Feasibility Study for an Online Store and E-commerce Business in Egypt

How an online store makes money, and where it loses it

An online store selling physical products earns the gap between its selling price and the full cost of getting the product into the customer's hands. The owner sees the purchase price and the shipping charge, and forgets that some cash-on-delivery orders will be refused at the door after their ad, shipping and packaging have been paid for, and that advertising is paid for every order placed, not every order delivered.

So an online store feasibility study does not start from the product margin. It starts from two numbers: the contribution per order actually paid for after refusals and returns, meaning what is left of it after its variable costs, and the advertising cost of acquiring an order. If the ad cost per order exceeds what is left before advertising, every new order adds to the loss. The third number is cash: stock is bought upfront, and cash-on-delivery money arrives after delivery.

Distance selling under consumer protection law: a 14-day right to withdraw

Selling online is a remote contract, and Consumer Protection Law No. 181 of 2018 has a chapter on it. Article 40 states: "Without prejudice to any warranties, legal conditions or better Consumer agreement, the Consumer who enters into a remote contract shall have the right to rescind the contract within fourteen days of receiving the commodity"¹. The supplier then refunds the amount the same way it was paid, unless another refund method is agreed, within no more than 7 days from the date the product is returned, and "the consumer shall bear the expenses of shipment and returning the product, unless otherwise is set forth in the contract"¹. If the supplier delivers later than the agreed date, or does not deliver within 30 days when no date was agreed, the consumer may rescind without any expenses, and the supplier bears all reshipment and delivery costs¹. Article 41 removes the right to rescind in listed cases, including goods made at the consumer's request or to specifications the consumer set, and a defect caused by the consumer's poor handling of the goods¹.

Article 37 requires the supplier, before the contract, to give the consumer the price of the product and all amounts that may be added to it, in particular fees, taxes and shipping charges, and the provisions and period for rescinding the contract¹. In practice: returns after delivery are a legal right, so put a return rate in your numbers and state your return policy and shipping charges on the product page. If you pay return shipping yourself to encourage purchases, it is a cost inside the contribution per order.

Tax: the registration threshold, imports and the e-receipt

The general VAT rate is 14% from fiscal year 2017/2018², the mandatory registration threshold is EGP 500,000³, and anyone whose sales reach it must apply to register within 30 days of reaching it². For stores that import their stock, Article 16 of the same law requires every importer of a taxable good or service for trading to register with the Tax Authority whatever the size of its transactions², so the EGP 500,000 threshold does not apply to them.

On e-receipts, Minister of Finance Decision No. 230 of 2022 requires taxpayers registered with the Egyptian Tax Authority to issue electronic tax receipts for services performed and goods sold to the final consumer. The Authority applies it in phases through successive decisions; the latest phase published on its page is phase nine, Decision No. 361 of 2025⁴. The same page offers an inquiry service for taxpayers named in the obligation decisions⁴, so check your company's status and budget for a receipt system if you are covered. Maher Consulting Firm can handle company formation and tax registration.

Illustrative example: order economics for a store selling one product

This is an illustrative example. Its figures are assumptions to explain the method, except the online payment fees, wage and social insurance. A store sells one product line, say a backpack, and figures are before VAT:

• Selling price: EGP 650 including delivery; product cost landed in the store's stockroom EGP 260; packaging EGP 15 per shipment.
• Shipping: EGP 75 per shipment, paid on delivered and refused orders alike, and assumed to include bringing a refused order back to the stockroom. This is an assumption, since prices vary by governorate, weight and agreement, and some couriers charge a separate return fee on refused orders that must be added; ask for a written quote setting the delivery, return and collection fees and when collected cash is transferred.
• Cash-on-delivery collection fee: 1% of the amount collected (assumption).
• Card payments: 20% of orders. Paymob publishes a standard price of 2.75% + EGP 3 per transaction, with weekly settlement to your bank account⁵. Kashier publishes the same rate per successful transaction, with 14% VAT charged on its fee only⁶. On a EGP 650 order the fee is 0.0275 × 650 + 3 = EGP 20.88, and EGP 23.80 after adding 14% to be cautious.
• Cash on delivery: 80% of orders, of which 20% are refused at the door, with no refusals on card orders (assumption).
• Returns after delivery: 3% of delivered orders, refunded in full, with the customer paying return shipping as under Article 40. Refused and returned items go back into stock in saleable condition.
• Advertising: EGP 90 per order placed (assumption).

Out of every 100 orders placed: 20 by card and 80 cash on delivery, of which 16 are refused, so 84 are delivered, 2.52 of those are returned, and 81.48 orders are actually paid for. The costs spread over those paid orders:

The quick sum 650 − 260 − 75 − 15 − 90 gives EGP 210, but the actual contribution is EGP 158.14 per paid order, or EGP 128.85 per order placed, because every refused order costs EGP 75 in shipping out and back and EGP 15 in packaging on top of the EGP 90 of advertising already spent on it, EGP 180 with no revenue. What is left before advertising is EGP 218.85 per order placed, and that is the maximum you can pay in advertising per order before every order loses money.

Fixed monthly costs: we assume a store platform subscription of EGP 1,500; one employee to confirm and pack orders at the private-sector minimum wage of EGP 7,000 a month in force from 1 March 2025⁷, plus the employer's 18.75% social-insurance share⁸, EGP 8,312.5 in total; an accountant at EGP 2,000; a small stockroom, not a shop, at EGP 4,000; and phones and other costs at EGP 1,500. The total is EGP 17,312.5, and the owner draws no salary in the example.

