In this article
You run an ad campaign, get 200 orders and do the quick math: 200 orders × 124 MAD profit each, minus 3,000 MAD of ads = more than 21,000 MAD. At the end of the month, only about a third of that is in your account. Where did the rest go? With cash on delivery, an incoming order is not a sale yet. Two stages sit between the order and the cash, and each one drops a share of your orders: confirmation and delivery.
The three stages of a COD order
- Lead (incoming order): the customer fills in the form after seeing your ad. You have already paid for the ad.
- Confirmed order: your confirmation team calls. Some numbers are wrong, some customers changed their mind or ordered twice. What remains is packed and shipped, which is where packaging and confirmation costs start.
- Delivered order: the courier reaches the customer, who either pays or refuses / doesn’t answer, and the parcel comes back. You only get paid here, and returns usually carry a fee.
So every COD seller needs to watch two numbers each week:
- Confirmation rate = confirmed orders ÷ incoming orders.
- Delivery rate = delivered and paid orders ÷ confirmed (shipped) orders.
Multiply them and you get the effective rate: how many paid orders you get from every 100 leads. Both rates vary a lot by product, price, city, ad quality and courier, so don’t rely on figures other sellers quote; take yours from your store dashboard or courier reports.
A worked example
Say a store sells a product for 249 MAD that costs 90 MAD, and gets 200 orders from a campaign that cost 3,000 MAD (15 MAD per lead). Confirmation rate is 70% and delivery rate is 75%. Shipping is 35 MAD per delivered parcel, returns cost 15 MAD per refused parcel, packaging is 3 MAD and phone confirmation 8 MAD per confirmed order.
- Confirmed orders: 200 × 70% = 140.
- Delivered orders: 140 × 75% = 105; returned: 35.
- Effective rate: 105 ÷ 200 = only 52.5% of leads turned into cash.
| Item | Calculation | Amount (MAD) |
|---|---|---|
| Cash collected | 105 × 249 | 26,145 |
| Product cost | 105 × 90 | 9,450 |
| Shipping | 105 × 35 | 3,675 |
| Return fees | 35 × 15 | 525 |
| Packaging | 140 × 3 | 420 |
| Phone confirmation | 140 × 8 | 1,120 |
| Ads | — | 3,000 |
| Net profit | 7,955 |
Real profit is 7,955 MAD, about 75.8 MAD per delivered order, not 21,800 MAD as the quick calculation suggested. The whole gap comes from orders that were never confirmed or never delivered.
Delivery rate matters more than you think
Keep everything else the same and let the delivery rate fall from 75% to 55%: delivered orders drop to 77, returns rise to 63, and profit falls to about 4,063 MAD. Twenty points of delivery rate wiped out roughly half the profit, without touching the ads.
In the same example, the minimum delivery rate needed to cover all costs is about 34.1%; below that you sell at a loss. The highest cost per lead you could afford before losing money is about 54.77 MAD — the campaign can absorb pricier ads far better than it can absorb a collapse in deliveries.
Common mistakes
- Dividing ad spend by leads only: 15 MAD per lead looks good, but the real ad cost per paid order in the example is 3,000 ÷ 105 ≈ 28.6 MAD.
- Forgetting return and packaging fees: every parcel that leaves the warehouse costs money, even if it comes back.
- Treating returns as a total loss — or ignoring them: returned items usually go back to stock, but some come back damaged or incomplete. Estimate that share and add it to the return cost.
- Judging a campaign after one day: delivery takes days, so wait until most parcels are closed.
How to raise confirmation and delivery rates
- Call customers quickly after they order; interest cools with time.
- On the call, confirm the final price including shipping, the full address and the expected delivery date.
- Keep the ad and product page honest about price and features — overpromising creates refusals.
- Choose a courier that is fast in your customers’ cities and follow up on stuck parcels.
- Watch cities or regions with weak delivery; excluding them from targeting may pay off.
Run your own numbers
Enter your store’s figures in the COD profit calculator to see your net profit and the minimum delivery rate you need. To check product margin before ads, use the profit margin calculator, and to measure ad return use the ROAS calculator.
The figures in this article are an illustrative example, not market averages; your real rates depend on your product, cities and courier.
