The Accounting Challenge of E-commerce
Selling on e-commerce platforms introduces accounting complexity that traditional retail doesn't have. Between commission fees, promotional costs, shipping subsidies, and payment holds, understanding your true profit requires careful tracking.Understanding Platform Fee Structures
Each marketplace has its own fee structure, but here are the common categories:Commission Fees
- Shopee: 2–6% per order (varies by category and seller tier)
- Lazada: 1–5% commission rate (category-dependent)
- TikTok Shop: 1–5% commission + payment processing fee
Other Common Fees
- Payment gateway / processing fee — usually 1–2% per transaction
- Shipping fee subsidies — absorbed by seller for free shipping promotions
- Marketing and advertising — pay-per-click or commission-based
- Return and refund processing — handling costs and lost inventory
Revenue Recognition for E-commerce
The key principle: recognize revenue only when control of the goods has transferred to the buyer. For e-commerce, this typically means:- Gross Revenue = Total order value on the platform
- Net Revenue = Amount actually disbursed to your bank account
- Net Revenue = Gross Revenue − Commission − Payment Fees − Shipping Costs − Returns
Monthly Reconciliation Checklist
- Download the monthly settlement report from each platform
- Match settlement amounts with bank deposits
- Record all fees as separate line items in your accounting software
- Reconcile returns and refunds
- Verify promotional cost allocations
- Flag any discrepancies for investigation
Tax Implications
If you sell across multiple countries, remember:
- Singapore GST applies to local sales
- Overseas sales may be zero-rated for GST purposes (if conditions are met)
- Some countries require you to register for local VAT/GST if you exceed their thresholds
- Keep records of all cross-border transactions for tax filing
Recommended Tools
- Xero / QuickBooks — for general accounting
- StoreHub / Omnichannel — for multi-platform inventory and sales management
- Spreadsheet reconciliation — for smaller sellers who are just starting out