What is IWO? IWO Explained for Bol.com Sellers

If you sell on bol.com, you'll come across the term IWO sooner or later. But what is IWO exactly, and why is it so important for your business results? IWO stands for Purchase Value of Sales and indicates how much you paid for the products you sold or have in stock. In this comprehensive article, we'll not only explain what IWO entails, but also how to calculate it, how it affects your profit margin, and which strategies you can use to lower your IWO and increase your return.

What is IWO and why is it important?

The Purchase Value of Sales (IWO) is the total cost price of all products you sold in a certain period. In other words: it's the amount you spent on purchasing the goods your customers bought. IWO is a key concept in business administration and forms the basis for calculating your gross profit.

The formula is simple:

Gross Profit = Sales - IWO

If your sales amount to €10,000 and your IWO is €6,000, your gross profit is €4,000. The lower your IWO compared to your sales, the higher your gross profit margin. For bol.com sellers, it's essential to keep an eye on this ratio, because after deducting commissions, shipping costs, and other costs, the gross profit determines whether your business is profitable.

How do you calculate IWO?

You can calculate IWO in two ways, depending on whether you look at your sold products (for the profit and loss account) or the value of your current stock.

Method 1: IWO of sold products

This method is most commonly used to calculate your gross profit over a period:

IWO = Beginning Inventory + Purchases - Ending Inventory

Let's say you start the quarter with an inventory worth €5,000. During the quarter, you purchase new products worth €8,000. At the end of the quarter, your remaining inventory is worth €4,000. Then your IWO is: €5,000 + €8,000 - €4,000 = €9,000.

Method 2: IWO of current stock

This calculation shows how much capital is tied up in your current stock:

Inventory IWO = Purchase Price per Product × Number of Units in Stock

This value is important to know how much working capital you've invested in products that still need to be sold. Track this value with the Profit Calculator to always have insight into your financial position.

IWO in practice: example for bol.com

Let's look at a concrete example of a bol.com seller who sells three products:

Product	Purchase Price	Sales Price	Sold (units)	IWO	Sales	Gross Profit
Phone Case	€2.50	€12.95	200	€500	€2,590	€2,090
Screen Protector	€1.20	€8.95	150	€180	€1,342	€1,162
Charging Cable	€3.80	€14.95	100	€380	€1,495	€1,115
Total	-	-	450	€1,060	€5,427	€4,367

In this example, the total IWO is €1,060, sales are €5,427, and gross profit is €4,367. The gross profit margin is 80.5%. Note: this is before deducting bol.com commission, shipping costs, and other operational costs. Use the Sales Dashboard to monitor your actual net margin.

Difference between IWO, cost price, and purchase price

These terms are often used interchangeably, but there are nuances:

Term	Definition	Example
Purchase Price	The amount you pay to the supplier per product	€2.50 per phone case
Cost Price	Purchase price + all additional costs (shipping, customs duties, packaging)	€2.50 + €0.80 shipping + €0.20 packaging = €3.50
IWO	Total cost price of all sold or stocked products	€3.50 × 200 units = €700

For an accurate IWO calculation, it's recommended to use the full cost price, not just the bare purchase price. Don't forget to include shipping costs from the supplier, customs duties (when importing from e.g. China), customs costs, and packaging costs. Check out our guide on purchasing in China for tips on managing import costs.

Why IWO is crucial for bol.com sellers

As a bol.com seller, you deal with multiple layers of costs: purchase costs, commissions, shipping costs, return costs, and advertising costs. Your IWO forms the largest cost item and therefore has the greatest impact on your profitability. Here are the main reasons why you should actively manage your IWO:

• Calculate profit margin: Without an accurate IWO, you can't calculate your actual margin. Many sellers overestimate their margin because they don't include all purchase costs.
• Determine pricing strategy: Your selling price must at least cover your IWO plus all operational costs. The Profit Calculator helps you calculate your break-even price.
• Monitor inventory value: The IWO of your inventory shows how much working capital is tied up in products. An excessively high inventory value can put pressure on your cash flow.
• Tax return: The IWO is a deductible cost in your tax return. Accurate administration saves you money.
• Product decisions: By analyzing the IWO per product, you see which products yield the highest margins and which you'd better phase out.

