This is outrageous! Many e-commerce operators only focus on order volume and total revenue, but ignore the key indicator that really determines profitability - gross operating profit. This article will help cross-border brands and Taiwanese sellers to understand the profit and loss statement thoroughly and grasp the secret of long-term profitability.
If you want to run a company, a store or an e-commerce business for a long time, it's important to be able to "sustainably make a profit". However, how do you judge profitability? Why do some businesses lose money even though their sales results seem to be very impressive?
Start with the income statement, which is one of the four major financial statements that record a company's operations over a specific period of time. By comparing the profit and loss statements of different periods, you can clearly observe the changes in the company's revenue, and then evaluate the effectiveness of the previous operating strategies.
The biggest problem is that many e-commerce entrepreneurs do not understand the real meaning of the indicators on the P&L table. Here is a detailed analysis of the 6 key indicators:
- Operating Costs: Directly incurred costs, such as raw materials, packaging materials, etc.
- Operating expenses: indirect costs such as fixed expenses for personnel, rent, advertising, etc.
- Operating revenue: Gross proceeds from the sale of goods or services.
- Gross profit: operating revenue minus operating costs, reflecting the market value of the products.
- Operating Profit: Gross Profit less Operating Expenses, which shows the profitability of the industry.
- Net Income After Tax: Operating Income After Tax True Revenue
For example, during the 2012 Olympics, many brands appeared to have increased their sales, but ended up losing money because they didn't control their operating costs and expenses. It's important for cross-border sellers to understand and calculate these indicators.
The formula for calculating gross profit margin is: (Operating Revenue - Operating Costs)/Operating Revenue x 100%; and Operating Profit Margin is: (Operating Revenue - Operating Costs - Operating Expenses)/Operating Revenue x 100%. Generally speaking, the higher the gross profit margin is, the better the profit-making mechanism of the enterprise is.
For Taiwanese sellers who set up store on Amazon, there are four major operating costs:
- Setup Fee: $0.99 per item for Personal Plan or $39.99 fixed per month for Professional Plan
- Sales commission: 8-15% depending on product category
- Logistics costs: Including warehousing fees, delivery costs, etc., can be estimated using the Amazon Logistics FBA online trial tool.
- Operating expenses: personnel, packaging, advertising and marketing, etc.
What's even cooler is that Amazon offers a variety of advertising programs, such as keyword merchandising, display ads, etc., and you can set an "average daily budget" to effectively control costs. For example, if you set the average daily budget to $200, then the average daily budget will not be exceeded within a specific period of time, helping you to precisely control your marketing expenses.
If you want to run a stable cross-border e-commerce business in the long run, besides regularly reviewing your profit and loss statement, it's also important to choose a trustworthy e-commerce platform. Amazon Amazon Global Store, with hundreds of millions of users, has already opened 14 overseas sites and over 400 operation centers in Taiwan, and provides free operation tools, tax calculations, and official logistics services to help you run your business properly and grow your gross margins steadily.
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# Cross-border E-commerce # Amazon Global Store # Operating Gross Profit # Profit and Loss Analysis # Taiwan Sellers # Financial Management # 2025 E-commerce Trends # Cross-border Brands # E-commerce Profit # Global Store # Global Open Store
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