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Mar 02, 2026
Your Ecommerce GMV Doubled but Your Bank Account Got Tighter? Open Up the Per-SKU Margin and You'll See Why
Last year RM2M, this year RM5M, and the bank balance is tighter than before. It isn't that you didn't hustle—it's the ecommerce model's cost structure, where selling more piles on ad cost, returns and stock. This piece shows you how to open up each SKU's net margin and rebuild the ecommerce profit five leaks quietly scrape away.
Spark Liang
Managing Director, MMC Financial
Ecommerce Profit Margin: Why GMV Doubles While Profit Gets Thinner
Rising GMV doesn’t mean rising profit. An ecommerce profit margin lives or dies not on GMV but on how much each order is scraped away by three things: ad cost (CAC), platform fees, and returns plus free shipping—and only once you open up the net margin on a single SKU do you know which product actually makes money. The bottleneck isn’t the seller not hustling; it’s that the numbers were never opened up down to the SKU level.
You may know this picture: Jay, running an online store of home-and-living products, did about RM2M last year across Shopee, Lazada and his own site, then poured money into ads, new launches and big campaigns this year and pushed GMV to RM5M—friends and relatives assume he’s made it. Yet when he reconciles the month, there’s less cash than last year: supplier invoices piling up, the platform still holding his payout, the warehouse stacked with stock that won’t move. The money didn’t vanish—it was scraped away, layer by layer, by ad cost, platform fees, returns, the free-shipping-and-discount trap, and cash locked in inventory. Here’s how to open that RM5M up, SKU by SKU.
GMV ≠ Profit
GMV measures “how much you sold.” Profit measures “how much is left at the end.” The most dangerous thing about ecommerce is that GMV is the prettiest number to report—and between that number and the cash in your account sit five separate leaks. GMV can double while profit goes negative. It happens constantly.
The Belief That Quietly Kills Online Sellers: “Chase Volume First, Worry About Profit Later”
The most popular line in ecommerce circles is: “Get the volume up first, costs come down at scale, and profit takes care of itself later.” It sounds right. Platform account managers and course gurus all teach it, don’t they?
That “later” is exactly the trap. The logic assumes one thing—that profit will appear on its own as long as revenue is big enough. But the cost structure of ecommerce works the opposite way: the more you sell, the more expensive ads get, the more returns you eat, and the heavier inventory weighs on you. Scale doesn’t automatically create profit—scale magnifies the loss on every order.
This isn’t a failure of effort on Jay’s part, and he didn’t pick the wrong products. It’s the cost structure of the ecommerce model itself that bites—platforms take a cut, traffic has to be bought, customers can return anytime, and nothing sells without free shipping. Blame the structure: same home-and-living products, but one seller is still losing money at RM10M GMV while another is solidly profitable at RM5M. The difference isn’t who works harder. It’s who does the math before launching—who works out, SKU by SKU, whether each one actually makes money.
Owners who understand the structure don’t ask “how do I push GMV higher.” They ask “for this SKU, after everything is stripped out, how many ringgit are actually left.”
Open It Up: Five Things Scraping Your Ecommerce Profit Margin
Between revenue in the owner’s mind and real profit in the bank, there are five gates. Each one scrapes off some cash.
The cost to buy one customer is often higher than your per-unit gross profit
Shopee / Lazada commission + transaction fees eat 5–15%
One return loses two orders; free shipping and discounts cut straight into margin
Gate 1: Ad Cost (CAC) Is More Expensive Than Your Margin
CAC is “how much it costs to acquire one customer.” You pour money into ads to chase volume, but the problem is traffic keeps getting more expensive—the same product can cost 30% more to advertise this year than last. If your gross profit per order is RM18, but acquiring that customer cost RM22 in ads, then you lose RM4 on every order you sell. The more you sell, the more you lose. GMV climbs while profit bleeds.
Gate 2: Platform Fees, the Invisible Fixed Leak
Selling on Shopee or Lazada, the platform commission plus transaction and campaign fees typically eat 5% to 15% of your revenue. Plenty of owners price their products counting only the cost of goods and never build this cut into the number. On an RM100 item, the platform takes RM12—you thought you made RM30, you actually made RM18.
Gate 3: Returns — One Return, Two Orders Lost
Ecommerce return rates in home goods and apparel often run above 10%. A return isn’t just one lost sale—you eat the shipping both ways, the re-packing, and sometimes the returned item can’t be resold and becomes dead stock. The loss on one return often equals the profit on two orders.
Gate 4: The Free-Shipping-and-Discount Trap
“Free shipping over RM80.” “20% off storewide.” These promotions look like they’re driving volume, but they cut flesh straight out of your gross margin. Free shipping costs RM8 an order, add a 20% discount, and your already-thin margin can go straight to zero. The problem is these discounts are usually applied “across the whole store”—even products that sell perfectly well at full price get their profit given away for nothing.
Gate 5: Cash Trapped in Inventory — Do the Math Before You Launch
To gear up for a big campaign, you bought in a large batch of stock. The fast movers are fine; the slow movers become dead stock in the warehouse—real cash, locked up in goods that won’t sell. This is why Jay is “profitable” on paper but his account is empty: his profit has turned into inventory on the shelf. Once your working capital is frozen, you don’t even have the cash to buy in the next batch of fast-moving stock.
Side note: to run these five leaks against your own SKUs’ numbers, start with the free AI profit diagnosis — a real consultant, 30-45 minutes, no hard selling.
