Profit & margins
High-margin ecommerce niches
The businesses with the highest profit margins tend to sell products whose price is far above what they cost to make, and where competitors can't easily undercut them. In US public-company data, consumer categories such as apparel, soft drinks and household products report gross margins above 50%. A high gross margin doesn't guarantee a high net margin, though.
The highest profit margin businesses by industry
These figures come from NYU Stern professor Aswath Damodaran's margins by sector dataset, built from US public company filings and updated each January.
| Industry (US public companies) | Gross margin | Net margin |
|---|---|---|
| Apparel | 56.9% | 3.9% |
| Beverage (soft drinks) | 54.7% | 13.4% |
| Household products | 51.0% | 11.7% |
| Beverage (alcoholic) | 47.0% | 0.6% |
| Shoe | 43.9% | 6.3% |
| Recreation | 39.8% | −4.7% |
| Electronics (consumer and office) | 38.8% | −9.4% |
| Retail (special lines) | 35.3% | 5.2% |
| Retail (general) | 33.2% | 5.6% |
| Furniture and home furnishings | 30.3% | 1.1% |
| Food processing | 23.2% | 2.8% |
Source: Aswath Damodaran, Margins by Sector (US), NYU Stern School of Business, January 2026.
Three things stand out:
- Brands earn more gross margin than retailers. Apparel and household products brands sit above 50%; general and specialty retailers, who resell other brands, are in the 30s.
- Gross margin and net margin tell different stories. Apparel has the highest gross margin in this list but one of the lowest net margins, because marketing, returns and overheads absorb most of it.
- Some categories lose money overall. Recreation and consumer electronics show negative net margins for the period, despite gross margins near 40%.
These are large public companies, so treat them as a guide to how categories compare, not as targets for a small store.
What makes a product's margin high
| Factor | Pushes margin up | Pushes margin down |
|---|---|---|
| Brand | Your own brand; customers pay for the name | Reselling widely available brands |
| Product cost | Low landed cost relative to price | Expensive materials, heavy freight, high duties |
| Comparability | Unique designs, bundles, custom products | Identical items sold by many stores |
| Size and weight | Light and compact: cheap to store and ship | Bulky or heavy: costly fulfillment |
| Average order value | Higher AOV spreads fixed costs per order | Low-price items with high shipping cost |
| Returns | Low return rates (consumables, accessories) | High return rates (fit-sensitive apparel and shoes) |
| Repeat purchases | Consumables people reorder | One-off purchases needing new ad spend each time |
How to find high-margin products for your store
- Calculate contribution margin per product, after landed cost, shipping, fees and an allowance for returns. The contribution margin calculator does this per SKU.
- Rank products by contribution, not revenue. Best-sellers aren't always the most profitable.
- Look for patterns among your top contributors, such as product type, size, price point or customer, and develop more products like them.
- Test new products in small batches before committing to large orders.
Ways to raise margin in any niche
- Develop own-brand versions of products you currently resell.
- Bundle low-margin items with high-margin ones. See the guide to product bundling.
- Reduce returns with better size guides, photos and product descriptions.
- Price from a target margin, not a markup. See how to calculate selling price.
For gross and net margin targets, see what a good profit margin is.
FAQ
What business has the highest profit margin?
In US public-company data, pharmaceutical and tobacco companies report some of the highest gross and net margins, but they're heavily regulated and not realistic for most online stores. Among consumer products sold online, apparel, soft drinks and household products report gross margins above 50%.
What are high profit margin products?
Products where the price customers will pay is far above the landed cost: usually branded, lightweight, hard to compare directly, and with low return rates. Your own brand of a product typically earns more than reselling someone else's.
Does a high gross margin mean a profitable business?
Not necessarily. Apparel brands in the data below have a high gross margin but a low net margin, because marketing, returns and overheads take most of it.
How do I find high-margin products for my store?
Calculate contribution margin for every product you sell or plan to sell, after shipping, fees and returns. The best candidates combine a high contribution margin with steady demand and low return rates.