Running an e-commerce business, especially in retail or D2C, means managing multiple vendors, fluctuating costs, and countless orders. How do you track profitability accurately?

At I&S Accounting SVCS, LLC, we help e-commerce businesses streamline finances and gain actionable insights. Let’s break it down with a real-world example:

📌 The Challenge: Understanding True COGS

You sell custom-designed T-shirts through Shopify and work with multiple vendors:

✅ Vendor A: Supplies blank T-shirts

✅ Vendor B: Handles custom printing

✅ Vendor C: Provides packaging

Each cost adds up to your Cost of Goods Sold (COGS) per T-shirt.

🔢 Step 1: Calculating COGS per Unit

To find true COGS:

➡️ Blank T-shirt: $5.00

➡️ Printing: $3.00 ➡️ Packaging: $1.00

➡️ Total COGS per T-shirt: $9.00

This is your baseline cost per unit.

📦 Step 2: Cross-Referencing Shopify Orders & Fulfillment Data

Your Shopify store provides:

💰 Sales price: $25 per T-shirt

🎉 Discounts: $5 off (promotion)

🔄 Refunds: $0 (no returns this time)

📊 Net sales: $20 per T-shirt

But you also have fulfillment costs:

🚚 Shipping: $4 per order

📦 Pack-out fee: $2 per order

Align these costs with your Shopify order numbers for accurate tracking.

📊 Step 3: Analyzing Performance Per Order

Example: You sold 2 T-shirts in one order

✅ Total Sales: $50

✅ Discounts: -$10

✅ Net Sales: $40

✅ COGS (2 T-Shirts): $18

✅ Fulfillment Costs: $6 (Shipping: $4 + Pack-out: $2)

✅ Gross Profit: $16

📈 Step 4: Scaling Up for Deeper Insights

Tracking this for every order helps you:

✔ Identify trends (e.g., higher fulfillment costs during peak seasons)

✔ Optimize pricing, discounts & supplier costs

✔ Improve profit margins with bulk order incentives

Example: If orders with 3+ T-shirts have lower fulfillment costs per unit, offer bulk discounts to encourage larger purchases.

📌 Extra Insights for Better Profitability

✅ Track Inventory Turnover: Slow-moving items might need pricing adjustments.

✅ Include Payment Processing Fees: Shopify, PayPal & Stripe take a cut from sales.

✅ Monitor Return Rates: High returns impact profits—analyze product quality & customer expectations.

✅ Consider Advertising Costs: Facebook, Google & TikTok ads affect net profitability.

✅ Understand Customer Lifetime Value (CLV): Repeat buyers = More stable revenue.

🎯 Why This Matters

Accurate data = Better decisions & higher profits.

At I&S Accounting SVCS, LLC, we help businesses like yours leverage financial data for growth.

💡 Want expert help?

Let’s talk! 📩

contact@oncyelhellycpa.com

oncyelhellycpa.com

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