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Cash on delivery in Morocco: how to work out your real profit

With cash on delivery, an order received is not a sale. Between the order and the cash come confirmation, delivery and returns. Here is how to calculate what you actually keep.

Updated

What COD means in Morocco

COD, or cash on delivery, means the customer orders online, often from an ad, and pays the courier in cash when the parcel arrives.

The customer takes no risk. The seller carries it all before getting paid: ads, stock and delivery are paid before you know whether the order will be.

Where orders get lost

  1. The order

    The customer leaves a name, phone number and address. You have already paid for the ad that brought them.

  2. Confirmation

    You call to confirm. Some customers don’t answer, change their mind or ordered twice.

  3. Shipping

    Each confirmed parcel goes to the courier, and you pay the delivery fee whether it gets paid or not.

  4. Delivery or return

    The customer pays and you collect, or refuses the parcel and you also pay for the return.

The real-profit formula

Parcels shipped
= orders received × confirmation rate
Parcels delivered
= parcels shipped × delivery rate
Revenue
= parcels delivered × selling price
Costs
= ads + product cost × parcels delivered + delivery fee × parcels shipped + return fee × parcels returned
Real profit
= revenue − costs

Product cost only counts for delivered parcels: a returned parcel goes back into stock. Add any other costs you have, such as a call centre paid per order or packaging.

A worked example

A product sold for 249 MAD that costs you 60 MAD. You spend 3,000 MAD on ads for 100 orders, or 30 MAD per order. Delivery is 35 MAD, a return 15 MAD.

On paper, each order makes 249 − 60 − 35 − 30 = 124 MAD, or 12,400 MAD for 100 orders. Here is what is left with 70% confirmation and 60% delivery:

Illustrative example: redo it with your own numbers.
StepAmount
Orders received100
Confirmed and shipped (70%)70
Delivered and paid (60% of shipped)42
Revenue (42 × 249 MAD)10,458 MAD
Ads− 3,000 MAD
Products delivered (42 × 60 MAD)− 2,520 MAD
Delivery (70 × 35 MAD)− 2,450 MAD
Returns (28 × 15 MAD)− 420 MAD
Real profit2,068 MAD

Profit drops from 12,400 MAD to 2,068 MAD. Before ads, 5,068 MAD is left for 100 orders: above roughly 50 MAD of ad spend per order received, this product loses money.

Three things to work on

  • Confirmation rate

    Call quickly, while the customer still remembers ordering. Call back missed numbers and note why others cancel.

  • Delivery rate

    Check the address and city when confirming, give a realistic delivery time and make sure the customer knows what they will pay.

  • The product and its price

    A price that is too low won’t cover delivery and returns. Before testing, see which products are already advertised in Morocco and at what price.

Frequently asked questions

What does COD mean in Morocco?
COD means cash on delivery: the customer pays the courier in cash when the order arrives.
How do I calculate COD profit?
Start from parcels delivered and paid: their revenue, minus ads, the cost of delivered products, delivery on every parcel shipped and return fees.
What is the most I can pay in ads per order?
Work out what is left after product, delivery and returns for 100 orders received, then divide by 100. Above that amount per order, you lose money.
Is cash on delivery still profitable in Morocco?
It depends on your numbers, not the model. With a price that covers delivery and returns, and measured confirmation and delivery rates, the calculation above tells you.

Your product choice moves every line of this calculation. See which products are advertised in Morocco, and at what price in dirhams, before you order stock.

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