For many ecommerce businesses, increasing revenue isn't the biggest challenge—improving profit margins is. Selling more products doesn't always mean making more money, especially when fees, advertising costs, inventory expenses, and underperforming sales channels eat away at profits.
The good news is that an ecommerce analytics tool can help uncover hidden profit leaks and identify opportunities to improve margins. Here are five ways analytics can help your business become more profitable.
Many ecommerce businesses sell on both Amazon and Shopify, but the fee structures are dramatically different.
Shopify transaction fees are typically around 3%, plus a monthly platform fee. Amazon sellers, however, often pay between 15% and 55% of each sale when referral fees, fulfillment fees, storage fees, advertising costs, and other charges are included.
One Connex customer sold a low-margin product profitably on Shopify. After listing the same product on Amazon, she discovered she was actually losing money on every sale because the Amazon fees consumed her entire margin.
Without detailed analytics, these losses can go unnoticed.
Connex Ecommerce Analytics helps businesses calculate profit per order by combining sales data, cost of goods sold (COGS), Amazon fees, and accounting data from systems like QuickBooks. This provides a clear picture of actual profitability instead of relying on revenue alone.
Not every sales channel deserves equal investment.
One Connex customer sold through Shopify, Amazon, Meta, and Instagram. After reviewing the analytics, she discovered that nearly 90% of her profitable sales came from Shopify. In fact, some of the social media channels were generating sales but producing little or no profit.
Revenue can be misleading. A channel that generates orders may still lose money once advertising costs, fees, refunds, and fulfillment expenses are included.
An analytics platform allows you to compare profit margins by channel so you can focus your marketing budget and resources where they generate the highest return. Using Connex Ecommerce Analyitcs, you can see sales grouped by selling channel.
Inventory mistakes can be expensive.
Order too much inventory and you'll tie up cash, increase storage costs, and risk carrying obsolete products. Order too little and you'll miss sales opportunities and disappoint customers.
Many ecommerce businesses rely on instinct when making purchasing decisions. One Connex customer told us he restocked inventory based on "a feel for it." When we analyzed his inventory data, we discovered he had approximately 2.5 years' worth of inventory for a product that only required two months to replenish from his supplier.
That excess inventory tied up valuable cash that could have been invested in faster-moving, higher-margin products. Instead of generating revenue, the inventory sat on the shelf accumulating storage costs.
Many ecommerce businesses also experience significant seasonality. Understanding historical sales trends helps determine how much inventory to order during busy periods versus slower seasons.
Connex Ecommerce Analytics analyzes sales history across all channels—including retail, wholesale, marketplaces, and ecommerce stores—to help businesses make more accurate inventory decisions. The platform also provides inventory forecasting and reorder reporting to reduce both overstocking and stockouts.
Profit margins are often lost in places that business owners don't expect—Amazon fees, underperforming sales channels, excess inventory, storage costs, and incomplete financial reporting.
The businesses that consistently improve profitability are the ones that measure it accurately. With the right ecommerce analytics platform, you can identify profit leaks, optimize operations, and make smarter decisions that improve your bottom line.
Not sure where your profit leaks are hiding?
The Connex team can review your current ecommerce workflows, sales channels, inventory processes, and accounting systems to identify opportunities to improve profitability and reduce manual work.
Contact Connex today for a free workflow assessment and discover how better analytics can help you increase your profit margins.