COGS Explained for TikTok Shop & Shopee

Direct answer

The short answer

For marketplace P&L, COGS should normally be calculated from sold quantity multiplied by the valid unit cost for each SKU. A cost master needs stable SKU keys and effective dates so changes in purchase or manufacturing cost do not rewrite historical periods.

Formula / operating model

A repeatable definition

COGS = Σ(sold quantity by SKU × valid unit cost for that SKU and period)

01

Maintain a cost master

Store SKU identifiers, unit cost, effective date and cost source so reporting can calculate COGS consistently by quantity without overwriting historical economics.

02

COGS is not every operating expense

Software, fixed labor and agency fees may sit outside COGS, while per-order packaging or fulfillment can be tracked as separate variable selling costs. The classification should stay explicit and consistent.

03

A profitable shop can contain loss-making SKUs

SKU-level cost mapping reveals products where Ads, vouchers, platform fees or commission consume the remaining margin even when the total shop remains positive.

04

Bundles need their own mapping rule

A bundle should either have a defined bundle cost or be decomposed into component SKUs using a documented rule. Leaving bundle cost implicit is a common source of overstated contribution.

Evidence

Data required to support the analysis

Use the source that answers the question it was designed to answer, preserve raw evidence and keep unresolved mappings visible.

• Order-level SKU and quantity data
• A controlled SKU cost master with effective dates
• Packaging or fulfillment costs tracked separately when they vary per order
• Mapping exceptions for unknown SKUs, bundles or cost changes

Decision rule

What this should change operationally

Do not decide which SKU to scale from shop-average margin when product economics differ. Review contribution at the lowest reliable SKU or bundle level.