Can you believe it? Many Amazon sellers who have a lot of orders end up losing money because they don't know their gross profit! This article will help you understand the income statement metrics once and for all, so that you can understand the operation status and growth trend.
If you want to run a cross-border e-commerce business for a long time, "sustainable profitability" is definitely the first requirement. However, how do you judge profitability? Why do some brand operators close their doors at a loss despite impressive sales figures? The answers to all these questions are hidden in the key indicators of the income statement.
Profit and Loss Account is one of the four major statements of financial statements, which records the operating data of a company during a specific period of time. By reviewing the income statement on a regular basis, you can get a clear picture of your income and expenses, calculate the actual amount of profit, and evaluate the effectiveness of your previous operating strategies by comparing your performance over time.
What's stopping you from accomplishing what you want to accomplish right now may be a misunderstanding of these financial indicators. Let's take a look at each of the 6 key indicators on your income statement:
- Operating Costs: Directly incurred costs, such as raw materials and packaging materials used to make the product.
- Operating expenses: indirect costs such as fixed expenses for personnel, rent, advertising and marketing, 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
Here we will show you how to calculate the key indicators: Gross Profit Margin = (Operating Revenue - Operating Costs)/Operating Revenue x 100%; Operating Profit Margin = (Operating Revenue - Operating Costs - Operating Expenses)/Operating Revenue x 100%. Generally speaking, the higher the Gross Profit Margin is, the better the profit 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.
It is worth mentioning that Amazon provides a variety of advertising programs, such as keyword merchandising, display ads, etc., and you can set an "average daily budget" to effectively control costs and ensure that you will not overspend.
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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# Amazon Global Store # Operating Gross Profit # Profit and Loss Statement Analysis # Cross-border E-commerce # Taiwan Sellers # Financial Management # E-commerce Profit # 2025 Financial Trends # Branding # Cross-border Entrepreneurship
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