D2C unit economics in India: shipping, RTO and gateway costs per order, honestly counted
By the Veritally team · · 3 min read
Every D2C founder knows their CAC. Far fewer know what an order really costs after it ships, and that is where good brands quietly run out of cash.
The order is not the end
A D2C order has three phases: winning the customer, shipping the product, and collecting the money. Most dashboards measure the first very well and the third hardly at all. Unit economics that stop at checkout overstate margin, sometimes by a lot.
Contribution margin per delivered order
Work this out per product line, over a full month:
| Line | Notes |
|---|---|
| Net revenue from delivered orders | After discounts and refunds |
| minus product cost (all units shipped) | Including units lost in RTO and returns |
| minus packaging (all units shipped) | |
| minus forward shipping (all shipments) | Billed weight, not your estimate |
| minus RTO shipping | Both directions if charged |
| minus gateway fees and GST on them | Prepaid orders |
| minus COD handling fees | COD orders |
| minus marketing spent on these orders | Ads and influencer cost |
| = contribution margin | Divide by delivered orders |
The three lines brands underestimate
Billed shipping vs planned shipping
Your plan assumes a weight and a zone. The courier bills what its scanner records. If your billed weight is regularly a slab above plan, every order costs more than you think. Check a month of freight bills against your packed weights.
RTO cost
A brand with high COD share in tier-2 and tier-3 cities can lose a large part of its margin to RTO. Count the forward and return shipping, the product damaged or lost, and the repacking time. The RTO cost calculator gives a quick estimate.
Money that never arrives
COD orders never remitted, prepaid payments never settled, refunds processed twice. These do not show up in any cost report because they are not costs, they are losses. Read COD cash flow for Shopify stores for where they hide.
Use it to make decisions
Once you have contribution margin per delivered order by product and by payment method, the decisions become clearer: which products to push, whether to offer COD on a product at all, which pin codes to restrict, and whether a prepaid discount pays for itself.
Make the inputs trustworthy
Unit economics are only as good as the numbers going in. Veritally for Shopify checks that every order was paid, every remittance arrived and every freight charge matches the shipment, so the margin you calculate is based on money you actually received.
Frequently asked questions
What is contribution margin for a D2C brand?
Net revenue from delivered orders minus all variable costs of getting those orders to customers and collecting the money: product, packaging, shipping, RTO, gateway and COD fees, and marketing.
Should RTO be included in cost per order?
Yes. Spread RTO shipping and lost product across delivered orders, because they are the orders that have to pay for the ones that came back.
How often should a D2C brand review unit economics?
Monthly by product line and payment method, and whenever shipping rates, gateway pricing or your COD share changes.
Keep reading
- Shopify and WooCommerceCOD cash flow for Shopify stores in India: where your money sits between order and bank
- Shopify and WooCommercePayment gateway settlements for D2C brands: what you actually pay and how to check it
- Shopify and WooCommerceMonth-end close for WooCommerce stores in India: a store owner's checklist
Looking for a step-by-step answer instead? Browse the seller guides or try the free tools.