Unprofitable SKUs are a silent killer for businesses on marketplaces. They can generate turnover, impressive “sales,” even a high ROAS… and at the same time, they eat into profits due to commissions, logistics, discounts, advertising, and returns.
In this article, we will explore how to quickly find unprofitable SKUs on Mercado Libre without perfect accounting:
- what signs of unprofitability exist;
- what data to collect;
- 3 effective methods for searching (quick, precise, “for advertising”);
- what to do after identifying negative products.
What Does “Unprofitable SKU” Mean
A SKU is considered unprofitable if:
Profit per unit < 0 or Profit per order < 0
Management formula (simplified):
Profit/unit = Actual Price − Commission − Logistics/Storage − Cost Price − Packaging/Labeling − Advertising ($/unit) − Losses from Returns (on average)
If it results in a negative, it’s not just a “bad week,” it’s a signal: either the conditions/price/card/advertising are broken, or the product simply does not fit the current economics.
Three Types of Unprofitable SKUs (important to distinguish)
1) Unprofitable “by unit economics” (structurally)
Even without advertising, it hardly earns: low margin, high logistics, commission, discounts.
2) Unprofitable “due to advertising”
The product is profitable organically, but in advertising, the DRR/expenses are too high.
3) Unprofitable “due to returns”
It seems to sell, but losses from returns/defects/misclassification “consume” all contributions.
Different types require different solutions. Therefore, we first look for why the product is negative.
What Data is Needed to Find Unprofitable SKUs
Minimum set (for a period of 7–30 days):
- SKU
- Sales (units) and revenue
- Actual selling price (not “shelf price”)
- Commission ($ or %)
- Logistics/Delivery/Storage ($)
- Cost price ($/unit)
- Advertising expenses ($) — by SKU or at least by groups
- Returns (units or %) + loss assessment
Yes, some data may be inaccurate. But even a rough model usually immediately shows “negative champions.”
Method 1 (quick): Find Unprofitable SKUs Without Advertising and Returns in 20 Minutes
If you are just starting and want to quickly understand who is at risk:
Step 1. Calculate “contribution after marketplace” by SKU
Formula:
Contribution/unit = Actual Price − Commission − Logistics/Storage − Cost Price − Packaging
Step 2. Sort by “contribution/unit” and “total contribution”
- contribution/unit will show products that hardly earn (or are in the negative)
- total contribution will show who actually brings money to the business
Step 3. Set risk markers
SKU is a candidate for unprofitability if:
- contribution/unit ≤ 0
- contribution/unit is too low (for example, < 5–10% of the price in low check)
- logistics/storage “consume” a large share of the price
Pros: quick, does not require complex analytics. Cons: does not account for advertising and returns — but this is okay for initial screening.
Method 2 (precise): Find Unprofitable SKUs Based on Full Unit Economics
This is the best method for regular monitoring.
Step 1. Include advertising in the calculation
If there are expenses by SKU:
Advertising/unit = Advertising expenses by SKU / Sales SKU (units)
If there are no exact data by SKU — allocate advertising proportionally (for example, by revenue share) as a temporary solution.
Step 2. Account for losses from returns
Simplified:
Losses from returns ($/unit) = % returns × (logistics back and forth + estimated product loss)
Even a rough estimate is better than none.
Step 3. Calculate profit/unit and total profit
- Profit/unit = how much you earn from one sale
- Total profit = profit/unit × sales (units)
Step 4. Find “dangerous” by two axes
- negative (profit/unit < 0)
- low-profit (profit/unit is low) + high sales volume The latter is often more harmful than the former: they can “disguise” themselves with turnover and consume all overall profit.
Method 3 (for advertising): Find SKUs That Are Unprofitable Due to DRR
Sometimes a product is profitable without advertising, but advertising traffic turns it into a negative.
Step 1. Calculate margin “before advertising”
Margin before advertising ($/unit) = Actual Price − Commission − Logistics/Storage − Cost Price − Packaging
Step 2. Calculate advertising/unit or DRR by SKU
- DRR SKU = Advertising expenses by SKU / Revenue SKU × 100%
- or advertising/unit as above
Step 3. Compare with acceptable levels
If the margin before advertising = $150, and advertising/unit = $220 — the product is unprofitable in advertising, even if the ROAS is “beautiful.”
Conclusion: either reduce DRR (clean traffic, bids, semantics), or advertise another SKU, or change the price/offer.
→ About DRR in detail: DRR and Advertising: How to Calculate and Manage
Typical Causes of Unprofitable SKUs (and What to Do)
Cause 1: Too Low Actual Price (discounts/promotions)
What to do: recalculate margin based on the real price, limit promotions, raise the price, change the discount mechanics.
Cause 2: High Logistics/Storage
What to do: optimize packaging, redistribute warehouses, remove “slow” SKUs, speed up turnover.
Cause 3: High Commission or “Paid Services”
What to do: check category/attributes, paid options, correctness of settings.
Cause 4: Advertising is Overheated (DRR too high)
What to do: clean traffic, separate campaigns, gradually lower bids, shift budget to more profitable SKUs.
Cause 5: Returns/Repurchases Kill the Economics
What to do: correct expectations in the card, improve quality/packaging, sizing, work with reviews.
Cause 6: Cost Price Changed, but the Model Remained Old
What to do: regularly update cost price (at least once a month).
What to Do After Finding Unprofitable SKUs: 5 Scenarios
- Raise the price (if demand allows)
- Reduce expenses (logistics, packaging, procurement)
- Limit advertising or only advertise exact queries
- Rebuild the card (conversion, returns)
- Remove SKU from the assortment or move to “organic/clearance” (if it’s a structural negative)
The main thing: an unprofitable SKU does not necessarily need to be “killed.” Sometimes just one adjustment (price/card/advertising) is enough for it to become profitable.
Common Mistakes When Searching for Unprofitable SKUs
- looking only at revenue and not calculating contribution/profit
- calculating from “shelf price,” ignoring the actual price after discounts
- not accounting for logistics/storage
- not considering advertising or distributing it “randomly” and believing the numbers without caveats
- ignoring returns (especially in clothing/shoes and products with expectations)
- analyzing only “profit/unit” and not looking at “total profit”
Mini-Checklist (weekly)
- Top 20 SKUs by turnover and advertising expenses
- Contribution/unit and profit/unit
- List of negative SKUs + reason (price/logistics/advertising/returns)
- Decision for the week: raise the price / cut advertising / adjust the card / clear out the remainder
Related Materials
- Guide: Profit and Margin (Unit Economics)
- About Margin: How to Calculate Margin: Common Mistakes
- About Advertising: DRR and Advertising: How to Calculate and Manage
- Diagnosis: Advertising Exists, Profit is Falling