Strategies to lower your IWO

A lower IWO with the same turnover means a higher gross profit. Here are proven strategies that successful bol.com sellers apply:

1. Negotiate with suppliers

With larger orders, you can often negotiate better purchase prices. Ask for quantity discounts and compare multiple suppliers before ordering. Use the Product Database to research which products have sufficient volume to leverage scale benefits.

2. Optimize your supply chain

Combine shipments, choose the right Incoterms (read more in our article about Incoterms) and compare freight forwarders to lower your transport costs. Every euro less in shipping costs directly lowers your IWO.

3. Avoid dead stock

Products that remain in stock for a long time increase your average IWO without generating turnover. Monitor your inventory turnover via the Sales Dashboard and lower the price of slow-moving items in time before they become dead stock.

4. Choose products with high margins

Not every product is equally profitable. Use the Product Tracker to find product categories with low IWO and high selling prices. Niche products with little competition often offer the best margins.

5. Consider Logistics via Bol (LVB)

Although LVB comes with extra costs, it can lower your overall costs by reducing returns and speeding up delivery - which leads to better reviews and more sales. Calculate the optimal size with the LVB Box Size Checker.

Keeping track of IWO: tools and methods

Accurately tracking your IWO is essential but can be time-consuming. Here are the most commonly used methods:

Method	Advantages	Disadvantages
Spreadsheet (Excel/Google Sheets)	Free, flexible, fully customizable	Time-consuming, prone to errors with many products
Accounting software (e-Boekhouden, Moneybird)	Automatic calculations, tax reports	Monthly costs, not specific to e-commerce
Boloo Profit Calculator	Specific to bol.com, takes into account commissions and shipping costs	Focus on product margin, not full accounting
ERP system (Exact, Afas)	Fully integrated, real-time inventory management	High costs, complex implementation

For most bol.com sellers, a combination of accounting software and the Profit Calculator offers the best balance between accuracy and ease of use. Larger sellers with hundreds of products may want to consider an ERP system.

Common mistakes in IWO calculation

Many bol.com sellers make mistakes in their IWO calculation, resulting in a distorted view of their profitability:

• Only considering the net purchase price: Don't forget to include shipping costs, import duties, BTW on import, and packaging costs in your cost price.
• Not processing returns: When a customer returns a product, you need to adjust your IWO. The product goes back into your inventory (if it's still saleable) or is written off.
• Ignoring exchange rate fluctuations: If you purchase in dollars or yuan, your actual purchase price fluctuates with the exchange rate. Always use the rate at the time of payment.
• Not accounting for breakage and theft: A small percentage of your inventory is lost due to damage or theft. These losses effectively increase your IWO per sold product.
• Not periodically valuing your inventory: The value of your inventory can decrease due to aging or price drops. Value your inventory at least quarterly to keep your IWO calculation up-to-date.

IWO and the Tax Authority

IWO plays a crucial role in your tax return. As an entrepreneur, you can deduct IWO from your revenue to calculate your taxable profit. Keep the following in mind:

• Keep all purchase invoices for at least 7 years (statutory retention period).
• Use a consistent valuation method for your inventory (FIFO, LIFO, or average purchase price).
• When importing from outside the EU, you are liable for BTW on import - this BTW can be reclaimed as a pre-tax deduction.
• Maintain a separate inventory administration that matches your accounting.

With Boloo's Automatic Invoicing, you keep your administration streamlined and avoid problems in case of a Tax Authority audit.

Frequently asked questions about IWO

What is the difference between IWO and revenue?

Revenue is the total amount you receive from customers (selling price × number sold). IWO is what you paid for those same products (purchase price × number sold). The difference is your gross profit.

How often should I calculate my IWO?

It's best to update your IWO monthly. At the very least, do it quarterly to keep a close eye on your profitability. Use the Sales Dashboard for a real-time overview.

Is VAT included in the IWO?

No, if you're VAT-liable, you calculate your IWO excluding VAT. The VAT you pay on purchases (pre-tax) is settled through your VAT return.

What if I receive products for free (samples)?

If you receive free samples and sell them, the IWO for those products is €0. You only need to factor in any additional costs (shipping, customs duties).

Can my IWO be higher than my revenue?

Yes, that means you're making a loss on your sales. This can happen during clearance sales, significant price drops, or if your purchase costs have increased. Analyze which products are loss-making and adjust your strategy accordingly.