The Number You Should Actually Watch: Net Gross Profit Per SKU
The biggest blind spot for online sellers is looking only at “is the whole business making money” and never drilling down to the individual product. But the truth is hidden inside each SKU—some are making you money, some lose you a sale every time they sell, and blended together you’ll never know which ones are dragging you down.
To work it out, apply this formula, one SKU at a time:
Net GP per SKU = Selling Price
− Cost of Goods
− Platform Commission + Fees
− Allocated Ad Cost (CAC)
− Allocated Return Loss
− Free Shipping / Discount Cost
If this number is negative, you lose money on every order.RM Example: One of Jay’s Best-Selling Storage Boxes
Jay has a storage box that sells best of all, and he always assumed it was his “money-maker.” We helped him open up this single SKU and run the numbers:
Selling price RM 60.00
Cost of goods − RM 28.00
Platform commission + fees (12%) − RM 7.20
Allocated ad cost (CAC) − RM 15.00
Allocated return loss (8% rate)− RM 4.50
Allocated free shipping − RM 6.00
─────────────────────────────────────────
Net gross profit per SKU RM −0.70Look closely: this best-selling storage box actually loses Jay RM0.70 on every order. The better it sells, the more he loses. The prettier the GMV, the tighter the bank account—that’s the answer right there.
After running every SKU through this, Jay found that 70% of his profit came from just 20% of his products; the rest—a big pile of “volume” SKUs—were either breaking even or losing money. Hunting down the cash leaks means flagging these loss-making SKUs one by one—killing them, raising the price, or dropping free shipping—instead of pouring more ad spend into pushing their volume.
The Internal Accounts You Read Yourself Must Drill to SKU
The set of accounts you give your accountant will only ever tell you whether “the whole business” is making money. What actually drives decisions is the internal set the owner reads himself—it must drill down to the net gross profit of each SKU and tell you which product makes money and which one quietly loses it. Without SKU-level visibility, you’re buying ads in the dark.
Three Things an Online Seller Can Do This Week
No need to wait for a system or hire a consultant—you can start these three this week:
- Take your 5 best-selling SKUs and calculate net GP on each. Apply the formula above, stripping out cost of goods, platform fees, ad cost, returns, and free shipping. Nine times out of ten you’ll find a “star product” that’s actually losing money.
- Kill the across-the-board storewide discount and free shipping. Reserve discounts and free shipping only for products that genuinely need a volume push; don’t give away profit on items that already sell well. This one move alone brings several margin points straight back for many sellers.
- Add up how much cash is trapped in inventory. List every item that hasn’t moved in over 90 days—that’s your frozen working capital. Clear the dead stock and convert it back to cash first, then decide what to buy in next.
Building this whole “do the math first, chase volume second” discipline systematically into your ecommerce business is exactly what we walk owners through hands-on in our strategic profit budgeting service and working capital optimization service.
FAQ
What’s a healthy ecommerce profit margin?
There’s no single benchmark that fits every category, but the point isn’t the blended average margin across the whole business—it’s the net gross profit on each SKU after stripping out ad cost, platform fees, returns, and free shipping. A healthy online business has most SKUs at a positive net GP, plus a set of “star SKUs” with margins thick enough to subsidise new-product testing and promotions. If you only look at total revenue and never break it down to SKU level, even a high GMV can be loss-making volume. For Malaysian online sellers, once revenue passes RM5M you should always run SKU-level margin analysis, or scale will simply magnify the loss.
Why does ecommerce profit get thinner as GMV grows?
Because the cost structure of ecommerce scales up with you rather than diluting. Traffic keeps getting more expensive, so ad cost (CAC) rises; volume is bought with discounts and free shipping, which cut straight into margin; more sales bring more returns; and bigger stock orders freeze cash in inventory. If the SKUs you’re pushing for volume already have a negative net gross profit, doubling GMV simply doubles the loss. Profit doesn’t appear automatically with scale—it requires you to get every SKU’s numbers straight before you chase volume.
How do I build Shopee and Lazada platform fees into my costs?
Platform fees aren’t a small charge “deducted after the sale”—they’re a fixed cost you must build into your pricing from the start. Add up the platform commission rate, transaction fees, and campaign-listing fees—together usually 5% to 15% of revenue—and deduct them straight from the selling price when you calculate per-SKU gross profit. Many owners price counting only cost of goods plus a little margin, forget the platform’s cut, and end up losing money on every order while thinking they’re making it. The correct approach is to treat platform fees exactly like cost of goods and subtract them before pricing every SKU.
Stop Feeding a Loss-Making Business With a Pretty GMV
Jay didn’t shrink his business and didn’t stop selling his best-sellers—he simply opened up the numbers on each SKU, killed the loss-makers, raised prices where needed, and dropped the across-the-board free shipping, and his account immediately breathed easier. If you’re also staring at a doubled revenue figure and a tight bank account, the problem usually isn’t that you didn’t sell enough—it’s that you never did the math before you launched.
To find out which of your SKUs are quietly losing money and how to rebuild your margin, book a strategy call with us, or sign up for the Budget Management (3+1)-Day Program and we’ll run the numbers on your own ecommerce figures.
Reading Is Free. So Is Seeing Your Own Numbers.
You've just read the theory — now apply it to your own company. Use the AI ROI calculator, then let MMC's licensed team take a free look at where your revenue, profit and cash are leaking. A real consultant, no hard sell — and the 30-45 minutes could give you back ten hours a week.
