The gap between “sales” and “money in the bank” is filled with platform charges, taxes and timing. Profitability that ignores them is optimism. This guide sets out the numbers that actually drive decisions.
Where margin actually disappears
Gross margin disappears in the layers between the selling price and cash:
- Commission and referral fees.
- Shipping and logistics (you or the marketplace).
- Collection and payment-handling charges.
- Ad spend tied to orders.
- GST impact on returns and charges.
- Refund reversals that claw back prior margin.
Each layer is small until it is quantified per order — then it is usually the biggest single cost after product cost.
The true profitability formula
Order-level profit needs this chain:
| Component | Source |
|---|---|
| Selling price | Order feed |
| minus Product cost (COGS) | Your item cost |
| minus Platform charges | Settlement, linked per order |
| minus Shipping / logistics | Per-order fulfilment cost |
| minus Ad spend (if allocatable) | Marketplace ad data |
| minus / plus GST and refund effects | Tax and return data |
| equals Order profit | The number decisions need |
Order-level profitability
Once charges are attached per order, every order gets a real profit. That makes it possible to answer: which orders, products and customers earn their keep.
Product and SKU profitability
Roll order-level profit up per product and per SKU. Listings that are heavily discounted, returns-heavy, or commission-heavy surface immediately. Gross margin hides them.
Marketplace channel views
The same product on two marketplaces usually carries different commission, logistics and ad economics. Channel-level profitability — after all platform costs — tells you where to invest supply and where to negotiate.
Warehouse-level cost
Fulfilment cost and stock-transfer expenses are keyed to warehouses. Profitability by warehouse separates the decisions you control (where you stock) from marketplace economics you negotiate.
From numbers to decisions
Useful profitability answers, in order:
- Which SKUs are profitable after platform cost?
- Which marketplaces are cheapest after all charges?
- Which warehouses cost the most to fulfil from?
- What is true margin on any given order?
When these are current and per order, pricing, inventory and channel decisions stop being guesses.