Nepal Ecommerce: COD Market Entry for Shopify (2026)

EasySell
2026-04-12T00:55:04+01:00

Nepal's ecommerce market generated $889 million in revenue in 2024 and is projected to cross $1.3 billion in 2025. That's 20-25% annual growth in a country of 32 million people where COD accounts for roughly 70% of all online orders. For Shopify merchants already selling in South Asia, Nepal ecommerce is the next COD market worth entering.

If you're a COD merchant looking beyond India and Bangladesh, Nepal is the obvious next market. But "obvious" doesn't mean easy. The logistics infrastructure is thin, digital payment adoption is low outside Kathmandu, and one platform controls most of the traffic. Getting the opportunity right means understanding what makes Nepal different from the South Asian markets you already know.

Why Nepal's COD Window Is Still Open

India's COD era ended in roughly three years once UPI reached critical mass. Bangladesh is following a similar path with bKash. Nepal isn't there yet.

Digital wallets like eSewa (8 million+ registered users) and the newly merged Khalti-IME Pay are growing, but cash on delivery still accounts for roughly 70% of online orders. Trust in online prepayment remains low, especially outside the Kathmandu Valley where household internet penetration drops to 17.4% compared to 79.3% in urban areas.

Nepal's payment infrastructure is estimated to be 5-7 years behind India's. That gap is your window. COD merchants who understand cash-first markets can capture customers that prepaid-only competitors can't reach.

The Daraz Problem (And Why It's Actually Your Opportunity)

Daraz, backed by Alibaba, dominates Nepal's ecommerce. Most online shoppers in Nepal start and end their journey on Daraz. That sounds like a problem for independent Shopify stores, but it's actually a signal.

Daraz recently disabled COD on parts of its platform to reduce fraud and operational costs. The backlash was immediate — order volume dropped visibly, and sellers reported steep declines in revenue. When nearly 70% of your orders come through cash on delivery and you remove that option, you push customers toward alternatives.

An independent Shopify store that offers COD with proper verification captures exactly the customers Daraz is pushing away. You're not competing with Daraz on selection. You're competing on trust — and for Nepali shoppers, COD is trust.

Internet and Mobile: The Infrastructure You're Building On

Nepal had 16.5 million internet users in early 2025, with 39 million active mobile connections across the country. Mobile broadband penetration has reached 89%, and 4G users surpassed 22.2 million.

Almost 96% of internet access happens through mobile devices. Smartphone penetration sits at roughly 70% and climbing. Your store needs to work on a 5-inch screen over a 4G connection — that's the baseline, not the edge case.

But here's the catch: the urban-rural divide is steep. Kathmandu Valley has reliable 4G. Move to the Terai plains or hill districts and speeds drop. Build your product pages light. Compress images aggressively. Test on throttled connections, not your office Wi-Fi.

Logistics Partners That Actually Deliver

Last-mile delivery in Nepal is harder than in flat, well-addressed countries. Nepal has no standardized street address system in most areas, and geography ranges from dense Kathmandu neighborhoods to remote hill towns.

Your logistics options:

Pathao Parcel — Covers 500+ locations across Nepal. Recently launched a "Delivery Assurance" program to address failed delivery attempts and cancellations. Strong in urban and semi-urban areas. Best option for COD collection and remittance.

Nepex Cargo — Specializes in ecommerce delivery with COD support and fulfillment services. Good for merchants who need warehousing in addition to last-mile.

Nepal Can Move — Offers integrated logistics with ecommerce, warehousing, and inventory technology. Useful if you're scaling beyond a handful of daily orders.

Start with one logistics partner in the Kathmandu Valley and expand. Trying to cover all 77 districts on day one is how you burn through cash on failed deliveries.

Payment Landscape: Cash First, Wallets Second

The payment stack in Nepal has three layers:

1. Cash on delivery — Still the default for most online orders. Required if you want volume.

2. Digital wallets — eSewa leads with 8 million+ users. Khalti merged with IME Pay in mid-2025 to create Nepal's second-largest wallet. Both support QR payments and in-app transfers.

3. Bank transfers and cards — Low adoption for ecommerce. Most Nepali banks support online banking, but the checkout experience is clunky and drop-off rates are high.

Offer COD as your primary payment method and eSewa/Khalti as secondary options. Don't force digital-only checkout — you'll lose the majority of potential buyers. Over time, you can incentivize wallet payments with small prepaid discounts to shift your payment mix, the same strategy that worked in India and Bangladesh.

Average Order Values and What Sells

Electronics is the largest ecommerce category in Nepal, accounting for roughly 24% of total online revenue. Fashion, personal care, and mobile accessories follow.

Average order values tend to be lower than in Gulf or Southeast Asian COD markets. Price sensitivity is high, and free shipping expectations are growing thanks to Daraz conditioning shoppers with subsidized delivery.

Products that work well for COD entry into Nepal:

Mobile accessories and cases — high volume, low return rates, easy to ship

Beauty and skincare — growing fast among urban millennials in Kathmandu and Pokhara

Fashion and apparel — size-related returns are a risk, so offer detailed size guides

Small electronics under NPR 5,000 (~$37 USD) — sweet spot for COD impulse purchases

Avoid high-ticket items until you've established a return and refund process that works with your logistics partner's COD remittance cycle.

How to Set Up Your Shopify Store for Nepal's COD Market

Your Shopify configuration for Nepal needs a few specific adjustments:

Currency: Set up Nepalese Rupee (NPR) through Shopify Markets. Display prices in NPR — showing USD or INR creates friction and erodes trust.

Language: English works for Kathmandu's urban shoppers, but adding Nepali language support expands your reach significantly. Use a multi-language app or Shopify's built-in translation features.

Shipping zones: Create separate shipping zones for Kathmandu Valley (1-2 day delivery), major cities like Pokhara, Biratnagar, and Bharatpur (2-4 days), and remote districts (5-7 days or exclude initially).

COD order form: Your order form needs phone number collection (mandatory for delivery coordination), address fields that work without postal codes, and city/district dropdowns instead of free-text fields. Apps like EasySell let you build COD-optimized order forms with phone verification and custom fields — useful for markets like Nepal where address formats don't follow Western conventions.

Fraud prevention: COD fraud in Nepal follows the same patterns as other South Asian markets — fake phone numbers, duplicate orders, and "not home" refusals. OTP verification on the order form cuts fake orders significantly. Set order limits per phone number and block repeat offenders.

The Realistic Timeline

Nepal isn't a market you crack in a month. A realistic entry timeline:

Month 1: Set up your Shopify store with NPR pricing, integrate one logistics partner (start with Pathao), configure COD with phone verification.

Month 2-3: Run test orders in Kathmandu Valley only. Measure delivery success rates, COD collection rates, and actual remittance timelines from your courier.

Month 4-6: Expand to secondary cities based on your courier's coverage map. Add eSewa/Khalti as payment options. Start optimizing based on real data.

The merchants who fail in Nepal are the ones who launch nationally on day one, get hit with 30%+ failed deliveries, and conclude the market doesn't work. The market works fine — the approach was wrong.

Start with Kathmandu. Prove the unit economics. Then expand district by district with a logistics partner who actually covers those areas. Nepal's COD window won't close overnight — you have time to build it right.