A 65% product gross margin can look comfortable. In our shared VND 500,000 case, platform fees and Ads reduce the amount retained before Affiliate and omitted costs to 34.7–36.7%. Follow each cost layer before calling that balance profit.
What remains from a VND 500,000 order?
| Order layer | VND per order |
|---|---|
| Revenue after 15% promotion | 500,000 |
| Platform fixed fee · 14% | (70,000) |
| Service fee · rounded to 0.3% | (1,500) |
| Transaction processing · 6% | (30,000) |
| Settlement after platform fees | 398,500 |
| Assumed COGS · 35% | (175,000) |
| Contribution before Ads and Affiliate | 223,500 · 44.7% |
| Assumed Ads · 8–10% | (40,000–50,000) |
| After Ads, before Affiliate and omitted costs | 173,500–183,500 · 34.7–36.7% |
All percentages use post-promotion product revenue, on an assumed consistent tax basis. The 15% promotion is already in the selling price: do not deduct it again. Net shipping cost is zero in the supplied settlement because a VND 56,800 charge was fully offset by an equal subsidy. That does not establish free shipping for every order.
Evidence: supplied settlement and modelling assumptions
| Settlement line | VND |
|---|---|
| Product amount after promotion | 938,818 |
| Shipping charge | (56,800) |
| Shipping subsidy | 56,800 |
| Fixed fee | (131,435) |
| Service fee | (3,000) |
| Transaction processing | (56,329) |
| Total fee deductions | (190,764) |
| Settlement receipt | 748,054 |
The settlement is user-supplied evidence, not independently audited. The VND 500,000 model scales and rounds its observed fees; 35% COGS and 8–10% Ads are assumptions. Affiliate is now assumed at 10% of net revenue for the illustrative orders; this is not a rate verified from the bill. The VND 3,000 service fee may be a per-order charge; its basis must be confirmed before using the scaled VND 1,500 for decisions. These are not a current or universal platform fee schedule.
| After Affiliate: the updated scenario | VND per order |
|---|---|
| Before Ads and Affiliate · 44.7% | 223,500 |
| Assumed Affiliate · 10% | (50,000) |
| Before Ads, after Affiliate · 34.7% | 173,500 |
| Ads · 8–10% | (40,000–50,000) |
| After Ads and Affiliate · 24.7–26.7% | 123,500–133,500 |
This scenario assumes the order incurs both Ads and Affiliate. Where only some orders incur Affiliate, use the actual commission-bearing revenue and the resulting effective rate, rather than charging 10% to every order.
01Define COGS Consistently
The supplier invoice price is rarely the full cost of goods. Inbound freight, non-recoverable taxes, duties and any costs required to bring inventory to a saleable condition should be included. In manufacturing environments, understand how overhead is allocated and how capacity utilisation affects unit cost.
Always compare SKUs and channels on the same cost basis. Purchase discounts and rebates should only be recognised when entitlement is reasonably certain and supported by documentation.
02Platform Fees Are a Structure, Not a Single Number
Separate the main components:
- Commission / selling fee
- Payment processing fee
- Order handling or fulfilment service fees
- Other programme or service fees
Each component often has its own calculation base, refund rules and effective dates. Maintain fee tables by platform, category and shop type, then reconcile actual settlements regularly. Do not apply one SKU’s effective rate across the entire assortment.
Classify withheld taxes and service charges according to their economic substance rather than treating every deduction as a selling expense.
03Per-Order Costs Put Pressure on Small Baskets
A fixed charge of VND 5,000 per order represents 5% of a VND 100,000 order but only 1% of a VND 500,000 order. Bundling can improve order economics, yet larger baskets may increase weight, trigger higher shipping tiers, or require deeper discounts.
Always recalculate contribution after all changes caused by the bundle. Packaging cost reductions must still provide adequate product protection — lower shipping fees can be more than offset by higher damage and return rates.
04Returns Cost More Than the Refund
Reversing revenue and restoring the cost of resalable goods is only part of the true cost. Also include:
- Outbound and return shipping
- Inspection and repacking labour
- Impairment of damaged stock
- Non-refundable platform or payment fees
Do not treat the full original cost of a returned item as a loss if it can be resold in good condition. Equally, do not ignore the portion that is damaged or obsolete. Track return reasons by SKU and channel to separate quality issues, listing accuracy, packaging problems and expectation gaps.
05Read Profitability in Layers
Revenue 500,000 − COGS 175,000 = gross profit 325,000 (65%). Platform fees 101,500 leave 223,500 (44.7%) before Ads and Affiliate. Ads 40,000–50,000 leave 173,500–183,500. Then deduct Affiliate and omitted variable costs before assessing the contribution available for overhead.
06A Cost Structure Should Lead to Action
| If this is high… | Then examine… |
|---|---|
| Per-order fees | Basket size, packaging design, shipping thresholds |
| Return rates | Product quality, listing accuracy, packaging, customer expectations |
| COGS | Sourcing and supplier terms (while protecting quality) |
| Fixed overhead | Capacity utilisation before reducing headcount |
Reports should highlight controllable costs, name owners, and estimate the expected financial impact of actions. Headquarters cost allocations are useful for assessing the overall business; incremental sales decisions should use only the additional costs and capacity that the decision actually triggers.
Key takeaway
Connect product-level gross margin to the full cost of completing (and potentially reversing) the transaction. Only then can the business judge whether growth is creating value.
The settlement was supplied for this editorial case; identifying details are excluded. Modelled COGS, Ads, Affiliate scenarios and thresholds are assumptions. This is an incomplete contribution model until omitted costs are added.
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