Real net margin sits around 6 to 12%, not 45%
The first mistake of a new e-commerce seller in Senegal is confusing gross margin with net margin. A fashion store that buys at 10,000 FCFA and resells at 22,000 FCFA thinks it earns 12,000 FCFA. After customer acquisition, shipping, payment fees, returns and packaging, what is left is usually 1,800 to 3,000 FCFA. Realistic net margin in e-commerce sits between 6 and 12% of revenue, rarely more.
Across about twenty stores supported between 2024 and 2026, the median net margin observed is 9%. In other words, for 1,000,000 FCFA in sales, 90,000 FCFA remains before tax. The whole challenge is knowing which category supports this model and which does not.
Gross margin vs net margin by category
Gross margin is the selling price minus the product cost. Net margin is what remains after ALL costs. The gap between the two is what kills most stores.
| Category | Average gross margin | Realistic net margin | Average basket |
|---|---|---|---|
| Fashion and textile | 50-60% | 12-20% | 18,000 FCFA |
| Cosmetics and beauty | 55-70% | 15-25% | 14,000 FCFA |
| Jewelry and accessories | 60-75% | 20-30% | 12,000 FCFA |
| Electronics | 8-15% | 2-6% | 85,000 FCFA |
| Home appliances | 12-20% | 4-8% | 120,000 FCFA |
| Food and grocery | 20-30% | 5-10% | 9,000 FCFA |
| Baby care | 35-45% | 10-18% | 22,000 FCFA |
| Handmade products | 45-60% | 15-22% | 28,000 FCFA |
The lesson is clear: electronics and appliances have a large basket but a gross margin crushed by competition and sourcing. Fashion, beauty and jewelry keep a decent net margin even with a small basket.
The 7 line items that eat your margin
Here is where money goes between gross and net margin, as a percentage of the selling price.
| Line item | % of selling price | Note |
|---|---|---|
| Product cost | 40-60% | The biggest item |
| Customer acquisition (ads) | 8-18% | Meta, Google, influencers |
| Shipping and delivery | 5-12% | Often underestimated |
| Payment fees | 1.5-3.5% | Card and mobile money |
| Returns and unsold stock | 3-8% | Tied to cancellation rate |
| Packaging | 1-3% | Box, tape, bag |
| Overheads | 4-8% | Storage, salaries, tools |
The cash-on-delivery trap
In Senegal, cash on delivery generates a cancellation rate of 15 to 35% depending on the category. Each refused order costs the round-trip shipping with no revenue. On a store with 20% cancellation, this single item can wipe out 6 to 9 points of net margin.
Worked example: a 35,000 FCFA fashion order
Take a dress sold at 35,000 FCFA, bought at 14,000 FCFA, delivered in Dakar.
| Line | Amount FCFA |
|---|---|
| Selling price | 35,000 |
| Product cost | -14,000 |
| Gross margin | 21,000 |
| Customer acquisition (12%) | -4,200 |
| Dakar shipping | -2,500 |
| Payment fees (2.5%) | -875 |
| Returns provision (6%) | -2,100 |
| Packaging | -600 |
| Overheads (6%) | -2,100 |
| Net margin | 8,625 |
Net margin comes out at 8,625 FCFA, or 24.6% on this high gross-margin product. But this dress is a favorable case: 60% gross margin. Redo the math with an 85,000 FCFA smartphone and 12% gross margin, and you go negative as soon as ads exceed 8%.
How to lift net margin from 9 to 15%
| Lever | Effect on net margin | Difficulty |
|---|---|---|
| Raise average basket (cross-sell) | +2 to 4 pts | Medium |
| Cut cancellation rate (deposit) | +3 to 6 pts | Medium |
| Negotiate shipping by volume | +1 to 3 pts | Easy |
| Lower CAC (loyalty) | +2 to 5 pts | Hard |
| Direct sourcing without middlemen | +5 to 10 pts | Hard |
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A partial deposit at order time is the most profitable and fastest lever: asking for 30% upfront usually drops cancellations from 25% to under 8%.
Break-even by category
How many orders per month to cover 600,000 FCFA in fixed costs?
| Category | Net margin/order | Orders/month needed |
|---|---|---|
| Jewelry | 3,000 FCFA | 200 |
| Fashion | 2,400 FCFA | 250 |
| Cosmetics | 2,800 FCFA | 214 |
| Electronics | 2,500 FCFA | 240 |
| Food | 600 FCFA | 1,000 |
Food demands enormous volume to survive. Jewelry and beauty reach break-even with ten times fewer orders.
FAQ
What is the average net margin in e-commerce in Senegal?
The median net margin observed is around 9% of revenue, versus 45 to 60% gross margin depending on category. The gap comes from customer acquisition, shipping, payment fees and cancellations.
Why is electronics so unprofitable?
Because gross margin is low (8 to 15%) due to competition and sourcing, while the high basket attracts heavy shipping and ad costs. A small pricing mistake tips it into a loss.
How do I reduce the impact of cancellations?
Ask for a 20 to 30% deposit at order time. This drops the cancellation rate from 25% to under 8% and recovers 3 to 6 points of net margin.
Is cash on delivery still worth it?
Yes for acquiring new customers, but you must provision 3 to 8% of the price for returns and shift loyal customers to prepayment as soon as possible.
What average basket should I target to be profitable?
Above 15,000 FCFA in gross margin over 40%, profitability becomes reachable from 200 to 250 orders per month. Below that, you need very high volume.
Let's talk about your project. To model your store's real net margin category by category, reach Kolonell on WhatsApp +221 77 596 93 33.
Mohamed Bah
Fondateur, Kolonell
Passionate about digital and entrepreneurship in Africa, Mohamed has been helping Sénégalese businesses with their digital transformation since 2020. Founder of Kolonell, he believes every SME deserves a professional and accessible online présence.
