Gross Profit 2
Gross Profit 2 is gross sales minus cost of goods and fulfilment. Fulfilment here means the operational cost of delivering the order: storage, picking, packing, outbound shipping and any handling fees.
GP2 = gross sales − COGS − fulfilment
Why it is usually the most useful layer
GP2 is the first figure that reflects the true unit economics of a sale, and the last one that is not distorted by marketing allocation. That combination makes it the natural basis for product-level decisions — what to promote, what to discount, what to stop stocking.
It is also where size and weight start to matter. Two products with identical GP1 can diverge sharply at GP2 if one is bulky and the other fits a letterbox. Categories that look equally attractive on margin percentage often do not survive this layer.
Where it shows up in marketing
GP2 is the numerator in epROAS — profit return on ad spend — which is why campaigns evaluated on it behave differently from campaigns evaluated on revenue. A campaign selling bulky, low-margin items can post strong ROAS and weak GP2, and only the second number tells you whether to scale it.
What it still hides
Marketing cost, which arrives at GP3, and returns, which the Net variant handles. In high-return categories the gap between GP2 and Net GP2 is the single largest correction in the whole framework.
The full framework
| Metric | Calculation |
|---|---|
| Gross Profit 1 | Gross sales − COGS |
| Gross Profit 2 | Gross sales − COGS − fulfilment |
| Gross Profit 3 | Gross sales − COGS − fulfilment − marketing |
| Net Gross Profit 1 | Gross sales − returns − COGS |
| Net Gross Profit 2 | Gross sales − returns − COGS − fulfilment |
| Net Gross Profit 3 | Gross sales − returns − COGS − fulfilment − marketing |
Two rules make the whole set readable: the number tells you how many cost layers have been deducted, and the Net prefix tells you whether returns have been taken out first.
See financial controlling for real-time GP2 by product, market and channel.
Related terms
Gross Profit 1
Gross Profit 1 is gross sales minus cost of goods sold. It is the first and broadest profit layer — useful for judging buying and pricing, but blind to fulfilment, marketing and returns.
Gross Profit 3
Gross Profit 3 is gross sales minus cost of goods, fulfilment and marketing. It is the layer at which a product, campaign or channel is either genuinely contributing or not.
Net Gross Profit 2
Net Gross Profit 2 is gross sales minus returns, cost of goods and fulfilment. It is the numerator in epROAS, and the most complete view of unit economics before marketing.
epROAS
epROAS is expected Profit Return on Ad Spend. It divides Net Gross Profit 2 by marketing spend, so it accounts for both cost of goods and expected returns rather than measuring revenue against spend.
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