How to find low-margin products in your ecommerce catalog

Low-margin products are not always obvious from bestseller lists. Volume can hide SKUs that contribute little per unit once discounts and COGS are applied.

Define low margin relative to your store

Start with your store's weighted gross margin for the period, then flag SKUs materially below that average — especially those with meaningful sales volume.

Data you need

• Order lines with quantity, gross sales and discount amounts
• Product file with SKU, variant and unit cost
• Matching date range across files
• Returns handled per your finance convention

Calculate margin per SKU

Net revenue = gross sales − discounts
Gross profit = net revenue − COGS
Gross margin = gross profit ÷ net revenue

Aggregate to SKU or variant level. Weight by units sold when ranking impact — a 10% margin on thousands of units matters more than the same margin on a handful.

Rank volume and margin together

• High volume + low margin → urgent pricing or cost review
• High volume + healthy margin → protect price; avoid unnecessary discounts
• Low volume + low margin → clearance, bundle or delist candidates
• Low volume + high margin → merchandising visibility tests

Separate discount effects

A SKU with acceptable list-price margin may be chronically on promotion. Net revenue tells the true story.

Validate before acting

• Confirm COGS reflects current supplier pricing
• Exclude one-off wholesale lines if they distort DTC margin
• Review return rates on flagged SKUs
• Consider stock levels before delisting or repricing

Turn findings into tests

On high-volume weak-margin SKUs, try small price increases, cost renegotiation or reduced automatic discounts. On low-volume laggards, clearance or bundling may free capital.

Automate with StoreOpps

Upload product and order CSVs to surface weak-margin products, discount patterns and inventory context — instead of rebuilding spreadsheets each month.