What a returned COD order really costs you

In September, one Egyptian online store we work with received 1,759 orders. Its bank saw money from 1,235 of them.

The store isn't failing. This is what cash on delivery looks like when you follow every order to the end. Every number in this article comes from the store's Shopify data for September 2026. All of its orders were cash on delivery. We've left out the store's name.

That's normal in Egypt, where most online orders are still paid in cash. In a 2021 interview, the founder of the courier Mylerz put it at some 80% of online purchases. And returns are costly even where customers pay up front: a 2022 Pitney Bowes survey found that returns cost US online retailers an average of 21% of order value, and US retailers expected 16.9% of their 2024 sales to come back.

Where 1,759 orders went

• 1,759 orders placed
• 395 cancelled at the confirmation call, before anything shipped (22%)
• 1,364 shipped
• 129 came back: refused at the door or returned (9.5% of what shipped)
• 1,235 delivered and paid (70% of what was placed)

That month wasn't unusual. From July to September the same store took 4,097 orders. A quarter were cancelled at confirmation, about one in ten shipped orders came back, and 67% ended up paid.

The 395 cancelled at confirmation cost the store a phone call each. This article is about the 129, because those cost real money.

What one returned order costs

When an order comes back, you pay for all of this:

1. Shipping. The courier charges you once per shipment, whether it's delivered or comes back.
2. The shipping fee you never collect. The customer was going to pay a shipping fee with the order. In this store it averaged 77 EGP per returned order. That fee never arrives, but the courier still has to be paid.
3. Damaged or unsellable items. Some returns come back unfit to sell again. In this store, the product cost inside an average returned order is about 123 EGP.
4. Repacking and handling. Someone has to check the item, repack it and put it back in stock.
5. The ad cost of the order. If the order came from an ad, you paid for it the moment it was placed, whether it was paid for or not.

As a formula:

Cost of one return = shipping + (share of returns you can't resell × product cost) + repacking + ad cost per order

The sale is lost on top of that. September's 129 returned orders were worth 47,755 EGP, or 370 EGP each on average. That money showed up in the dashboard and never reached the bank.

Putting this store's numbers in

Call the courier's charge per shipment S, and your ad cost per order placed A. Before damage and repacking, September's returns cost:

129 × (S + A)

Meta's dashboard put this store's ad cost at about 73 EGP per order. So the ads alone behind September's 129 returns cost 9,417 EGP, before a single courier fee. Every 10 EGP of courier fee adds another 1,290 EGP a month. Then add the items that came back unsellable and the time spent repacking.

The same 73 EGP looks different when you count only the orders that paid. The store paid for ads on 1,759 orders and collected on 1,235, so each paid order really carried about 104 EGP of ad cost, not 73.

To find your own A, divide the month's ad spend by the number of orders placed, not by the number delivered. Your ads paid for every placed order, including the ones that came back.

Where to find these numbers in your store

• Orders placed, cancelled and returned: in Shopify, tag returned orders (this store uses return) and void orders cancelled at confirmation. You can then count both for any month with a filter.
• Product cost: fill in "Cost per item" on each product. Shopify's profit reports only count products that had a cost recorded when they sold.
• Courier charges: your courier's monthly invoice shows the fee per shipment.
• Ad spend: your ads manager's total for the same month.

Three things that bring the cost down

1. Confirm every order before it ships. This store cancels about a fifth of its orders at confirmation. None of those cost a shipping fee. Without the call, some of them would have shipped and come back.
2. Count returns as a cost, not as "cancelled". Put the cost of returns into your profit per delivered order. If one in ten shipped orders comes back, every delivered order has to carry part of that cost.
3. Look at returns by product and by area. Returns often cluster in a few products or governorates. You can only see that if every return is tagged.

To run these numbers for your own store, use the free COD profit calculator. It shows your profit per delivered order and the delivery rate you need to break even.

For the other numbers that show whether a COD store is working, and how often to check each one, read How to measure an online store's success.