Ecommerce & Digital
Building an Ecommerce P&L That Actually Tells You Something
1 August 2025
Most ecommerce P&Ls are constructed the wrong way around. Revenue is detailed. Cost of goods is a single line. Everything between gross margin and net profit is a blended overhead block that tells you almost nothing about where money is being made and where it is being lost.
A P&L structured this way cannot answer the questions an ecommerce business needs to answer: which channel is profitable, which SKU is contributing, whether the Amazon business is actually making money after fees and advertising, and whether the DTC operation is recovering its customer acquisition cost.
The structure that works
An ecommerce P&L needs to be built by channel first, not by cost category.
Revenue by channel: Your own website, Amazon, other marketplaces, wholesale if relevant. Revenue is not revenue until you understand where it came from, because the cost structure of each channel is different.
Variable cost by channel: Cost of goods, marketplace fees, payment processing, outbound shipping per order, and return costs belong at the channel level, not in a blended overhead. Gross margin by channel is the first useful number in an ecommerce P&L.
Channel-specific marketing costs: Paid media for your own website, Amazon Sponsored Products for the marketplace, influencer costs attributable to specific channels. These are variable costs of revenue in ecommerce, not overhead. Treating them as overhead obscures the true cost of acquiring each order.
Contribution margin by channel: Revenue minus variable costs minus channel marketing gives you the contribution from each channel before shared costs. This is among the metrics that matter most: the number that tells you whether a channel is worth running.
Shared costs: Fulfilment operations, technology platform costs, customer service, photography, content production. These are real costs but they are harder to attribute precisely by channel. Allocate them on a rational basis and be consistent, but do not let imperfect allocation stop you from producing the channel-level contribution that precedes this layer.
Net profit: What is left after everything.
The SKU-level view
Channel-level P&L tells you which channels work. SKU-level contribution tells you which products are driving the result.
Not every SKU in your range is contributing positively to margin. Some products sell well but at margins that do not cover their fulfilment cost. Some products have high return rates that erode the gross margin. Some products carry advertising costs that make them unprofitable at their price point.
You cannot know this without SKU-level analysis. And you cannot manage a product range rationally without it.
The analysis does not need to be daily, but it needs to happen regularly enough to inform ranging, pricing, and promotional decisions before they are made, not in retrospect.
The working capital dimension
An ecommerce P&L shows profitability. Working capital management shows solvency. The two are related but distinct, and a profitable ecommerce business can run out of cash if working capital is not managed.
The primary working capital driver in product ecommerce is inventory. Cash goes out when you buy stock. Cash comes in when customers pay. The gap between those events, multiplied by the volume of stock you are holding, determines your working capital requirement.
Seasonal businesses have a particular working capital challenge: the inventory investment happens in advance of the selling season, so the cash outflow precedes the inflow significantly. This needs to be planned and funded, not discovered.
The ecommerce P&L and the cash flow forecast need to be built and read together, which is why ecommerce budgeting must integrate both. One without the other is an incomplete picture.
What this looks like in practice
Building this P&L properly requires systems that capture the right data at the right level of granularity. Cost of goods by SKU. Fees by channel and by order. Marketing spend by campaign and by channel. Shipping costs by order.
Most ecommerce platforms and most accounting systems can produce this data. The work is in connecting them so the data flows without manual intervention, and in building the reporting layer that presents it in a format that supports decisions. Having the right finance infrastructure for ecommerce makes that connection possible.
Maebh Collins is a Chartered Accountant (FCA, ICAEW) with twenty years of operational experience as a founder and senior finance leader, including ecommerce P&L design and commercial analysis across multiple channels and markets.
Maebh Collins is a Chartered Accountant (FCA, ICAEW), Big 4 trained, with twenty years of experience building and running international businesses. She specialises in finance transformation, ecommerce operations, and digital strategy.