Many e-commerce teams look at payouts and think that is profit. It is not. Payouts are net of fees and timing differences. If you do not track cost of goods, merchant fees, and shipping the right way, your margin will look higher or lower than it really is. This guide gives a clear approach you can put in place this month.
Common mistakes include booking marketplace deposits as revenue, posting shipping charges as a single bucket with no split by channel, and ignoring duty or inbound freight when computing cost of goods sold. Another mistake is mixing discounts and refunds with fees, which hides the reason margins move. Clean rules fix these issues and make your data useful for pricing and ads.
COGS is the cost to get a product ready for sale. For a reseller, that includes the purchase price and all costs to bring it to your shelf or warehouse.
COGS basics
If freight and duty hit at the shipment level, allocate them to units. Use a simple rule such as weight, volume, or item cost. Stay consistent. If you skip this step, items with low purchase cost but high freight will look better than they are.
Simple allocation steps
Pick a method and stick to it.
Count inventory at least once a quarter. Record write offs for damage or loss. If you rarely count, COGS will drift because ending inventory is wrong.
Fees reduce profit even when revenue looks strong. You need to see them by channel and fee type to act.
Record gross sales, then record fees as an expense line, and record refunds and discounts in their own lines. Do not post only the net payout. This gives you clear gross margin and shows which fee types are rising.
Example
If a marketplace remits net of commission and shipping, gross up the entry so you still see sales, fees, and shipping as separate lines. Your bank will still match the net amount.
Shipping touches many accounts. Split it so you can see what you charge, what it costs, and what is inside the warehouse.
Record third party warehouse fees in “fulfillment expense.” Split storage from pick and pack if the provider’s invoice allows it. Storage spikes by season and can hurt margin if you carry slow movers. Pick and pack is tied to order volume and can guide pricing for small orders.
Packaging
If branded boxes or inserts ship with the item and you track per item usage, include in COGS. If packaging is generic and hard to tie to a SKU, keep in fulfillment expense. Be consistent and write the rule down.
A steady close process gives you confidence in your numbers. Use a three-way reconciliation.
Match order totals to payout reports by date range and channel. Then match net payouts to bank deposits. Differences usually come from timing, holds, or fees. Keep a small clearing account for each processor to hold timing items that will settle next month.
Unit economics guide pricing and ad spend. Build a simple contribution margin for each channel or SKU group.
Contribution margin per order
Revenue
Watch this monthly by channel. If the margin is thin, adjust price, shipping rules, or ad spend. If a SKU often ships alone and is heavy, raise shipping income or move it to a bundle.
Own store with a payment gateway
Marketplace
Booking net deposits as revenue
Fix by splitting sales, fees, and shipping. Build a simple journal template per channel.
Missing landed cost
Fix by allocating freight and duty at receiving. Use a single driver and post to item cost.
Returns not tied to orders
Fix by scanning RMA numbers and linking to the order. Automate the inventory move and COGS reversal when restocked.
Shipping cost drift
Fix by reviewing carrier invoices against rules monthly. Adjust checkout shipping rates or free shipping thresholds.
Fee creep
Fix by tracking fee rate by channel. Negotiate when volume grows. Move payment types that drive chargebacks to safer flows.
No inventory counts
Fix by running cycle counts weekly. Adjust the ledger and record write offs. This keeps COGS true.
Start with one channel and one warehouse, then expand. Write rules so the team books items the same way every month.
Setup checklist
Month-end checklist
With these steps, your view of profit will match reality. You will see where margin slips, which fees matter, and how shipping rules shape results. Clear numbers support better pricing, cleaner ads, and stable growth.
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