How to Start a COD Business on Shopify (Beginner Guide)

If you want to start a COD business on Shopify, here's what nobody tells you upfront: Shopify wasn't built for cash-on-delivery stores. The default setup assumes credit cards and digital wallets. COD still accounts for over 50% of ecommerce orders across MENA, South Asia, Southeast Asia, and Latin America — above 80% in the Philippines, and between 54% and 80% in Morocco.

If you're launching a store in one of these markets, COD isn't optional. It's how your customers expect to pay. That means you need to configure a few things differently from day one — or you'll spend your first month dealing with fake orders, failed deliveries, and cash flow problems that prepaid stores never face.

This guide walks you through every step, from choosing a Shopify plan to shipping your first COD order.

Pick the Right Shopify Plan (Basic Is Fine)

You don't need Shopify Plus. You don't even need the mid-tier Shopify plan. For a new COD store, Shopify Basic at $39/month gives you everything you need: product pages, manual payment methods (which is how COD works in Shopify), discount codes, and abandoned checkout recovery.

The main difference between plans that matters for COD merchants is transaction fees. If you're using Shopify Payments for any prepaid orders alongside COD, Basic charges 2.9% + 30¢ per transaction. If you're using a third-party payment gateway, there's an additional 2% fee on Basic.

For a store doing under $10,000/month — which covers most new COD businesses — Basic is the right starting point. Upgrade when your revenue justifies the savings on transaction fees, not before.

Enable Cash on Delivery as a Payment Method

Shopify supports COD natively, but it's buried under manual payment methods. Here's how to turn it on:

1. Go to Settings → Payments in your Shopify admin.
2. Scroll to Manual payment methods.
3. Select Cash on Delivery (COD) from the dropdown.
4. Add payment instructions your customers will see at checkout (e.g., "Pay cash when your order arrives. Please have the exact amount ready.").
5. Click Activate.

That's the minimum. Your store now accepts COD orders. But the default Shopify checkout treats COD the same as any other payment — no verification, no deposit, no order limits. That's a problem, and we'll fix it in the next steps.

Choose Your Courier Before You Launch

Prepaid stores can ship with anyone. COD stores can't. Your courier collects cash from customers and remits it back to you, which means you need a logistics partner that specifically supports COD remittance.

What to look for in a COD courier:

• COD remittance cycle — How often do they transfer collected cash to your bank? Weekly is standard. Some charge extra for faster cycles. A 14-day remittance cycle will choke your cash flow within the first month.
• Coverage area — Can they deliver to the regions where your customers live? In countries like the Philippines (7,000+ islands) or Indonesia (17,000+ islands), not every courier covers every area.
• COD fees — Most couriers charge 1-3% of the order value as a COD handling fee on top of the shipping rate. Factor this into your product pricing.
• Failed delivery policy — What happens when a customer refuses the package? How many delivery attempts do they make? What's the return shipping cost?

In MENA, services like Aramex, SMSA, and J&T handle COD well. In South Asia, Leopards (Pakistan), Pathao (Bangladesh), and Delhivery (India) are common. In Southeast Asia, J&T Express and Flash Express dominate. Research what's available in your specific market and sign up before you take your first order.

Set Up Your Order Form for COD Customers

The default Shopify checkout flow — product page → cart → multi-step checkout — works fine for prepaid customers who are already committed to paying. COD customers behave differently. They haven't spent money yet, so there's less friction to placing an order and less commitment to completing it.

That's why COD stores see higher fake order rates and higher return-to-origin (RTO) rates than prepaid stores. COD orders typically have return rates well above prepaid transactions, and in some markets, RTO can eat 15-30% of your shipped orders.

A dedicated order form helps in two ways: it shortens the path from browsing to ordering (fewer steps = fewer drop-offs), and it lets you add verification steps that the default checkout doesn't support.

EasySell replaces the default buying flow with a COD-optimized order form that includes phone verification (OTP via SMS or WhatsApp), order limits per customer, and blocklists for repeat fake orders — all built into the form itself.

What Fraud Prevention Do You Need to Start a COD Store?

