Cash on Delivery Best Practices in Kenya: Reduce Risk, Boost Conversions, and Improve Last-Mile Success
Introduction
Cash on delivery (COD) remains one of the most important payment methods for e-commerce in Kenya. Despite rapid growth in mobile money and card acceptance, consumers—especially outside urban centres—still prefer paying when they receive goods. For logistics and e-commerce operators, COD brings higher conversion but also greater operational complexity: failed deliveries, cash reconciliation headaches, security risks and higher returns. This guide sets out practical, Kenya-focused cash on delivery best practices that reduce risk, improve customer experience, and boost margins. Real-world examples and actionable steps are provided—drawing on insights from last-mile operations across all 47 counties, including urban hubs like Nairobi and Mombasa and more remote rural routes.
Why COD Still Matters in Kenya
Several local factors explain COD’s durability in Kenya:
- M-Pesa ubiquity but cash preference: While M-Pesa is widely used, many customers still want physical inspection before payment—especially for apparel, electronics and second-hand items.
- Trust and returns: New online shoppers often choose COD because it feels safer. They can inspect before paying and request an immediate return if something’s wrong.
- Last-mile realities: In peri-urban and rural areas, network coverage, return logistics, and limited banking access make COD practical.
Main Challenges of COD in Kenya
- Higher failed delivery rates: Incorrect addresses, recipient unavailability, and refusals increase costs.
- Cash handling risks: Security issues for drivers, theft risk, and manual reconciliation burdens.
- Operational complexity: Reverse logistics for returns, longer settlement times, and reconciliations across agents and payment channels.
- Seasonal peaks: Holidays and sale events in Kenya intensify pressure on COD processing and cash float management.
COD Best Practices — Actionable Steps for Kenyan E-commerce & Logistics Teams
1. Pre-delivery customer verification
Reduce failed deliveries before a driver leaves the hub:
- Confirm orders by SMS and call within 2–4 hours of dispatch. Use clear messages in English and Swahili.
- Require a working phone number and offer WhatsApp confirmation—many Kenyan customers prefer WhatsApp for communication.
- Provide clear time windows (e.g., 9am–1pm) and send an SMS 1 hour before arrival.
2. Make addresses machine- and human-friendly
Kenya’s addressing can be a challenge because many areas lack formal house numbers:
- Use landmarks, digital pin drops, and local language descriptors (e.g., “near Gikomba market” or “next to M-Pesa shop”).
- Train agents to ask for landmarks at checkout and allow customers to share live locations via WhatsApp.
- Integrate mapping and geocoding in checkout and in your delivery app.
3. Offer hybrid payment flows (COD + M-Pesa)
Reduce cash handling while preserving the convenience of COD:
- Allow drivers to accept M-Pesa at delivery—this reduces cash float and security risk.
- Promote partial prepayment discounts (e.g., 10% off when customers pay a deposit via M-Pesa). This increases commitment and lowers refusal rates.
- Use prompt pay links (STK Push) during checkout to encourage digital payment while still offering a COD fallback.
4. Standardize secure cash handling and rider training
Protect your team and your money:
- Issue tamper-evident cash bags and clearly defined cash custody policies.
- Train drivers on safe routes, avoiding cash pickups in high-risk zones after dark, and how to use M-Pesa where possible.
- Alleviate security exposure with cash pick-up schedules and secure transfer points.
5. Reduce refusals with clear return and inspection policies
Make returns transparent to reduce disputes at delivery:
- Provide clear photos, size guides and descriptions online to set expectations.
- Offer immediate testing or inspection at delivery for electronics and high-value items, with simple return workflows if items are rejected.
- Define an easy returns SLA and communicate it before dispatch—customers are less likely to refuse when they know returns are simple.
6. Optimize routing and consolidate deliveries
Lower per-delivery costs and driver time:
- Group COD orders geographically to reduce multiple cash pickups in one area.
- Use dynamic routing to cluster deliveries during peak days, reducing rider time and exposure.
7. Automate reconciliation with API integration
Manual reconciliation causes delays and errors:
- Integrate your logistics platform with payment channels (M-Pesa APIs, bank APIs) and your courier’s system to reconcile COD collections automatically.
- Royal Truck Star Courier’s API can push POD (proof of delivery) and cash collection data in real time to merchant systems for daily reconciliation.
8. Monitor KPIs and iterate
Track the right metrics and run pilots:
- Key KPIs: COD conversion rate, failed delivery rate, cash collection accuracy, days-to-settlement, and return rate.
- Run A/B tests—e.g., test prepayment incentives versus standard COD to find the optimal mix for your customer base.
Practical Examples and Kenya-Focused Case Studies
Example 1: Reducing failed COD deliveries for a Nairobi fashion retailer
A mid-sized Nairobi apparel shop was seeing a 20% failed-delivery rate for COD orders concentrated in Eastlands and peri-urban Kiambu. By implementing pre-delivery WhatsApp confirmations, offering a 5% deposit via M-Pesa at checkout, and clustering deliveries by neighbourhood, they reduced failed deliveries to 12% within two months. Cash-handling incidents dropped after drivers were required to deposit cash at central collection points daily.
Example 2: Hybrid COD + M-Pesa model for a Mombasa electronics seller
An electronics vendor on the coast integrated an M-Pesa STK Push at checkout and trained drivers to accept M-Pesa on delivery. Adoption grew from 10% to 45% of COD orders paying by M-Pesa within six weeks. The result: improved security, faster settlement, and fewer reconciliation errors.
Industry example: Lessons from major players
Large e-commerce players in Kenya have long invested in logistics and payment blends (COD, M-Pesa, card) and robust last-mile networks. Their success shows the importance of technology integration, strong customer communication and flexible payment options tailored to different regions across the 47 counties.
How Royal Truck Star Courier Helps You Master COD
At Royal Truck Star Courier, we operate across all 47 counties and understand Kenya’s unique last-mile environment. Our services help merchants manage COD efficiently:
- Real-time tracking & POD: Digital proof of delivery and instant status updates reduce disputes.
- API integration: Seamless reconciliation between order management, payment channels and our courier platform.
- Warehousing & micro-fulfillment: Localised hubs reduce transit times and enable cluster deliveries.
- Cash handling best practice: Proven SOPs, secure cash-transfer points and trained riders to minimise exposure.
We work with merchants to design COD policies and pilot programs—whether that’s a partial prepayment incentive, M-Pesa-first strategy, or a returns SLA tailored to sensitive categories.
Checklist: Quick COD Readiness Audit
- Do you confirm orders via SMS/WhatsApp before dispatch?
- Is your checkout collecting reliable phone numbers and landmarks?
- Can drivers accept M-Pesa or STK Push at delivery?
- Do you have daily cash reconciliation and secure deposit processes?
- Are your delivery routes clustered for COD orders?
- Are KPIs tracked and reviewed weekly?
Conclusion and Call to Action
Cash on delivery will remain a key part of Kenyan e-commerce for the foreseeable future. By combining strong customer communication, secure cash-handling procedures, hybrid payment options, and robust API-driven reconciliation, merchants and couriers can unlock the benefits of COD while controlling costs and risks. Whether you’re a startup selling in Nairobi or a retailer scaling across the 47 counties, implementing these COD best practices will reduce failed deliveries, improve cash flow, and earn customer trust.
Royal Truck Star Courier is ready to partner with you—providing last-mile expertise, real-time tracking, API integration and warehousing solutions tailored to Kenya’s logistics landscape. Contact us to run a COD pilot, integrate our API, or audit your current workflows and start improving COD performance today.
