E-commerce COGS (Cost of Goods Sold)

Ecommerce COGS, or Cost of Goods Sold, an essential part of your ecommerce accounting and inventory management. It is the direct cost associated with producing the products sold through your online store. This includes manufacturing costs, shipping fees, and any other expenses directly tied to getting a product into the hands of your customers. For ecommerce businesses, tracking COGS is essential because it directly impacts gross margin and overall profitability.

Understanding your ecommerce COGS allows you to assess how efficiently you’re managing production and supply chain costs. If your COGS is high, you might need to look for ways to negotiate better rates with suppliers, optimize inventory management, or find ways to reduce waste. A solid understanding of ecommerce COGS helps you determine whether your pricing strategies are sufficient to cover costs and generate a profit. Monitoring this closely ensures that your business remains profitable, even as you scale.

Read our in-depth article about ecommerce COGS.

Ecommerce COGS Formula

COGS=Beginning Inventory+Purchases During the Period−Ending Inventory

Cost of goods sold is calculated by adding your beginning inventory and purchases and subracting your ending inventory.

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