Cash on delivery is why a lot of Pakistani ecommerce businesses can sell at all, buyers who’d never enter card details on an unfamiliar site will happily order knowing they only pay once the parcel’s in hand. But that same trust mechanism quietly eats into margins in ways that don’t show up until someone actually sits down and calculates true cost per order.
Every failed COD delivery still costs something. The rider fee often applies whether or not the parcel gets accepted. Packaging is already spent. Return shipping back to the warehouse is a second charge on top of the first. And the seller carries all of it, because the buyer never paid a rupee to place the order in the first place. Multiply that across a return rate that, for smaller or newer sellers, regularly runs into double digits, and it becomes a real chunk of monthly revenue disappearing quietly.
There’s also the cash handling side, which gets less attention. Couriers typically hold COD collections for a settlement period before transferring to the seller, sometimes a week or more, which creates a cash flow gap that catches new sellers off guard when they’re trying to reorder stock.
Ways sellers are managing this
- Building courier and packaging fees into the listed price rather than absorbing them silently
- Offering a small discount for prepaid orders through JazzCash or Easypaisa to shift some volume off COD
- Confirming orders by call or WhatsApp before dispatch to filter out ones unlikely to be accepted
Working out the real number isn’t complicated, just rarely done. Take total orders shipped in a month, subtract the ones that came back unpaid, then add up what each failed one actually cost in rider fees, wasted packaging, and return shipping. Divide that total across every successful sale and the true cost per order is often two or three times higher than sellers assume when they’re only looking at the ones that went through.
Ikonix Marketing Agency has helped a couple of clients rework their pricing structure once they saw their actual COD return numbers laid out, adjusting margins and adding a light prepaid incentive rather than trying to eliminate COD altogether, which usually isn’t realistic given how much of the market still expects it.
COD isn’t the enemy here, it’s the reason most of these businesses have customers in the first place. But treating it as a free option instead of a cost with a real number attached is how healthy looking sales end up as a thin or negative margin by month end.