Running an e-commerce business, especially in retail or D2C, means managing multiple vendors, fluctuating costs, and countless orders. How do you track profitability accurately?
At I&S Accounting SVCS, LLC, we help e-commerce businesses streamline finances and gain actionable insights. Let’s break it down with a real-world example:
📌 The Challenge: Understanding True COGS
You sell custom-designed T-shirts through Shopify and work with multiple vendors:
✅ Vendor A: Supplies blank T-shirts
✅ Vendor B: Handles custom printing
✅ Vendor C: Provides packaging
Each cost adds up to your Cost of Goods Sold (COGS) per T-shirt.
🔢 Step 1: Calculating COGS per Unit
To find true COGS:
➡️ Blank T-shirt: $5.00
➡️ Printing: $3.00 ➡️ Packaging: $1.00
➡️ Total COGS per T-shirt: $9.00
This is your baseline cost per unit.
📦 Step 2: Cross-Referencing Shopify Orders & Fulfillment Data
Your Shopify store provides:
💰 Sales price: $25 per T-shirt
🎉 Discounts: $5 off (promotion)
🔄 Refunds: $0 (no returns this time)
📊 Net sales: $20 per T-shirt
But you also have fulfillment costs:
🚚 Shipping: $4 per order
📦 Pack-out fee: $2 per order
Align these costs with your Shopify order numbers for accurate tracking.
📊 Step 3: Analyzing Performance Per Order
Example: You sold 2 T-shirts in one order
✅ Total Sales: $50
✅ Discounts: -$10
✅ Net Sales: $40
✅ COGS (2 T-Shirts): $18
✅ Fulfillment Costs: $6 (Shipping: $4 + Pack-out: $2)
✅ Gross Profit: $16
📈 Step 4: Scaling Up for Deeper Insights
Tracking this for every order helps you:
✔ Identify trends (e.g., higher fulfillment costs during peak seasons)
✔ Optimize pricing, discounts & supplier costs
✔ Improve profit margins with bulk order incentives
Example: If orders with 3+ T-shirts have lower fulfillment costs per unit, offer bulk discounts to encourage larger purchases.
📌 Extra Insights for Better Profitability
✅ Track Inventory Turnover: Slow-moving items might need pricing adjustments.
✅ Include Payment Processing Fees: Shopify, PayPal & Stripe take a cut from sales.
✅ Monitor Return Rates: High returns impact profits—analyze product quality & customer expectations.
✅ Consider Advertising Costs: Facebook, Google & TikTok ads affect net profitability.
✅ Understand Customer Lifetime Value (CLV): Repeat buyers = More stable revenue.
🎯 Why This Matters
Accurate data = Better decisions & higher profits.
At I&S Accounting SVCS, LLC, we help businesses like yours leverage financial data for growth.
💡 Want expert help? Let’s talk! 📩 [email protected] 🔗 https://iandsaccountingsvcs.com/contact-us/
