Introduction
Cash on delivery (COD) remains one of the most important payment methods for Kenyan e-commerce. For many shoppers — especially outside major cities — COD reduces trust risk, lowers perceived purchase friction, and drives conversion. But COD also brings operational complexity: higher returns, cash handling risks, reconciliation headaches, and increased last-mile costs.
As Kenya's leading e-commerce logistics partner operating across all 47 counties, Royal Truck Star Courier has worked with hundreds of retailers to design and scale reliable COD operations. In this post we share practical, Kenya-specific cash on delivery best practices to help merchants, logistics teams, and marketplaces reduce risk, improve customer experience, and protect margins.
Why COD Still Matters in Kenya
There are three Kenya-specific reasons COD continues to be essential:
- Trust and buying behavior: In many regions buyers prefer to see goods before paying, especially for apparel, electronics, and goods from smaller merchants.
- Address and identity gaps: Informal addressing and reluctance to share bank account details make electronic prepayment more difficult in rural areas.
- Mobile money coexistence: Although M-Pesa is ubiquitous, customers often prefer COD for certain product categories or when buying from new sellers.
Top Cash on Delivery Challenges in Kenya
Before laying out best practices, it's important to acknowledge the realities Kenyan businesses face with COD:
- High failed-delivery and return rates: Unavailable customers, incorrect addresses, or order cancellation at delivery raise operational costs.
- Cash security and reconciliation: Physical cash creates theft and miscount risks and complicates daily banking reconciliation.
- Fraud and chargebacks: Fake orders, collusion with delivery agents, and identity spoofing increase losses.
- Longer cash conversion cycles: Time between sale and banked cash slows working capital turnover.
Cash on Delivery Best Practices (Actionable Steps)
1. Design a clear COD policy
Define value limits, acceptable product categories, return windows, and agent protocols. Communicate the policy on product pages during checkout so customers understand expectations (eg, ID checks for high-value items).
2. Use hybrid payment options and encourage partial prepayment
Encourage customers to pay a small deposit via M-Pesa or card at checkout. Even a 10–20% partial payment reduces no-shows and fraud while preserving the customer's sense of security. Offer incentives such as a small delivery discount for partial prepayment.
3. Verify contacts and addresses before dispatch
- Use phone validation and SMS confirmations to reduce failed deliveries.
- Employ geocoding and address-standardization tools to map informal addresses. In Kenya, referencing landmarks or estate names often helps ensure accurate routing.
- Provide clear, printable delivery notes for drivers with directions and alternative contact points.
4. Offer tight delivery windows and reminder messages
Allow customers to select delivery slots and send timely reminders (SMS and WhatsApp). A confirmed time-window increases the likelihood the customer will be home and reduces wasted trips.
5. Implement robust proof-of-delivery (POD)
Require delivery agents to capture:
- Recipient name and phone
- Signature or WhatsApp photo of recipient with the package
- Time-stamped GPS coordinates
These artifacts are essential for dispute resolution and reconciliation. Royal Truck Star Courier's real-time tracking and POD capture via API ensure secure, auditable records for every COD drop.
6. Train agents and standardize cash-handling SOPs
Invest in regular training: tamper-proof cash bags, two-person handover for large amounts, daily cash drop-offs at secure points, and strict documentation. Agents should be incentivized to follow SOPs with performance-based pay and audits.
7. Reconcile daily and automate accounting
Set strict cut-offs for daily cash collection and reconciliation. Where possible, leverage bank-aligned cash pickup services and integrate COD settlement into your ERP. Our API integration offers automated remittances and reconciled statements to speed up cash flow and reduce human error.
8. Use data-driven risk scoring for orders
Build a simple fraud score that flags orders based on:
- Order value above threshold
- New customer with multiple addresses or inconsistent contact info
- High return rates from the same customer
Flagged orders can require additional verification or a partial prepayment before dispatch.
9. Offer transparent COD fees and returns policy
Pass-through COD costs or charge a fair COD fee to discourage casual orders, while being clear about returns and inspection policies. A straightforward policy reduces disputes and maintains trust.
10. Use technology to minimize manual steps
Integrate your store with courier APIs for live status, automated customer notifications, and single-click returns. Automation reduces manual errors and frees teams to focus on exceptions.
Practical Implementation Checklist (For Merchants and Logistics Teams)
- Set COD limits and categories in your checkout system.
- Enable partial deposit via M-Pesa or card.
- Validate phone numbers at order time and send confirmation SMS.
- Require address details and landmark field for Kenyan addresses.
- Provide delivery time slots and send reminders 24 hours and 1 hour before delivery.
- Equip agents with mobile apps for POD, photo capture, and OTP verification.
- Daily reconciliation: agent cash drops and digital remittance statements.
- Audit agents regularly and run data analytics on COD performance.
Real-World Examples and Case Studies (Kenya-Focused)
Case study: Nairobi apparel retailer (anonymized)
A mid-sized Nairobi fashion retailer struggled with 40% failed-delivery attempts and frequent COD refusals. They partnered with Royal Truck Star Courier to implement a three-step solution: partial 15% M-Pesa deposit at checkout, two SMS reminders plus driver pre-call, and mandatory photo POD. Within three months they saw a meaningful reduction in failed deliveries and a smoother cash reconciliation process, improving working capital predictability.
Example: Rural electronics shipments
Electronics sold to customers in counties with sparse addressing benefited from combined measures: geotagged dispatch instructions, customer-provided landmark directions, and driver coordination via WhatsApp groups. By batching deliveries across villages and pre-notifying customers, delivery success rose while per-delivery costs fell.
How Royal Truck Star Courier helps
We provide end-to-end COD support across all 47 counties: API integration for order orchestration and automated settlements, real-time tracking and POD capture, secure cash handling SOPs, and merchant dashboards for reconciliation. Our localized knowledge of Kenyan addressing, M-Pesa integration, and agent network reduces COD friction and protects merchant margins.
Measuring Success: KPIs to Track
To evaluate the effectiveness of COD improvements, track:
- COD conversion rate (orders placed vs. successfully collected)
- Failed delivery rate and reasons
- Average time to bank/cash remittance
- Return rate and net refunds
- Cost per COD delivery
Use these KPIs to iterate on policies and agent incentives.
Conclusion — Balancing Trust and Efficiency
Cash on delivery will remain an important tool for Kenyan e-commerce as long as trust gaps and informal addressing persist. But COD does not have to be costly or chaotic. By combining clear policies, partial prepayments, strong agent protocols, digital POD, and reliable courier partnerships, Kenyan merchants can offer COD at scale while protecting margins.
Royal Truck Star Courier has helped numerous brands implement these cash on delivery best practices across Kenya. If you want to reduce COD losses, speed up reconciliation, or integrate COD flows into your platform, contact our team for a demo of our API, warehousing, and last-mile solutions.
Call to action: Reach out to Royal Truck Star Courier to schedule a consultation and learn how to optimize your COD operations nationwide.
