If you’re like most Shopify sellers, scalability is always a topic of discussion. Creating strategic plans, executing precise budgets, and understanding the direction your business is headed rely on having accurate financial data to base your decisions on.
Certain columns on the Shopify sales report omit information, like shipping and taxes, making it important to understand what each column means to pick the data for the right job. Failure to use the correct column can lead to inaccurate projections, improper budgets, and incorrect tax filings.
This article will help you learn the following three areas:
- The problem with Shopify sales reports
- What the Shopify sales report columns mean
- The reports that each department benefits from
The Problem with Shopify Sales Report
The main problem with the Shopify sales report is that Shopify doesn’t make it transparent what columns are included in totals. Instead, users have to search through the Shopify website to find information.
When there is no clear definition of which report totals to use, you risk sending the wrong information to your marketing agency, internal team, and bankers. What information are you using for a ROAS calculation? How are you creating a budget? How are you planning future labor needs?
Each party requires a specific set of reports to base their decisions on. For example, a banker wants to see net sales minus taxes, while your marketing agency might want to base decisions on gross sales.
Defining the Shopify Sales Report
Shopify does have a web page that outlines what each category includes. Here’s a breakdown of the three important sales columns to pay attention to.
Gross Sales
Gross sales take the product selling price multiplied by the quantity sold. This number tells you how much revenue you make before any taxes, shipping, discounts, and returns are considered. This category is important to use for budgeting purposes.
Net Sales
Net sales are gross sales minus any discounts and returns. Net sales represent the true amount of money your business earned and remains important for calculating contribution margin and customer lifetime value. Contribution margin calculates how much additional revenue is generated by making an additional product after the company has reached a breakeven point. On the other hand, customer lifetime value tracks how much revenue you receive from a customer throughout the relationship.
Total Sales
Total sales take net sales a step further, adding taxes, duties, and shipping charges. When you pass the shipping costs off to customers, you earn a separate revenue category known as shipping income. Total sales adds this item back to true up your sales. Total sales are often the amount that gets deposited into your bank account. Analyzing the total sales column is important to understand how profitable your business is after fees, deductions, and shipping are factored in.
Recommendation by Stakeholder or Department
Different columns in the Shopify sales report are useful for certain projects. Let’s break down the column recommendations for marketing departments, banks, and internal reporting.
Marketing
When it comes to developing marketing strategies, the team will most likely use gross sales, except when the agency or internal marketing team has control over discounting. In this situation, marketing teams can use gross sales less discounts. The main goal of marketing is to drive revenue through new customer acquisition and increase customer lifetime value.
Banks
Banks are interested in the total sales less tax. They want to see how much revenue you generate after fees, shipping, discounts, and returns are included. After all, one of the top expenses of e-commerce businesses is shipping and fees.
Internal Teams
The sales figures that internal teams find most useful depend on the task at hand. However, internal reporting teams generally lean toward total sales less tax or gross sales.
Still Not Sure About Shopify Sales Reports?
Shopify sales reports can be confusing, which is why we want to work with you to maximize the value you are receiving. To go over what specific sales figures your e-commerce business can benefit from using, reach out to one of our team members today to schedule a consultation.
