Everything You Need to Know About Finance in eCommerce

Most eCommerce founders are optimising to the wrong number, and the gap between what the ad account says and what the bank account shows is where most brands get into trouble. This video walks through every financial concept an operator needs to understand, from how to actually read your P&L through to where the profit frontier sits and why most brands have already crossed it. We cover the real cost stack hiding inside your gross margin, why blended MER masks acquisition decline, how cash flow kills profitable brands, and what 30-day LTGP:CAC actually tells you about whether your acquisition model is viable. It's the long version of the conversation I have with founders every week. If you're running an eCommerce business between $1M and $50M and you've ever looked at a healthy ad account and wondered why the business still feels stuck, this is for you. $5m+ p/yr brands get a free audit here: https://bsd.bluesensedigital.com.au/f... Performance marketers apply here to become apart of the team: https://docs.google.com/forms/d/e/1FA... 00:00 Intro: Why most brands look at the wrong numbers 02:20 The P&L explained 04:55 Gross vs net revenue and the levers most brands miss 07:55 COGS, cost of delivery, and the gross margin mistake 12:30 Marketing on the P&L 18:20 Operating expenses and where 7-figure brands go wrong 20:15 The full P&L waterfall walkthrough 24:10 Unit economics 25:05 CAC: how to calculate it correctly 27:45 Pricing strategy: keystone, IMU, and waterfall pricing 37:20 LTV, LTGP, and why most people calculate it wrong 41:40 Product-level economics and bidding strategy 44:50 The metrics pyramid 45:30 Why ROAS misleads you 49:25 Finance grade KPIs 51:00 Incrementality testing 52:55 MER vs aMER 54:05 LTGP to CAC and the benchmarks you should be hitting 57:40 View-through conversions and frequency caps 59:20 Existing customer spend: the formula 1:00:55 The profit frontier and the next best dollar 1:03:20 Cash flow vs profit 1:04:45 Inventory grades and SKU rationalisation 1:09:00 The cash conversion cycle 1:14:05 The CFO vs CMO disconnect 1:16:20 Forecasting new and returning customer revenue 1:21:55 Why ROAS overweights bottom of funnel 1:22:40 Brand and where performance marketing breaks 1:27:15 Five key takeaways 1:29:25 Outro 💰 Proven Scaling Framework for eCommerce Brands in 2024:    • Proven Scaling Framework for eCommerce Bra...   👉 Guide To Analysing A Cohort Analysis In Shopify:    • Guide To Analysing A Cohort Analysis In Sh...   👉 Scaling & Testing Framework for Meta:    • Scaling & Testing Framework for Meta Ads   👉 How We Scaled A $6M AU Brand into the USA Profitably:    • How We Scaled A $6M AU Brand into the USA ...   -------------------------------------------------- Get the latest updates, best practices, and PROVEN eCommerce strategies every day. Subscribe here:    / @bluesensedigital   -------------------------------------------------- Blue Sense is a global eCommerce consulting firm that partners with founders & operators to tackle their biggest growth challenges. Our YouTube channel is dedicated to sharing our most effective marketing strategies to help you achieve your business goals. -------------------------------------------------- Sign up for a FREE Action Plan today: https://www.bluesensedigital.com.au/ Connect with Nathan here:   / nathan-perdriau   ⬇️️ You can find us here ⬇️️: Website: https://www.bluesensedigital.com.au/ Instagram:   / bluesensedigital   LinkedIn:   / blue-sense-digital   #googleads #facebookads #digitalmarketing #ecommercetips #shopify