This is where most new COD merchants learn the hard way. Without verification, anyone can type a fake phone number and a random address, and you'll ship a product that never gets accepted. You pay for shipping both ways and lose the inventory handling time.

Start with one of these on day one:

• OTP verification — Require a one-time password sent via SMS or WhatsApp before the order goes through. This confirms the phone number is real and active. It's the single most effective filter against fake COD orders. (Full OTP setup guide.)
• Minimum order value for COD — Set a floor (e.g., $10 or equivalent) below which COD isn't available. Tiny COD orders have the highest fake rates and the worst unit economics.
• Partial payment / deposit — Require a small upfront payment (10-20% of order value) through Shopify's regular checkout, with the rest paid on delivery. Customers who pay even a small deposit are significantly less likely to refuse delivery.

You don't need all three at launch. Pick one, see how your order quality looks after the first 50-100 orders, then add more layers if needed. For a deeper look at what fake orders actually cost, see our breakdown of the true cost of COD fraud.

Price Your Products to Absorb COD Costs

COD has costs that prepaid doesn't. If you price your products the same way a prepaid-only store does, your margins will be thinner than you expect.

Hidden costs to account for:

• COD courier fee: 1-3% of order value per delivered order
• Return shipping on refused orders: you pay forward + return shipping with zero revenue
• Cash remittance delays: your cash is tied up for 7-14 days with the courier
• Higher return rate: COD returns consistently run higher than prepaid across every market

A simple approach: calculate your true cost per order assuming a 15-20% RTO rate. If your product costs $10, shipping is $3, and 20% of orders come back, your real cost per successful delivery isn't $13 — it's closer to $16.50 once you factor in wasted shipping on returned orders. Price accordingly.

Set Up Order Confirmation via WhatsApp

Email open rates in COD-heavy markets are low. In many MENA and South Asian markets, customers check WhatsApp far more reliably than email. Sending order confirmations and shipping updates via WhatsApp does two things: it reduces "where's my order?" messages, and it gives customers a channel to confirm or modify their order before you ship.

Some merchants use WhatsApp confirmation as an extra verification step — sending the order details and asking the customer to reply "confirm" before dispatching. This adds a small delay to fulfillment but can cut RTO rates by catching orders where the customer already changed their mind.

You can set this up manually at low volume (just message each customer from WhatsApp Business) or automate it with tools like Zoko or the WhatsApp Business API as you scale past 20-30 orders per day.

Track the Right Metrics From Day One

Prepaid stores track conversion rate and revenue. COD stores need to track additional metrics that determine whether the business is actually profitable:

• RTO rate — Percentage of shipped orders that come back undelivered. Above 20% and your unit economics are likely negative.
• COD confirmation rate — Of all COD orders placed, how many actually get delivered and paid for? This is your real conversion number, not the Shopify "orders" count.
• Cash remittance lag — Days between order delivery and cash hitting your account. Track this per courier.
• Cost per delivered order — Total costs (product + shipping + COD fee + return costs) divided by successfully delivered orders only.

Set up a simple spreadsheet for this during your first month. Shopify's built-in analytics won't track RTO or remittance — you need to pull that data from your courier's dashboard.

Your First 30 Days: The Launch Checklist

Before you open your store to traffic, run through this list:

1. Shopify Basic plan active, COD enabled under manual payments.
2. Courier account set up with COD remittance terms confirmed in writing.
3. At least one fraud prevention measure live (OTP, minimum order value, or deposit).
4. Product prices adjusted for COD costs (courier fee + expected RTO).
5. WhatsApp Business set up for order confirmations.
6. Tracking spreadsheet ready for RTO rate, confirmation rate, and remittance lag.

Skip the first month of optimizing ads, tweaking product pages, and testing upsells. For a new COD store, the first priority is proving that your fulfillment chain works: an order comes in, you verify it, you ship it, the customer pays cash, and the cash reaches your bank. Once that loop runs smoothly for 50 orders, then start scaling.

Every successful COD store started by getting the operations right before the marketing. Get your order flow, verification, and courier setup locked in first — the growth part is easier when your foundation doesn't leak money on every fifth order.