As online shopping becomes a central part of life across the Gulf region, Cash-on-Delivery (COD) continues to dominate as a preferred payment method, especially in emerging e-commerce markets. While digital wallets and cards are growing, a large portion of consumers in the Khaleej (GCC) still trust cash at the door—a trend entrepreneurs are keen to tap into.
For startups and SMEs looking to enter the regional e-commerce space with a COD model, selecting the right city can make all the difference. Based on logistics infrastructure, internet penetration, consumer behavior, and regulatory support, here are the best places in the Gulf to launch a COD-based e-commerce business in 2025.
1. Dubai, UAE – The E-Commerce Capital of the Gulf
Dubai remains the top choice for launching a COD e-commerce business in the GCC. With high smartphone penetration, world-class logistics through companies like Aramex, Fetchr, and Amazon, and tax-friendly policies in free zones like Dubai CommerCity, Dubai offers the infrastructure needed for rapid scale.
COD is still popular among lower-income consumers and in certain categories such as fashion, electronics, and health supplements.
“Even though card payments are growing, nearly 45% of e-commerce orders in the UAE are still paid in cash,” said Rami Al-Khoury, a logistics expert at GulfPay.
2. Riyadh, Saudi Arabia – A Booming Market with High COD Demand
Saudi Arabia is the largest e-commerce market in the GCC, with Riyadh at its commercial heart. While the government is pushing for more digital payments under Vision 2030, over 50% of online shoppers still prefer COD, especially outside major cities.
For businesses that can manage COD logistics and offer Arabic-language support, Riyadh offers massive opportunity. The Saudi e-commerce sector is projected to surpass SAR 90 billion ($24 billion) by the end of 2025.
Platforms like Salla, Zid, and Shopify Arabia have made it easier for local businesses to launch quickly and offer COD as a default option.
3. Kuwait City, Kuwait – Small Market, Big Margins
Kuwait has one of the highest internet penetration rates in the Arab world and strong purchasing power per capita. COD remains common, especially in the fashion, luxury, and home decor segments, due to trust issues with online payments.
While the market is smaller compared to Saudi or the UAE, margins can be higher, and logistics partners like DHL, Aramex, and local courier startups offer reliable COD services.
“Kuwait is ideal for niche COD brands targeting high-income segments with limited competition,” noted Noor Al-Dabbous, founder of a beauty e-commerce startup.
4. Manama, Bahrain – The Underrated Logistics Hub
Often overlooked, Bahrain is quickly rising as a regional e-commerce logistics hub. Thanks to its low entry barriers for foreign businesses, supportive government regulations, and proximity to Saudi Arabia’s Eastern Province, Manama offers a strategic base for cross-border COD operations.
Startups can benefit from Bahrain’s cloud-first IT policy, easy licensing under the Bahrain Economic Development Board (EDB), and reliable last-mile delivery partners like Bahrain Post and Talabat Logistics.
5. Muscat, Oman – Emerging Market with Loyal Shoppers
Oman’s e-commerce ecosystem is still maturing, but it offers strong long-term potential for COD-focused businesses. While digital payment adoption is growing, more than 60% of Omani online shoppers still opt for cash on delivery, especially outside Muscat.
With fewer competitors, a loyal customer base, and government support for SMEs, Oman offers a great testing ground for brands willing to localize content and manage COD fulfillment across a wide geography.
Honorable Mention: Sharjah & Ajman (UAE)
While not as large as Dubai, Sharjah and Ajman have emerged as cost-effective alternatives for e-commerce startups. Warehousing, staffing, and delivery costs are lower, yet access to UAE’s major logistics infrastructure remains intact. COD is still popular in these emirates, especially in categories like modest fashion, home goods, and electronics.
Key Considerations When Starting a COD E-Commerce Business
- Reliable Last-Mile Delivery
COD success depends heavily on timely deliveries and cash reconciliation. Partner with regional couriers that specialize in COD handling and offer real-time tracking. - Clear Return and Refund Policies
COD shoppers are more likely to cancel or return orders. Make sure you have a streamlined reverse logistics process in place. - Localized Marketing
Arabic content, GCC-specific promotions (e.g., Ramadan deals), and influencer partnerships significantly boost conversion rates. - Free Zone Incorporation
Consider setting up in free zones like Dubai CommerCity, RAKEZ (Ras Al Khaimah), or Bahrain’s Startup Hub for 100% foreign ownership and customs benefits.
Final Thoughts
COD may be declining globally, but in the Khaleej, it remains a dominant and trusted method for millions of shoppers. For entrepreneurs and SMEs, cities like Dubai, Riyadh, and Kuwait City offer fertile ground to build scalable e-commerce brands tailored to local preferences.
As digital payment adoption grows alongside COD, the Gulf region offers a rare opportunity to serve both ends of the consumer trust spectrum—blending convenience with cultural familiarity.
