Gross margin is the share of revenue left after the cost of goods: revenue minus COGS, divided by revenue. It is the most quoted margin in retail and the least sufficient one in ecommerce, because it stops before shipping, payment fees and advertising have taken anything.
A store at 60 percent gross margin can still be losing money on every order once fulfilment and acquisition are counted, which is exactly why the contribution-margin ladder exists. Gross margin corresponds roughly to CM1 percent, and only when the cost data behind it is complete and dated properly.
Worked through on the example store the calculators use: an €85 order, VAT out, carries €32,30 of goods, so its gross margin is 62,0%. The same order keeps 52,6% after its parcel and payment fee, which is CM2, and about 27,6% once its share of the month's advertising is paid, which is CM3. The 62% is real, and it is still the least informative of the three.
The accounting version carries a second ambiguity ecommerce inherits badly: whether the denominator includes VAT. A margin computed on VAT-inclusive revenue is flattered by the whole VAT rate: the same order, priced at €101,15 with 19% VAT, would show a gross margin of 68,1%, and two stores comparing 'gross margin' across that line are not comparing anything.
Markup is the number it is most often confused with. Markup divides the same gross profit by the cost rather than by the price, so the example order's €52,70 on €32,30 of goods is a markup of about 163% while its margin is 62%. A supplier quoting markup and a P&L quoting margin can describe the same product and sound wildly different.
Use it as a product-level sanity check and steer on CM2 and CM3. Building a price from what it must cover is margin-based pricing. The contribution margin calculator shows how far apart the two readings sit on your own numbers.
On a nouz statement gross margin is CM1 %, line 20: net revenue minus the cost of goods, over net revenue, with every unit priced at the cost in force on the day it sold. Insights, Products shows it per product beside CM2 and CM3, which is where a 60% product with heavy parcels gives itself away.
