Your Offline and Online Prices Are Not Comparable Until the Brand Margin Is in Both
The comparison is sound only if the brand margin is treated the same way in both builds.
As written, the offline sequence runs from FOB cost through freight, duty, the local cost stack, the distributor margin, the retail margin and tax. No separate brand margin appears. The online build, by contrast, adds a desired brand margin explicitly, alongside the platform fee and fulfilment cost. If the FOB input is a cost figure, the offline price describes a product sold at cost and the online price describes a product sold at a profit. The online channel will look more expensive for reasons of definition, not channel structure.
The reverse error is also possible. If the FOB input already embeds the brand’s margin, the offline layers compound on it, while the online build adds a further margin on top, and the online price is overstated.
The consequence is a channel decision made on an inconsistent comparison. A brand may favour offline because its price looks lower, then find that once its own margin is included, the advantage disappears. It may be dismissed online for the opposite reason.
The executive decision is to define what the FOB input represents, a cost or a transfer price, and to build both channels on the same brand-margin definition before comparing them. That definition should also carry into Framework 09, P&L Outlook, so the price model and the profit outlook describe the same economics.
This is also a capability question. The people building the two channels must agree a single definition before either result reaches leadership, because the first number presented tends to become the reference for everything that follows.
Commercial impact: the primary entry channel can be chosen on a comparison that is not like-for-like. Strategic implication: the brand’s own margin must sit visibly in the model, not implicitly. Business risk: a channel verdict that reverses once margin is included. Execution implication: one definition of the FOB input should be agreed before channel results are shared.
This Samana Insight Framework 08 Value Chain Analysis strengthens that step by addressing how the brand’s own margin enters each build. It belongs here because the framework’s channel decision rests on comparing consumer prices at a viable brand margin
See how Framework 08 Value Chain Analysis supports like-for-like channel comparison across markets
