Some estimates put the free shipping & returns, and warehousing at around 10% of total retail price but this figure obviously varies across categories, countries, and price levels. If we assume free shipping and returns are around 7% of revenue, then a doubling of those costs could significantly impact the operating profitability of e-commerce businesses. JD.com has recently experienced a small dip in its EBITDA margin in Q3 and basically it is flat from Q1 despite significantly higher revenue. Zalando in Europe experienced a drop in its EBITDA margin to 8.5% in Q3 from 12.3% in Q2. Analysts are currently expecting Zalando’s EBITDA margin to increase in Q4 but is that realistic given the FedEx and UPS story combined with the surge in Q4 in global shipping rates? If commodity prices also rise, then the entire global supply chain will begin feeling the input cost pressure. One thing is for sure, Saxo’s theme basket of global e-commerce stocks, which we wrote about recently, is not showing any signs of discounting profit impact from higher logistics and commodity prices. Our e-commerce theme index is up 67% in USD this year. It could be a good idea to scale down positions in e-commerce in anticipation of negative surprises in the Q4 earnings season starting in late January.