PCOGS

 PCOGS is one of Amazon’s core financial metrics used to measure vendor profitability and supply chain efficiency. It reflects the actual product cost (not retail or selling price) associated with goods Amazon has received and shipped to customers.

How It Works:

• Formula:

PCOGS=Units Shipped×Cost per Unit (Vendor’s Purchase Price)

• Example: If a vendor sells 1,000 units of a hair dryer to Amazon at $25 per unit, then PCOGS = $25,000.
• In Vendor Central reporting, PCOGS = Shipped COGS, meaning it reflects inventory that has already left Amazon’s fulfilment centres to customers.

Components Included in PCOGS:

• Product manufacturing cost (ex-factory).
• Cost of packaging, labelling, and compliance.
• Freight to Amazon (if vendor-paid).
• Any agreed cost deductions or funding mechanisms (e.g., VIR, VFBD).

Benefits for Vendors:

• Financial transparency: Helps vendors understand cost-side performance separate from revenue.
• Margin calculation: Used to determine gross margin and profitability per ASIN or category.
• Forecasting: Enables tracking of cost trends over time and across product lines.

Benefits for Amazon:

• Category profitability analysis: Amazon tracks PCOGS to optimise pricing, margin, and sourcing decisions.
• Vendor negotiations: PCOGS forms the baseline for funding and margin discussions in AVN (Annual Vendor Negotiations).
• Supply chain optimisation: Identifies cost efficiencies or inefficiencies by vendor or product type.

Challenges:

• PCOGS excludes promotional or marketing funding, so actual vendor profitability may differ.
• Vendors must ensure accurate cost data entry to avoid discrepancies in reports.
• Cost fluctuations (e.g., raw materials, logistics) can impact year-over-year comparability.

Why It Matters:
Understanding PCOGS is essential for margin management on Amazon. It determines how profitable a vendor relationship is for both sides and forms the financial foundation for negotiations, business reviews, and forecasting.

Example:
A vendor selling electric toothbrushes sees PCOGS of $200K in Q1 and Net Received Sales of $260K. The gross margin = 23%, guiding both Amazon and the vendor in planning pricing and funding levels for Q2.

In short:
PCOGS (Product Cost of Goods Sold) is the total cost to the vendor for goods sold to Amazon, equal to Shipped COGS in Vendor Central, and a key metric for margin and profitability analysis.