Cash on delivery (COD)
Cash on delivery is a sales method where the buyer requests the product with no upfront payment, and pays cash to the delivery agent when the package arrives. The seller ships first and collects after the carrier deposits payment, so the seller alone bears the cost of shipping and returns for every order that doesn't deliver.
Also calledCODPay at deliveryCash at deliveryCollect on deliveryPayment at delivery
The formula
Delivered orders = Incoming orders × Confirmation rate × Delivery rate
- Incoming orders: every order form submitted from the site, confirmed or not.
- Confirmation rate: share of orders the buyer approved after a call or message.
- Delivery rate: share of shipped packages that reached the buyer and payment was collected in cash.
- This number is the only one that puts actual money in your account.
Worked example
A week of sales in Algeria
- 1Incoming orders from site: 100 orders.
- 2Confirmation rate 60% → Confirmed orders: 100 × 0.60 = 60 orders.
- 3Delivery rate 75% → Delivered orders: 60 × 0.75 = 45 orders.
- 4Product price 4,500 DZD → Cash collected: 45 × 4,500 = 202,500 DZD.
- 5Apparent revenue if calculated from incoming orders: 100 × 4,500 = 450,000 DZD.
Takeaway: The gap between 450,000 and 202,500 DZD is not a shock loss—it's the natural shape of COD: roughly half the top-line number never arrives.
What it means in practice
This method spread in Algeria, Morocco, and Egypt for a simple reason: the buyer doesn't trust a site they've never heard of, and bank cards aren't in everyone's pocket. COD moves the trust burden fully to the seller, so order count climbs but so does fake and half-hearted orders at the same time.
The seller pays costs in reverse order from income: buy stock, then pay ads, then pay shipping, then wait for the carrier to deposit. Any profit math that doesn't account for this order gives a rosy picture of a situation where the seller may not have enough cash on hand to buy again.
The ad dashboard shows numbers built on form submission—that's incoming orders. Real money is built on delivered orders. Keep your tracking board showing both side by side for every product, or you'll make budget calls on a number that's nowhere in the bank.
Common mistakes
- Calculating profit from incoming or confirmed orders instead of delivered ones, making the product look profitable while shipping and returns eat the whole margin.
- Forgetting the collection fees the carrier deducts from the amount before depositing, and treating product price as full revenue received.
- Accepting every incoming order without vetting: incomplete phone numbers and imprecise addresses turn into returned packages you pay shipping for twice.
- Scaling ad spend based on a strong week of incoming orders before actual cash from the previous week comes back.
Questions and answers
When does COD money reach my account?
After the agent delivers the package and collects payment, then the carrier pools collection and deposits it in regular batches. The timing varies by carrier and by location. Ask your carrier for a written deposit schedule and plan your cash flow from that, not guesswork.
Why are my profits so much lower than my total orders?
Because some orders never get confirmed, and some confirmed orders never get delivered. Every returned package costs you shipping both ways with zero revenue. The number that matters is cash collected from delivered orders minus all shipping costs, including return shipping.
Can I cut down on fake orders?
Yes, with practical steps: ask for a real phone number and verify it, make price and shipping fees clear inside the landing page before the form, call as soon as the form is submitted, and send a reminder before the package ships. Clarity upfront cuts cash-on-delivery refusals at the door.
Does COD work for high-priced products?
It works but it eats more cash. Every shipped package means expensive stock out of your warehouse with nothing back until delivery, and every return locks that value up longer. Selling at high price this way needs bigger capital and stricter order vetting.