E-commerce and retail
An online store or a shop can grow revenue every month and run out of cash doing it. Inventory is bought in advance, ads are paid before the sale, platform and card fees take their share at checkout, and freight and returns take theirs after. We bring order-level and product-level finance to e-commerce and retail businesses across British Columbia, working alongside their CPA. Ali's team has run conversion and marketing businesses since 2019 and understands where the money goes.
How the money works
- Contribution per order, after product cost, fees, freight, packaging and returns, is often a fraction of the gross margin the owner quotes
- Inventory is cash on a shelf, and the products that sell slowly hold most of it
- Advertising is paid in advance of the sale, so growth funded by ads needs cash before it produces cash
- Seasonality and platform rule changes swing volume and cost without warning
The moves we make
- A contribution margin model by product and by order, with every fee and cost included
- Inventory turns, reorder points and dead stock by product, built into purchasing
- Advertising cost per order and payback by channel, so spend follows contribution rather than revenue
- A cash forecast that models purchasing, ad spend and payout timing from each platform
Where cash and margin leak
Margin leaks in free shipping offered on orders that cannot carry it, in discount codes that were meant for one campaign and never expired, in returns that are not costed, in platform fees that rose and in products priced from the supplier's cost before freight and duties.
Cash leaks in inventory bought to get a better unit price, in ads scaled on revenue rather than contribution, and in platform payout schedules that hold money for days or weeks. A store that grows fast on this basis looks successful and is financed by its suppliers and its credit card.
The numbers to watch every week
Contribution per order and per product after all variable costs. Advertising cost per order by channel and its payback. Inventory turns and weeks of stock by product. Return rate by product. Cash in the bank against committed purchase orders and ad budgets. Platform payouts expected by date.
A retailer who sees these every week stops the campaign that loses money on every order and stops the purchase order for the product that has not moved in three months, before either one hurts.
How pricing works in retail and online
Price is set in a market where the customer can compare in seconds, so the levers are landed cost, the fee stack, bundling, shipping thresholds and the mix of products at different margins. A price that covers the supplier's invoice and not the freight, duties, fees and returns is below cost without looking it.
The pricing model we build calculates a landed, all-in cost per product and sets a floor, then tests shipping thresholds, bundles and discount rules against contribution rather than revenue. Promotions are planned with a margin check before they run.
Questions from e-commerce and retail owners
Our revenue is growing but our bank balance is falling. Why?
Usually because inventory and ad spend are paid before the sale, platform payouts arrive after it, and contribution per order is thinner than the gross margin suggests. A contribution model and a cash forecast that includes purchasing and ad timing show where the money is going.
How much should we spend on ads?
As much as produces orders with a contribution above the ad cost and a payback your cash can carry, by channel. That is a number from your own data, not a percentage of revenue. We build the model and set the limits with you, and Ali's marketing agencies can run the channels if you need that.
How do we deal with stock that does not sell?
Clear it, take the loss with your CPA's guidance on the write-down, and fix the purchasing rules so it does not come back. Reorder points from real demand and lead time, and a weekly weeks-of-stock report by product, prevent the next one.
Start with a finance review.
Ninety minutes with Ali on your cash, margin and pricing. You leave with the four numbers to watch and the two or three moves that change them, whether or not we work together.