RekonPay-on-delivery profit: what your sales figure hides
Sales look healthy when you count confirmed orders. Profit is what is left after the orders that never arrive, the trips that fail, the ads and the goods themselves.
Published
A worked example
The figures below are an illustration, not an industry average. Replace them with your own.
A seller runs ads for one product priced at ₦19,000 with a ₦3,000 delivery charge. It costs them ₦9,000 to buy. In one week:
- 100 orders come in from the ads
- 80 are confirmed on the phone
- 60 are delivered and paid for; 20 deliveries fail
- Ad spend for the week is ₦150,000
- Riders charge ₦2,500 per delivery and ₦1,000 per failed attempt
What the sales figure says
80 confirmed orders at ₦22,000 looks like ₦1,760,000. That is the number that gets shared, and it is not money anyone will receive.
What actually happened
| Calculation | Amount | |
|---|---|---|
| Revenue | 60 delivered × ₦22,000 | ₦1,320,000 |
| Cost of goods | 60 × ₦9,000 | −₦540,000 |
| Rider fees, delivered | 60 × ₦2,500 | −₦150,000 |
| Rider fees, failed | 20 × ₦1,000 | −₦20,000 |
| Ad spend | −₦150,000 | |
| Contribution | ₦460,000 |
That is ₦7,667 per delivered order, or about 35% of revenue, before rent, salaries and data. A healthy result, but a long way from the sales figure.
The two numbers to watch
Cost per delivered order
Ad spend divided by delivered orders, not by orders received: ₦150,000 ÷ 60 = ₦2,500. Counting orders received (₦1,500 each) makes an ad look better than it is, because 40 of those 100 orders never paid.
Return on ad spend
Delivered revenue divided by ad spend: ₦1,320,000 ÷ ₦150,000 = 8.8. Track it per product. A product with a high sales figure and a low return is eating the profit of your good products.
Where the money goes missing
- Failed deliveries cost a fee each and tie up stock. Here, 20 failures cost ₦20,000 in fees alone.
- Cash not yet received. Revenue is earned at delivery, but the money is still with riders until they remit. Profit you cannot spend is a cash-flow problem waiting to happen.
- Stock losses: damaged, missing or never-returned units are a cost even if nobody writes them down.
- Discounts given at the door to close a sale reduce revenue order by order.
How to work out your own
- Count revenue only from delivered orders, including what customers actually paid.
- Use the real cost of each unit sold, at an average cost if your buying price changes.
- Add rider fees for delivered and failed trips.
- Record ad spend every day, by channel and by product.
- Compare the result with the money that actually reached your bank in the same period.
If those last two numbers drift apart week after week, the gap is sitting with riders, partners or customers who said they paid. Find it before it grows.