Ecommerce gifts and samples: measure campaign cost and order contribution
Measure ecommerce gift purchase, dispatch, usable returns and incremental campaign contribution.
A gift-with-purchase campaign can generate more orders and send thousands of free items out of the warehouse. To assess its value, do not multiply the gift's retail price by every order or equate the procurement payment with the cost of the campaign. Start with what was acquired, issued, returned and still usable; then compare the costs caused by the campaign on a consistent basis.
This guide is for ecommerce operators and finance teams, including overseas colleagues reviewing a China store's campaign. Gifts may be purchased by the merchant, supplied by a vendor or shared under an agreement. Establish who owns the goods, who bears each cost and which orders received them. Accounting and tax treatment depend on the entities, movement of goods, evidence and applicable rules; the label “free gift” does not settle those questions.
Trace the gift before choosing a cost
| Stage | Evidence to check | Why it matters |
|---|---|---|
| Purchase or receipt | Supplier agreement, units received, actual cost, funding and settlement | Retail value is not the merchant's cost; do not count a supplier-funded purchase twice |
| Issue | Campaign terms, orders, warehouse dispatch and replacements | Identify gifts actually sent, rather than treating unused inventory as consumed |
| Returns and restocking | After-sales record, physical receipt, inspection and usability | A refunded order does not prove the gift came back; a returned item is not automatically reusable |
| Packing and fulfilment | Additional packaging, handling, transport and reprocessing | Include the extra cost caused by the gift, not a common delivery charge that would occur anyway |
| Remaining stock | Quantity, condition, alternative use and future handling cost | Separate usable inventory from consumption and distinguish procurement cash from current campaign cost |
For an entity applying Chinese Accounting Standards for Business Enterprises, the Ministry of Finance's inventory standard describes purchase price and attributable purchase costs, including relevant taxes and transport, as components to consider. Actual accounting depends on the evidence, tax method and standards applicable to the entity. The management calculation below does not itself determine the entries or tax treatment.
Separate issued gifts from reusable returns
Assume a merchant purchases 22,000 gifts specifically for a campaign at an attributable cost of RMB 25 each. It sends one gift with each of 20,000 orders; the remaining 2,000 units are usable in later normal activities. After the campaign, 1,000 orders are refunded. Of their gifts, 600 are physically returned and pass inspection for reuse; the other 400 are not recovered or cannot be reused.
Each gift sent incurs RMB 3 of additional packaging and handling, which is not refunded on return. The 600 usable returns also incur RMB 2 each in additional reprocessing. Assume no other incremental costs and use a consistent amount basis excluding recoverable input VAT.
| Campaign reconciliation | Calculation | Amount |
|---|---|---|
| Gifts not returned to usable inventory | 20,000 − 600 = 19,400 units | — |
| Cost of those gifts | 19,400 × RMB 25 | RMB 485,000 |
| Additional packaging and handling for issued gifts | 20,000 × RMB 3 | RMB 60,000 |
| Additional reprocessing of usable returns | 600 × RMB 2 | RMB 1,200 |
| Gift-related campaign cost | RMB 485,000 + 60,000 + 1,200 | RMB 546,200 |
The purchase itself cost RMB 550,000. At the review date, the 2,000 unissued and 600 returned usable gifts total 2,600 units with an assumed cost of RMB 65,000. The reprocessing charge on the 600 returns is already included in campaign cost; do not also treat their RMB 15,000 inventory cost as consumed.
Cash planning and cost analysis answer different questions. If the full RMB 550,000 purchase was paid, it affected cash even though some gifts remain usable. Follow up on whether the remaining stock can actually be used, whether extra storage is needed and whether any impairment occurs; the purchase payment does not automatically return as cash.
Compare the campaign with a realistic alternative
Assume that, compared with a consistent no-gift alternative, the campaign generated RMB 4.8 million of incremental net sales and RMB 3.3 million of additional product, fulfilment and other variable costs. These figures already reflect the refunded orders above and exclude the gift cost.
Incremental contribution before gifts is RMB 1.5 million. Subtracting RMB 546,200 of gift-related cost across all the campaign's gift orders leaves RMB 953,800. This management comparison does not allocate unchanged common fixed costs and is not complete accounting profit or cash realised. Estimate incremental sales against a comparable baseline or a cautious forecast; the whole campaign's sales are not automatically caused by the gift.
For a decision about sending additional gifts, consider the costs and benefits that will change from that decision: extra purchase or handling payments, the opportunity cost of inventory that could otherwise be used, and any costs that can still be avoided. A past outlay that remains unchanged whichever option is chosen does not become a new cash payment merely because it is reallocated. ACCA's discussion of relevant costs explains the distinction.
Four checks before acting on the result
- Identify who pays. A vendor-supplied gift can still create merchant shipping, storage or handling costs, but do not record a purchase expense the merchant did not bear.
- Match dispatch and after-sales. Keep the promised, shipped, replacement, refunded and physically returned quantities distinct. The handling of gifts and samples depends on applicable platform rules, the product and the promise to the customer.
- Count each cost once. If product or fulfilment costs already include the gift or extra packaging, do not subtract them again. Shared rent and shipping that would have occurred anyway are not automatically incremental.
- Track remaining stock and later outcomes. Separate usable, uninspected and unusable units. Evaluate repeat purchase or longer-term benefits when the relevant evidence is available.
CaiGeek is an AI financial assistant for small and medium-sized businesses. Begin with the campaign orders, gift inventory and after-sales records; read the promotion contribution guide, explore the operating and profit analysis example, or contact CaiGeek about a specific question.
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