Making Sense of Margins in Ecommerce, Manufacturing, and Distribution

Sales are moving. Orders are shipping. On paper, the business looks great.

But when it comes time to review margins, the numbers don’t make sense. Sometimes they look strong. Sometimes razor-thin. Sometimes they vanish altogether.

For ecommerce, manufacturing, and distribution businesses, this isn’t a pricing problem – it’s an accounting problem.

Why Margins Feel Like a Mystery

Margins should be simple: revenue minus direct costs. But product businesses operate in a world of complexity that most owners never see reflected in their financials.

Here’s what it looks like on the ground:

• COGS that don’t match sales. Inventory and production costs never seem to line up with revenue.
• Shipping and fulfillment surprises. Fees pop up after the fact and eat into profit.
• Different stories across channels. Shopify says one thing, Amazon another, wholesale something else – and none of it matches your books.

From the operator’s seat, it feels like every system is telling you a different story. No wonder margins feel unpredictable.

Why Accounting Is the Culprit

Margins don’t get lost in the warehouse or at checkout. They get lost in the accounting.

That’s because most accounting setups are designed for compliance, not clarity. Bookkeepers can record transactions and reconcile accounts, but that only gets you a tax return — not a clear view of profitability.

The gaps show up here:

• Financials that might be “accurate” on a cash basis, but they don’t tell you which channels, SKUs, or production runs are profitable.
• Expenses are recorded, but they’re not tied back to the work that generated them.
• Reports get produced, but they don’t help you make better decisions.

So when you sit down to review margins, you’re not seeing reality. You’re seeing the limits of expertise that’s not sufficient for ecommerce, manufacturing, or distribution, at your size.

How to Fix It

The solution isn’t AI, your tax CPA or more middleware. It’s accounting that actually reflects how your business runs.

That means:

• Tracking COGS accurately across production runs, channels, and SKUs.
• Tying shipping, fulfillment, and platform fees back to revenue.
• Consolidating disparate channel data into one set of financials you can trust.

Fractional accounting makes this possible without hiring a full in-house finance team. Instead of “closing the books” and hoping for the best, you get a team that knows how product businesses work and builds systems to show you the truth about your margins.

Margins Shouldn’t Be Murky

When your accounting is right, margins stop being a mystery. You’ll know what you’re making, where you’re making it, and how to scale with confidence.

👉 Get your Free Financial Risk & Readiness Assessment

We’ll help you spot where your margins are slipping – and build accounting systems that actually make sense.