CoD still dominates online sales in Egypt, and it structures how the country’s homegrown brands operate. Payment cycles run 5-7 days on average. Failed deliveries cost the shipping fee, the customer acquisition spend, and all too often, the customer themselves. Returns are the piece of the fulfillment stack nobody’s really built. These pressures compound with the rising customer acquisition costs those same brands absorb on Meta and other platforms, with a handful of last-mile service providers now building what the sector has been missing.

Settlement cycles

The payment cycle is the defining working capital pressure for the Egyptian Direct-to-Consumer (DTC) model. Mark Khouzam, head of supply chain at cosmetics brand Dermacy Labs, tells EnterpriseAM that the typical cycle runs “around 5-7 days on average,” with the caveat that “this varies from one service provider to another, and sometimes from one month to another depending on the volumes.” That lag matters because money locked with delivery partners is money not available to place the next order, particularly for brands importing raw materials on their own schedules.

The logistics operators frame the settlement question differently. At ShipBlu, the model is contract-flexible. “We’ve built our platform to be able to onboard clients on very different cycles depending on their needs,” Ahmad Kawass, COO of ShipBlu, tells us. “So we have merchants with two-day cycles, five-day cycles, weekly, biweekly. And the objective is really to accommodate on a case-by-case basis.” Mylerz operates on a 72-hour standard for domestic shipments, with faster cadences available to key accounts, “either three transfers a week or a transfer every day,” the company’s chief commercial officer Alhussein Hassan says.

The sector-wide read is that no single settlement window applies. What matters to a merchant depends on their volume, their risk profile, and their working-capital tolerance. Faster settlement is a commercial lever the operators use to gain and retain business.

How the money moves

Behind the settlement window sits mechanical infrastructure most brands never see. “The courier hands [banknotes] in at the hub the same day, it is reconciled against confirmed deliveries, and the money is in the merchant’s account within 72 hours of delivery, with a full shipment-level statement to their finance team,” Hassan tells us. Daily hub reconciliation and shipment-level statements are what make any settlement window shorter than a week possible.

The parallel move on the merchant side is prepaid conversion. ShipBlu’s Blupay product sends customers instant Fawry payment links after a failed doorstep attempt, moving real volume off the CoD rails. “For the last month, our platform has generated more than 12 mn EGP in payments online for our merchants that didn’t happen before,” Kawass says. That results in a category-scale reduction in CoD dependency.

Doorstep-tampering

CoD’s less-discussed downside is what happens at the doorstep before the money changes hands. Customers demanding to inspect or “try” products before paying is a known issue for fashion and packaged-goods categories. Hassan’s data on this is unambiguous: cosmetics and fashion run lower delivery success rates than consumables such as coffee, cigarettes, and food. The category-level differential is meaningful enough that some brands have built entire operational protocols around prevention.

Take Dermacy Labs as a case in point. “Product safety and hygiene are non-negotiable. We have built our process around prevention rather than reaction,” Khouzam tells us. The prevention model is specific:

• Checkout messaging and delivery-partner communication making clear products cannot be opened or tested at the doorstep prior to payment;
• Full cellophane sealing on every product.

“[This is] a practice typically reserved for high-end perfume brands,” he says. On rejected products, the policy is absolute: “We treat that item as non-sellable and do not return it to inventory under any circumstances.” That write-off is the true cost of running a hygiene-sensitive product line on CoD.

The load-bearing cost

All three sources we spoke to converge on one point: the shipping fee is the least of what a failed delivery costs. From the brand side, Khouzam names the real economics. “Not only because of the delivery charge that goes out for no return to the seller, but more importantly for the investment made to acquire this particular customer and the effort spent on educating the shopper about the product benefits and brand differentiation that goes to waste. That is the real pain.”

Hassan’s commercial-side framing arrives at the same point differently. “A failed parcel costs the merchant the return leg, the inventory, the sale, and often the customer, so a few [EGPs] per parcel never beats a few points of success. Price only decides when success rates look equivalent.” Mylerz runs 91% delivery success across all shipments and 99% on prepaid, against what Hassan calls a market average of about 80%. Success rates are how the sector’s competitive positioning actually works.

Kawass frames the same problem operationally. “Even a 5% cost improvement makes a lot of difference on the merchant's P&L. Just imagine you're a small business; you have a lot of clients from a specific city. You can save so much money if you don’t have to send the shipment for a client that lives in Aswan directly from your source location.” ShipBlu’s transition-of-shipments capability consolidates multiple orders from different merchants going to the same customer into a single delivery run, one of several unit-economics investments the operator is making to close the fulfillment cost gap.

Reverse logistics

Returns are where the fulfillment stack has been weakest. Most of the businesses handled returns as an operational exception rather than a product line, which has cost brands and customers alike. “Reverse logistics is a big issue. Especially the way it’s happening right now, it's just failing,” Kawass says. ShipBlu is launching a reverse-logistics capability this quarter that gives merchants “full stop control over their reverse logistics,” including scheduling, tracking, and integration with existing systems.

Two things matter about this. First, the return economics on Egyptian DTC have been punitive: a failed delivery followed by a return that costs the brand a second logistics run, plus product loss or restocking cost. Second, without a real returns product, brands have been discouraging returns rather than accommodating them, a customer-experience penalty the wave’s more scaled operators are increasingly unwilling to accept. If ShipBlu’s launch, and equivalent moves from other operators, shifts the sector’s returns economics, the effect on brand-side unit economics is meaningful.

Density-first

For geography beyond Cairo, the sector’s answer is either density-first, obtaining high-density zones before expanding, or partnering with a specialist. “Not everyone can do it because it requires a lot of investment. But of course you don’t have to be perfect in all this because you can partner up with people. If a business is only doing 10k orders and doesn’t have inventory across the country, they should be partnering with people like Khazenly,” Kawass tells us.

Hassan’s pricing rate card is the concrete expression of the geographic cost gradient. Cairo and Giza start at EGP 75-85 for the first 2 kg. Upper Egypt and the Red Sea run EGP 90-110. Sinai, including Sharm El Sheikh, runs EGP 120. Delivery windows follow the same gradient: 24-48 hours inside Cairo and Alexandria, and 48 hours first attempt for everywhere else.

What to watch

Success rate at the hub level and merchant retention, measured as active merchants, is what to watch, Hassan says. “A merchant whose success rate is holding and whose weekly volume is not eroding is healthy; a quiet drop in shipments is the first warning, long before anyone complains about price.” Kawass watches CoD-to-prepaid conversion as the leading indicator that the sector’s economics are shifting. Both are looking at the durability of the merchant relationship from different angles.

Khouzam’s brand-side framing captures the whole logic. “The right partner is the one that strikes a balance between offering reasonable pricing, achieving strong delivery performance, and providing a tight cash payment cycle.”

What’s next

Kawass is direct about what he sees coming. “There’s going to be a lot of consolidation in the market. It’s a challenging business. Costs are going up. There is a limit to how much you can pass on to the merchant. There is a limit to how much you can pass on to the customer. So more and more we’re going to see companies burning [through capital], running out of [runway].” That consolidation, if it comes, resets which businesses the wave’s brands can partner with and on what terms.