Blog/P&L Analytics

Why your Amazon sales look good but your P&L is red

"Revenue is vanity, profit is sanity." It sounds like a motivational poster. But for ecommerce sellers, it is the most important financial truth you can internalise. We regularly speak to Indian sellers doing ₹8-15 lakh in monthly GMV who are actually losing money - and do not know it until they run a proper P&L.

The problem is not that they are bad at selling. The problem is that marketplace economics are complex and most sellers track revenue, not profit. When you add up marketplace commissions, FBA fees, ad spend, returns, and storage - the number that arrives in your bank account is often a fraction of what you expected.

G
Gangadhar Jena
Founder, EcomLinx · 8 Apr 2026 · 9 min read

The 6 hidden costs eating your margin

Most sellers account for two of these. The profitable ones account for all six.

Marketplace commission8-45%

Amazon India: 5-15%. Flipkart: 8-20%. Meesho: 10-18%. Myntra: 25-45% on fashion. Many sellers only know their primary channel rate - not all of them.

FBA / fulfillment fees₹35-120/unit

FBA pick & pack fees vary by product dimensions and weight. A 500g product in a 25x20x10cm box costs ₹52.50 in FBA fees before storage. Sellers often forget to include this in COGS.

Return processing cost15-35% of returns

Every returned unit costs forward shipping + return shipping + inspection + re-packaging. On a ₹399 product with 25% return rate, returns alone consume ₹30-60 per unit sold.

Ad spend (ACoS bleed)Unbounded

A campaign with 40% ACoS on a product with 30% gross margin is actively destroying money. Each ₹100 of revenue generated by that ad costs ₹40 in ads but only delivers ₹30 in gross margin. Net: -₹10.

Storage fees₹8-25/unit/month

FBA long-term storage fees escalate sharply after 6 months. Sellers with slow-moving inventory in FBA warehouses often find storage fees exceeding the product margin.

Payment gateway / settlement delay1-2.5%

Amazon and Flipkart charge a payment processing fee on each order (0.5-2%). Settlement arrives 7-14 days after delivery - this working capital gap has a real cost for sellers financing inventory.

A real P&L walkthrough: ₹1L revenue, ₹7,800 profit

This example uses real-world averages for a mid-range fashion seller on Amazon India. The numbers are not extreme - they reflect typical marketplace economics.

Gross Revenue (orders × sale price)₹1,00,000
- Returns (25% return rate)- ₹25,000
= Net Revenue₹75,000
- COGS (cost of goods, 40% of net revenue)- ₹30,000
- Marketplace commission (15% avg)- ₹11,250
- Shipping cost (FBA + returns shipping)- ₹9,000
- Ad spend (ACoS 28% on ₹40K ad-attributed revenue)- ₹11,200
= Gross Profit₹13,550
- Return processing / repack cost- ₹3,750
- Storage + miscellaneous platform fees- ₹2,000
= Net Profit₹7,800

Net margin: 7.8% on gross revenue. Many sellers looking at their ₹1L revenue figure believe they are doing well. A proper P&L tells a very different story.

How to fix your P&L: 4 levers that actually work

You cannot optimise what you do not measure. Start with visibility, then optimise each cost line.

01
Calculate true COGS - including all inbound costs

COGS is not just manufacturing cost. It includes inward freight, packaging, labelling, quality check cost, and your time. Many sellers calculate COGS at ₹150 but the true landed cost at the warehouse is ₹190.

02
Set an ACoS ceiling before campaigns go live

Before launching any Sponsored Products campaign, calculate your break-even ACoS: (Gross Margin %) = your ceiling. A product with 30% gross margin should never run campaigns above 25% ACoS.

03
Track return cost per SKU, not in aggregate

Returns are not evenly distributed. One SKU with a 40% return rate is destroying your P&L while 8 others are healthy. You cannot see this in aggregate dashboards - you need per-SKU return cost tracking.

04
Include marketplace commission in your pricing floor

Work backwards: desired net margin + all costs + commission % = minimum listing price. Build a pricing model in a spreadsheet before listing, not after you have been selling for 3 months.

EcomLinx P&L Dashboard: see every cost in one place

The EcomLinx P&L Dashboard automatically pulls your marketplace commission data, ad spend, shipping costs, and return rates - and calculates your true net profit per SKU, per channel, and per time period. No more spreadsheets. No more guessing which products are actually profitable.

Claude AI generates narrative insights directly in the dashboard: "Your Meesho listings are loss-making after returns. Your Amazon listings have healthy margin. Shift spend to Amazon." - with the underlying data to back it up.

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