Building a Profitable eCommerce P&L:
From Unit Economics to EBITDA (Amazon Example)
Most eCommerce brands don’t fail because they can’t grow revenue.
They fail because growth hides bad unit economics.
This article breaks down a clean, Amazon-first P&L, starting with a $100 product, and shows exactly which levers matter, how to optimise each line, and how to drive a healthy EBITDA—not just top-line growth.
1. Start With Unit Economics (Not Revenue)
Before looking at monthly or annual P&Ls, you must understand one unit.
If one unit doesn’t make sense, scaling only magnifies the problem.
Assume:
Amazon Selling Price (ASP): $100
Fulfilled by Amazon (FBA)
Category-agnostic (logic applies to Beauty, FMCG, Electronics, etc.)
2. Net Revenue (After Amazon Takes Its Cut)
Gross Selling Price
List Price / ASP: $100.00
Amazon Fees (Typical Range)
Referral Fee (≈15%): –$15.00
FBA Fulfilment Fee: –$7.00
Net Revenue
📌 Key Insight
Amazon fees are structural. You don’t “optimize” them away.
You optimize everything else around them.
3. Cost of Goods Sold (COGS)
This is where many brands lie to themselves.
True COGS Includes:
Product manufacturing
Packaging
Freight & duties (to Amazon FC)
Quality control & wastage
Labeling / prep costs
Assume:
COGS per unit: $30.00
Gross Margin (Post-Amazon)
61.5% Gross Margin on Net Revenue
48% Contribution on ASP
📌 Benchmark Reality
If your post-Amazon gross margin is below ~55%, paid media will hurt.
4. Contribution Margin (Where Profit Is Won or Lost)
Now we subtract variable selling costs.
Typical Amazon Variable Costs
Sponsored Ads (PPC): $15.00
Promotions / Coupons: $5.00
Returns & Refunds: $3.00
Contribution Margin %
25% of ASP
32% of Net Revenue
📌 This Is the Most Important Line in eCommerce
If Contribution Margin is weak, EBITDA will never be healthy.
5. Operating Expenses (OPEX)
These are mostly fixed or semi-fixed costs, spread across volume.
Typical Monthly OPEX (Allocated Per Unit)
Team & payroll: $6.00
Agency / tools / software: $3.00
Brand content & creative amortisation: $2.00
Overheads (legal, accounting, admin): $1.00
Total OPEX per unit: $12.00
6. EBITDA Summary (Per Unit)
Line Item | $ | % of ASP |
|---|---|---|
Selling Price | 100.00 | 100% |
Amazon Fees | –22.00 | –22% |
COGS | –30.00 | –30% |
Gross Profit | 48.00 | 48% |
Ads + Promos + Returns | –23.00 | –23% |
Contribution Margin | 25.00 | 25% |
OPEX | –12.00 | –12% |
EBITDA | 13.00 | 13% |
📌 A 10–15% EBITDA on Amazon is strong and scalable.
7. How to Optimise Each Line (Practically)
1️⃣ Price (ASP)
Strategic price ladders
Bundles & multipacks
Subscribe & Save optimisation
Avoid discount-led growth
+5% ASP often drops straight to EBITDA
2️⃣ Amazon Fees
You can’t remove them—but you can:
Reduce FBA size/weight
Improve packaging efficiency
Fix incorrect fee classifications
Small fixes = meaningful margin recovery
3️⃣ COGS
Renegotiate at volume milestones
Dual-source suppliers
Reduce over-engineering
Improve forecast accuracy (less air freight)
COGS discipline is a leadership problem, not a sourcing problem
4️⃣ Advertising (Biggest Lever)
Separate growth ASINs vs profit ASINs
Push organic rank to reduce PPC dependency
Control TACoS, not ACOS
Use ads to defend, not just acquire
Ads should scale contribution, not replace margin.
5️⃣ Returns & Refunds
Fix PDP clarity (expectation management)
Improve reviews & Q&A
Identify ASIN-level return outliers
Returns are silent margin killers.
6️⃣ OPEX
Centralise execution
Kill vanity tools
Automate reporting
Scale people after contribution improves
8. The Core Principle
Revenue is vanity.
Contribution is sanity.
EBITDA is survival.
If you build your business unit-first, EBITDA becomes predictable, scalable, and defensible—especially on Amazon.