Business
How COD Returns Affect E-commerce Profit in Pakistan
Direct answer
COD returns reduce profit in two directions: fewer orders generate revenue, while failed deliveries can still consume packaging, advertising and return-courier costs. Delivery rate therefore changes profit more sharply than a simple lost-sale count suggests.
Key takeaways
- Separate dispatched, delivered and returned orders.
- Charge revenue only to delivered orders.
- Include RTO courier cost and packaging on failed deliveries.
- Compare scenarios using your own store data, not invented industry averages.
The 100-order model
The comparison below holds price and costs constant and changes only delivery rate. Assumptions: Rs 3,000 price, Rs 1,200 product cost per delivered order, Rs 200 outward courier per delivered order, Rs 200 RTO courier per return, Rs 100 packaging per dispatched order, 2% COD fee, Rs 50,000 ads and Rs 10,000 overhead.
Why the profit drop is larger than it looks
Moving from 90% to 75% delivery removes revenue from 15 orders. It also leaves acquisition and dispatch spending spread over fewer successful deliveries and adds more return-courier cost.
Use your own evidence
Export order, delivery and return data from the same date range. Keep courier and ad-spend periods aligned. Do not rely on a general market return-rate claim when your own courier reconciliation is available.
Original reference table
90% vs 75% delivery
| Metric | 90% delivery | 75% delivery | Change |
|---|---|---|---|
| Delivered / returned | 90 / 10 | 75 / 25 | −15 delivered |
| Sales | Rs 270,000 | Rs 225,000 | −Rs 45,000 |
| Total modeled cost | Rs 203,400 | Rs 184,500 | −Rs 18,900 |
| Net profit | Rs 66,600 | Rs 40,500 | −Rs 26,100 |
| Net margin | 24.67% | 18.00% | −6.67 points |
Original visual
Profit by delivery scenario
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Useful questions
Quick answers
Should product cost be charged to returned orders?
The default model charges product cost to delivered orders because returned stock may be recoverable. Add damage or non-recoverable loss to overhead when relevant.
Sources & references
How this guide was checked
Seedha Hisab
Original COD scenario methodology
No external industry-average return rate is assumed.
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Editorial owner: Seedha Hisab Editorial. No invented expert reviewer or government affiliation.
Update history: 11 September 2026 — guide created or verified against the source and methodology shown above.