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Operational Advisory — Lake Washington Advisors

Your margin is broken.
Let’s find exactly where
and fix it.

Most apparel brands know their revenue. Few know their true per-SKU contribution margin after every cost is accounted for. Margin Improvement starts with a structured diagnostic — then works through the specific levers that move the number.

Book a 30-Minute Call See the 5Angle Diagnostic
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Principal-led by Shabbir Sharaf — 21 years operating apparel brands with personal capital. Every engagement conducted under NDA.
Engagement Type
Diagnostic + Improvement
Duration
90-Day Initial Engagement
Scope
Discussed on First Call
The Problem

Where apparel margin actually leaks

Amazon’s fee structure is deliberately complex. Apparel return rates run 20–35%. Supplier terms negotiated in year one rarely get renegotiated. PPC spend grows to maintain revenue that should be organic. By the time all of it is layered together, most brands are operating on a fraction of the margin they think they have.

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The Amazon Cost Stack
FBA fees, referral fees, PPC spend, return processing, storage charges — each calculated separately, never seen together at the SKU level. Running a true per-unit P&L across every cost layer takes time — and the picture that emerges is almost always more complex than the dashboard suggests.
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Returns Eating Contribution
Apparel averages 25% return rates industry-wide. Shoes run over 30%. Each return carries a reverse logistics cost, a restocking cost, and a potential write-off. Returns are typically tracked as a blended category cost — diagnosing which specific SKUs are driving the rate, and why, is where the real leverage sits.
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Supply Chain Cost Untouched
Factory terms set years ago. MOQs that force over-inventory. Freight costs that have never been renegotiated. Landed cost that has drifted with tariff changes nobody modeled. The supply chain side of the margin equation is where the largest untapped leverage usually sits.
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PPC Masking Organic Decay
Ad spend grows quarter over quarter to maintain rankings that should be organic. Remove the spend and revenue drops — which means the brand is renting its own sales velocity. The true cost of that dependency rarely appears in any report the brand sees.
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SKU Proliferation
Every color, every size run, every seasonal variation is a separate inventory commitment. Capital tied up in the wrong colorways, dead sizes that will never sell through, and photography and listing costs that accumulate across a catalog nobody has rationalized.
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Pricing Architecture Misaligned
Price points set by competitive benchmarking rather than cost structure. Promotions that train customers to wait. Coupons with no expiration date that became structural discounts. The price at which a product sells is rarely the price at which it is profitable.
The Methodology

Diagnosis first. Improvement follows.

Margin improvement without accurate diagnosis is guesswork. The engagement starts by reconstructing the true economics of the business — then identifies which levers move the margin number and works through them systematically.

01
True Margin Reconstruction
We rebuild the per-SKU P&L from scratch — not from dashboard numbers, from actual costs. Every FBA fee, referral fee, PPC spend, return processing cost, storage charge, landed cost, and freight allocation mapped to individual ASINs. Most brands see their true margin number clearly for the first time at this stage.
FBA fee mapping by ASIN including size tier and weight
True PPC cost per unit sold by SKU
Return rate and reverse logistics cost per SKU
Landed cost reconstruction including tariff exposure
Storage cost allocation and long-term storage exposure
02
SKU Classification — Scale, Fix, or Exit
Every SKU receives a classification based on its true economics and strategic position. Scale: strong fundamentals, investment-worthy. Fix: viable product with specific addressable issues. Exit: margin is structurally unworkable, capital is better deployed elsewhere. This classification drives every subsequent decision.
Green — Scale: economics support investment, prioritise for growth
Yellow — Fix: specific levers identified, improvement roadmap built
Red — Exit: discontinue and redeploy capital
03
Lever Identification & Prioritisation
For each Fix-classified SKU, we identify the specific levers available — supply chain cost reduction, PPC restructuring, pricing adjustment, return rate reduction, listing improvement. Each lever is sized by its margin impact and ranked by effort required. The roadmap focuses capital and attention on the highest-impact moves first.
04
Improvement Execution
We work through the roadmap with the client — supplier renegotiations, PPC restructuring, return rate diagnosis traced back to factory tolerance or listing accuracy issues, pricing architecture adjustment, SKU exit planning. The goal is measurable margin movement within the 90-day engagement window, with a clear trajectory established for the following two quarters.
Supplier term renegotiation and landed cost reduction
PPC efficiency rebuild — organic ranking recovery plan
Return rate root cause analysis and factory or listing fix
Pricing architecture review and promotional discipline
SKU exit and inventory liquidation planning
What You Receive

Deliverables from the engagement

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True Margin Report
Per-SKU contribution margin after every platform cost, advertising spend, return, and supply chain cost. The number your P&L has never shown you, built from your actual data.
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SKU Classification & Roadmap
Every ASIN classified Scale / Fix / Exit with the specific rationale and next action for each. The roadmap prioritised by margin impact — highest-leverage moves addressed first.
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Supply Chain Cost Analysis
Landed cost review by SKU including factory terms, freight, duties, and tariff exposure. Specific renegotiation opportunities identified with estimated margin impact.
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Return Rate Diagnosis
Return rate by SKU with root cause analysis — factory tolerance, sizing inconsistency, listing accuracy, or structural category behaviour. Fix identified for each addressable cause.
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PPC Efficiency Assessment
True cost per unit sold by SKU, organic vs. paid revenue split, and a restructuring plan that reduces PPC dependency without destroying revenue in the transition.
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90-Day Improvement Plan
Specific actions, owners, and timelines for the first 90 days. Margin target by SKU tier. Clear criteria for what a successful engagement looks like and how to measure it.
“Apparel margin problems are most often supply chain problems or return rate problems in disguise — visible only when you have operated every layer of the stack. I built a supply chain from fiber to consumer across seven brands over 21 years. I know where apparel margin leaks because I have watched it leak from the inside.”
Shabbir Sharaf — Founder, Noble Mount · Managing Director, Lake Washington Advisors

Ready to see the real number?

Every engagement begins with a 30-minute conversation. No pitch — a direct discussion about your brand economics and whether this engagement is the right fit.

Book a 30-Minute Call
Related Services

Other ways we can help

Diagnostics
The 5Angle Diagnostic
Five factors. One decision. Fix, Diversify, or Exit — determined by the full picture.
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Operational Advisory
Supply Chain & Sourcing
Factory relationships, tariff exposure, sourcing geography restructuring.
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Operational Advisory
Returns Management
Return rate diagnosis, root cause analysis, reverse logistics optimisation.
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