Profit and Loss Statements - Part 2

This Part 2 of a series looks at what goes into the fulfillment, advertising, and general and administrative aspects of a catalog's profit and loss statement. The cost of receiving customers' orders, inquiries, and catalog requests and of shipping products to them, fulfillment also includes the cost of order entry, computer systems, warehousing, shipping, returns, and customer service. For most "mature" catalogs, the net cost of fulfillment should be in the 10%-15% range. To calculate what it costs to ship one order, catalog need to take their total fulfillment cost, subtract shipping and handling revenue, then divide by the number of orders shipped. A huge percentage of the cost of most catalogs, advertising includes fixed and variable costs, such as design, photography, production, printing, paper, binding, lists and list processing, and postage. Further, the higher the response, the lower advertising is as a percent of sales.