Quickly calculate your ecommerce profits
The Myfoodlink Profit report lets you get an overview of the profit margins of your online business at a glance. To locate the report visit the backoffice of your Myfoodlink ecommerce platform and select the Financials tab. Then from the top menu select Profit Report and then set the date range you would like to show the report for.
How is the report built?
The report uses a number of data points from your ecommerce platform to make the calculation of profit. Specifically, these are the revenue of goods sold and the cost of goods sold, which are drawn from your ecommerce platform and point of sale integration. For goods where the cost price is not known, the value is calculated using an industry standard of 25% gross margin.
From this, the gross margin for the timeframe is calculated. The next step is to subtract an estimate of the picking costs associated with orders from that timeframe and from this a net Profit is calculated.
Picking time
The picking cost calculation is based on a breakdown of the estimated hourly rate your picking staff are paid and the estimated time in which they pick and pack an order. The picking cost can be set in your online store, or it will use the system standard cost of $25.20 per hour. The estimated time taken to pick the order is calculated by the rate at which items are checked off for that order in the when using the tablet picking screens (on an iPad or similar). If tablets aren’t used in your shops to pick orders, the Net Profit section of the report is not included.
Each business has a different measure of success, beyond a baseline of profitability.
We suggest that anything above 20% ‘net margin after picking’ is a good benchmark to achieve.
How can I improve these figures?
- There are a few strategies you can use to improve your net profit calculation:
- Try to assign a known cost to as many products as possible in your POS, to improve the ‘estimated cost of goods sold with unknown cost price’ line
- Make sure your staff are using the picking app correctly to ensure this line is a good estimation
- Consider adding a picking fee or price for online products to improve margins
- Make sure your POS data contains stock locations. Where present in the export to Myfoodlink, we can sort the products in the order to match your store layout, reducing packing time and improving net profit
- Consider using a courier to reduce delivery costs. These aren’t reflected in the numbers shown in this report, but they are a large part of ecommerce fulfilment overhead
If you would like to learn more about this report or have any questions about how it is performing in your ecommerce platform, please contact us on [email protected].