Monthly break-even = 17,312.5 ÷ 128.85 = about 134.4, so 135 orders placed, or about 110 orders actually paid for. At 400 orders placed a month, operating profit is EGP 34,228.5 before profit tax. The method is explained in detail in our article on break-even and working capital.

Cash: stock is paid upfront and collection lags

We extend the example with cash assumptions: start-up costs of EGP 40,000 (incorporation, product photography and store set-up); stock bought in batches of 800 units at EGP 208,000 a batch, paid in cash on purchase, with a new batch bought whenever stock will not cover the next month's sales. Orders placed are 150 in month one, 250 in month two, 350 in month three and 400 a month after that. Card money arrives in the same month; for cash on delivery the courier transfers half of what it collects in the same month and the other half the following month (assumption).

(Other cash out = advertising, shipping, packaging, fees, refunds and fixed costs; amounts are rounded to the nearest pound.)

The store covers its costs from month one, yet the deepest cash need reaches EGP 325,212 in month three, when the second stock batch coincides with growing orders, and the balance does not turn positive before month 12. At 400 orders a month, about EGP 83,200 of your money is still with the courier at the end of every month. That is the working capital you need: stock on the shelf and cash in transit. The difference between profit and cash is explained in our article on cash flow for small businesses.

In the example, cumulative sales reach EGP 609,063 by the end of month four, so the store passes the VAT registration threshold during that month and must register within 30 days of reaching it². The table is net of VAT, so it assumes the consumer price becomes EGP 741 including VAT after registration; what happens if you keep it at EGP 650 is shown in the next section.

What if refusals rise, ads cost more or you cut the price?

The same example with one assumption changed at a time and the same number of orders placed; figures are in EGP:

In none of the four alternative scenarios does the balance turn positive within 12 months. The most dangerous is the price cut: 10% off the price wipes out 40% of the contribution per order, because product, shipping and advertising costs do not fall with it. Work out how many extra orders you need to make up for a cut before you make it, as explained in our article on how to price your product. All three together push break-even to 1,448 orders a month, which in practice means the store loses money.

Tax works like a price cut if you leave it out: if you register for VAT and keep the consumer price at EGP 650 including VAT, your net price is EGP 570.18, about 12.3% lower, while payment and collection fees are still charged on the EGP 650 the customer pays, so the contribution per order placed falls to EGP 63.81 and break-even rises to 272 orders a month, assuming the other costs are net of any VAT you can deduct.

The two levers that matter most: refusals and prepayment

You control how many orders leave the stockroom and come back: confirming orders by phone before shipping, accurate photos and sizes, and following up delivery dates. Raising the share of prepaid orders is stronger still: in the example, if card-paid orders rose from 20% to 40%, the contribution per order placed would rise to EGP 140.27, break-even would fall to 124 orders, the deepest cash need would fall to EGP 290,887, and the balance would turn positive in month seven instead of month twelve. A small discount for paying in advance may cost less than the refusals it prevents, so calculate both together.

The second lever is stock: a large batch often lowers the purchase price but raises the cash need. In the example, each 800-unit batch lasts about two and a half months at 400 orders a month and costs EGP 208,000 in cash. If you will import the stock yourself, also read about an import and export company feasibility study.

Common mistakes in an online store feasibility study

1. Calculating the margin as selling price minus product cost, without shipping, packaging, advertising and fees.
2. Dividing the ad budget by orders placed rather than by orders actually paid for.
3. Assuming a refused order costs nothing, when it carries its ad, shipping and packaging, and may come back damaged.
4. Ignoring the 14-day right to withdraw in distance selling.
5. Leaving out the delay in transfers of collected cash and the cost of the second stock batch.
6. Pricing without accounting for VAT, or assuming the EGP 500,000 threshold applies to an importer.
7. Relying on a single advertising platform, with no scenario for its cost per order rising.

Frequently asked questions about an online store feasibility study

Sources

1. Official Gazette via WIPO Lex. قانون رقم 181 لسنة 2018 بإصدار قانون حماية المستهلك (الجريدة الرسمية، العدد 37 تابع ج) | Law No. 181/2018 Promulgating the Consumer Protection Act (in Arabic) (2018-09-13). Checked 22 October 2026.
2. Financial Regulatory Authority. قانون الضريبة على القيمة المضافة رقم 67 لسنة 2016 وفقًا لآخر تعديل (in Arabic). Checked 22 October 2026.
3. Egyptian Tax Authority. ما هو حد التسجيل الإلزامي لضريبة القيمة المضافة، وما هي الأنشطة المعفاة منها؟ (in Arabic). Checked 22 October 2026.
4. Egyptian Tax Authority. قرارات الإلزام بالتعامل بالإيصال الإلكتروني (in Arabic). Checked 22 October 2026.
5. Paymob. Pricing: Standard plan. Checked 22 October 2026.
6. Kashier. Pricing. Checked 22 October 2026.
7. Ministry of Planning and Economic Development. الاجتماع الأول للمجلس القومي للأجور: رفع الحد الأدنى لأجور القطاع الخاص إلى 7000 جنيه (in Arabic) (2025-02-09). Checked 22 October 2026.
8. Andersen Egypt. Social insurance in Egypt (contribution rates under Law 148/2019) (2026-06-30) — secondary source. Checked 22 October 2026.