Cross-border e-commerce sellers who regularly sell on Amazon should take note! The National Holidays are just around the corner, and while you're busy preparing for the Q4 selling season, don't forget to review your Profit and Loss reports first to make sure your Amazon store is actually making money. This article will reveal how to properly evaluate your performance and provide best practices for analyzing profit and loss reports.
Did you know that there are only five key metrics for determining the profitability of Amazon's business? There are really only five key metrics for determining the profitability of an Amazon business: revenue, cost of goods, operating costs, profit, and net income. While the income statement contains a lot of financial data, focusing on these five core metrics gives you the big picture.
The biggest issue is how sales are calculated. We need to divide it into two parts: natural traffic sales and tax sales. The formula for calculating this is completely different for FBA and FBM sellers:
FBA Sellers: Price per unit - (Shipping + Gift Wrap + Payment Method Fee) - Ad Sales = Natural Traffic Sales
FBM Sellers: Price per unit + (Shipping + Gift Wrapping + Payment Method Fee) - Ad Sales = Natural Traffic Sales
For example, if you are an FBM seller, charges such as shipping will be added to your sales, whereas an FBA seller will have to deduct these charges from your sales. This difference is often overlooked, but it's important!
Additionally, Amazon has a number of different taxes that must be factored into the calculation to know the correct sales revenue. In the end, natural traffic sales plus taxed sales are your total sales revenue.
More noteworthy is the distinction between direct costs (cost of goods sold) and indirect costs (overhead). Direct costs include the cost of purchasing products from suppliers, raw materials, transportation costs, etc., while indirect costs include rent, utilities, insurance, salaries, and other expenditures that are not directly related to the creation of a product.
The formula for calculating gross margin is: [(Gross Revenue - Cost of Goods Sold)/Gross Revenue] X 100. If your gross margin is 40%, it means that there is a profit of 40% per item. Ultimately, Net Income (Gross Profit minus Overhead) is the key metric that determines the profitability efficiency of your company.
Calculating these figures manually is not only time-consuming, but also prone to errors, BQool's BigCentral Profit Statement Analyzer automatically calculates all the data to help you get a clear picture of your store's profitability and make adjustments to your business strategy with ease.
Want to be the first to get the latest Amazon business information? Click the link to join Green Circle LINE friends:https://line.me/ti/p/g2Vc38nLnR
# Amazon Global Store # Cross-border E-commerce # Profit Analysis # Taiwan Sellers # Financial Management # E-commerce Entrepreneurship #FBA Logistics
EN 
ZH_TW 
ZH