Is Your E-commerce Business Actually Profitable?
Answer 6 questions about your margins, returns, and costs to find out if your e-commerce business is truly profitable — or just generating revenue.
Answer 6 questions about your costs, returns, and margins. We'll tell you whether your business is likely profitable — and where the leaks are.
Spotlight
The Full Cost Stack for an E-commerce Order
| Selling price | 100% |
| Product cost (COGS) | −30% to −60% |
| Marketplace commission | −5% to −20% |
| Shipping (forward) | −₹40 to −₹150 |
| Packaging | −₹15 to −₹60 |
| Returns (reverse logistics + restocking) | −15% to −25% |
| Advertising (ROAS dependency) | −8% to −20% |
| GST (net after ITC) | −0% to −5% |
| Net margin (typical) | 5%–20% |
Why E-commerce Profitability Is Harder Than It Looks
Sellers often confuse revenue with profit. Here are the costs that eat into margins that many sellers undercount:
The Full Cost Stack for an E-commerce Order
See the cost breakdown above — from product cost down to a 5–20% net margin for healthy businesses.
The Return Rate Problem
A 20% return rate doesn't cost you 20% of revenue. The real cost is:
- 100% of the forward shipping cost for that order
- 100% of the reverse logistics cost
- Restocking or write-off of the returned item
- Lost time slot for that listing
At scale, a 20% return rate on ₹5L monthly GMV typically costs ₹60,000–₹90,000 per month in real cash.
Unclaimed TCS Credit
Marketplaces deduct 1% TCS from every settlement. If you're not claiming this in GSTR-3B Table 8 every month, you're leaving 1% of your total GMV on the table. On ₹10L monthly GMV, that's ₹10,000/month — ₹1.2L per year — permanently lost.