Margin is measured at the wrong level
Gross margin on the product line looks healthy. Contribution after acquisition, payment, fulfilment and returns is a different number, and it is the one that pays wages.
04 · eCommerce & Digital Commerce
Revenue is not the number that matters.
Contribution margin per order is. A store can double its turnover and lose more money doing it, and the cause is almost always one of three things: the platform, the fulfilment, or the returns. We find out which.
01 · The problem
The dashboard says growth. The bank does not agree.
Commerce platforms report revenue beautifully and cost almost not at all. Payment fees, pick and pack, carriage, returns processing and discount leakage sit outside the dashboard, and together they are usually where the margin went.
Returns are treated as an inconvenience
In several categories the return rate is the single largest determinant of profitability, and it is often not reported at product level at all, so the worst offenders keep being promoted.
Platform chosen for features nobody uses
Replatforming is expensive, disruptive and frequently solves a problem that was never in the platform. The question is which constraint is actually binding, and it is rarely the one being discussed.
Acquisition without retention
Where repeat rate is low, every month starts from zero and acquisition cost must be paid again. Retention is usually the cheapest available growth, and the least attended to.
02 · What you receive
The economics first, then the fixes.
Conversion work is only worth doing once you know which orders you want more of. Optimising a funnel that delivers unprofitable orders faster is not an improvement.
03 · How it runs
Four weeks to a defensible number.
Most eCommerce engagements start with a short, intense piece of arithmetic. Until the contribution model exists there is nothing to optimise against, and every subsequent decision is a preference rather than a judgement.
- 01
Reconcile to the bank
Platform revenue against banked receipts. The difference is discount, fees, refunds and failed payments, and it is frequently larger than anyone expects.
- 02
Build contribution per order
Every cost that varies with an order, allocated honestly. Products and channels that consume profit become visible, usually for the first time.
- 03
Fix the largest leak
One thing at a time, measured. Simultaneous changes are impossible to attribute, and unattributable improvement cannot be repeated.
- 04
Hand over the model
Your team maintains it monthly. The point is not the report we produce; it is that you can produce it next quarter without us.
04 · Is this the right service?
Five signs this is the work you need.
The first of these on its own is usually enough to justify a conversation.
- Online revenue is rising and profit is flat or falling, and no one can say precisely why.
- Your platform’s reported revenue and your banked receipts differ by more than you can explain.
- Return rates are not reported at product level, or are reported but never acted on.
- A replatforming project is being discussed and nobody has written down which constraint it removes.
- Most of this month’s orders came from customers who had never bought before, and that is normal for you.
05 · Questions
On eCommerce specifically.
General questions about fees, timing and how engagements are scoped are answered on the frequently asked questions page.
No. We define what needs to be true and work with your developers or agency to get it built. Keeping the specification separate from the build is deliberate. It means the assessment of whether a platform change is necessary is not being made by the people who would be paid to carry it out.
All the major ones, and we hold no reseller agreements or referral arrangements with any vendor. That is a commercial choice on our part: a platform recommendation is worth very little if the adviser is paid differently depending on the answer.
Yes, and the comparison is often the most valuable part. Contribution by channel is what tells you whether direct-to-consumer is genuinely more profitable than wholesale once acquisition and fulfilment are properly charged to it. Frequently the answer surprises people.
The analysis can, and should be. Structural changes should not be. We will happily build the model and identify the leaks ahead of a peak, then hold the larger fixes until trading has settled. Changing checkout in November is a decision very few people enjoy twice.
Often, yes, and it is worth checking before anything else. Configuration drifts as sites change, and a tracking error that has been quietly running for two years means two years of acquisition decisions rested on numbers that were not quite true.
06 · Start the conversation
Tell us what is actually holding the business back.
An introductory consultation is a straightforward conversation about your position and your priorities. No charge, no proposal deck, and no obligation to go further.
- What to expect
- Forty-five minutes with a senior adviser, followed by a short written summary of what we heard.
- What to bring
- Your last set of management accounts, if you have them. If you do not, that is already useful to know.
Vader Barclay ConsultingManagement · Accountancy · Marketing