reviews and no reputation, these points matter. COD lowers the barrier to the first order, which is often the hardest one to get.

What COD gives the seller

• More orders from careful buyers who would not prepay.
• A simple checkout with no payment gateway to set up.
• A natural way to build trust, because the customer only pays for what actually arrives.

The drawbacks sellers feel

• Refused parcels: if the customer changes their mind, is not at home or will not pay, the order fails and the trip still has to be paid for.
• Delayed cash: money reaches you only after delivery and after the cash has been settled, not when the customer clicks order.
• Fake or careless orders: because nothing is paid upfront, some orders are placed without real intent to buy.
• Handling cash: someone has to collect it, count it and pass it on safely.

The costliest of these is the refused parcel. Nobody earns from it, and delivery has a cost. The guide on refused orders and returns explains how to reduce them.

How to manage the downsides

1. Confirm every order with the customer by phone or WhatsApp before you place it. How to confirm cash-on-delivery orders shows a simple way.
2. Describe the product honestly so the customer knows what to expect at the door.
3. Put the full delivery address and a working phone number on every order.
4. Price in the cost of occasional failed orders instead of assuming every order succeeds.
5. Keep a record of which orders failed and why, so you can spot patterns.

Is COD right for you

If your customers are new to buying online and your products are modest in price, COD is usually the practical choice, and the extra effort in confirming orders pays for itself. For high-value items or special orders, you may want to ask for part payment first through a method your customer trusts, if your selling channel allows it.

Whichever way you sell, check your numbers before you promise a price. How to calculate your profit on a cash-on-delivery order walks through it step by step.

A worked example: what one refused order does to your profit

Numbers make the risk concrete. These are example amounts only; your own costs will differ. Imagine you sell a product to a customer for Rs 1,500. The shop's price is Rs 900, delivery is Rs 250 and the platform fee is Rs 50. After those costs you keep Rs 300 on a delivered order.

Now imagine a second customer refuses the parcel at the door. Nothing is collected, so there is no sale to share out, but the rider still made the trip and the delivery has to be accounted for. If that trip costs you Rs 250, one refused order has taken back almost all the profit of the good order next to it.

• Profit on a delivered order in this example: Rs 300.
• Cost of one refused order in this example: about Rs 250 of delivery.
• So two orders, one delivered and one refused, leave you with Rs 50, not Rs 600.

This is why confirming orders and describing products honestly matters more under cash on delivery than any clever advertising trick. The exact charges on Shipify are shown before you place an order and the return rules are in the Return and Refund Policy.

When part payment first can make sense

For an expensive or made-to-order product, asking the customer for a part payment before you place the order reduces the chance of a refusal. It works only if the customer trusts you and has an easy, safe way to pay. For everyday low-value items it can scare buyers away, so use it selectively and say clearly what the payment is for and when it is returned or counted.

Common questions