E-commerce Advisor
Strategic frameworks for e-commerce founders, operators, and brand builders. Most ecommerce decisions are unit-economics decisions — knowing the math is the difference between a brand that compounds and one that subsidizes itself out of existence.
Keywords
ecommerce, e-commerce, DTC, direct-to-consumer, Shopify, Amazon, retail, wholesale, 3PL, fulfillment, dropship, unit economics, contribution margin, CAC, AOV, LTV, returns, refunds, payment processing, interchange
Clarify First
Before building the model, confirm these inputs. If any is unknown or vague, ASK — do not assume:
- [ ] Single channel or blended — model each channel (DTC, Amazon, wholesale) separately; a blended model hides an unprofitable channel and makes contribution margin meaningless
- [ ] AOV and COGS — average order value and landed cost of goods (drives gross margin, the top line of the model)
- [ ] Returns/refund rate — returns eat margin twice (the sale plus reverse logistics), so this swings contribution margin
- [ ] CAC basis — true paid/blended CAC and what ad spend is counted (drives CAC payback period and break-even repeat rate)
Stop rule: ask only the 2-3 that most change the output. If the user says "just draft it," proceed and list your assumptions at the top of the model.
Quick Start
python scripts/ecom_unit_economics_calculator.py model.json
Calculates gross margin, contribution margin, CAC payback, and per-order profit from a structured input file.
Core Workflows
Workflow 1: Unit Economics Model
- Build a JSON config: COGS, fulfillment cost, payment processing %, returns %, ad spend %, AOV
- Run calculator:
python scripts/ecom_unit_economics_calculator.py model.json - Identify the marginal cost line items eating most of the margin
- Decide: cut costs, raise price, change channel mix, or kill the SKU
Time Estimate: 2-4 weeks for first robust model.
Workflow 2: Fulfillment Strategy
- Read
references/fulfillment_models.md - Score each model (DTC self-fulfilled, 3PL, Amazon FBA, dropship, retail) for your stage and SKU profile
- Migrate fulfillment as you scale — most brands change models 2-3 times in their first 3 years
Time Estimate: 4-8 weeks per major fulfillment transition.
Workflow 3: Channel Strategy
- Read
references/channel_strategy.md - Decide channel mix: DTC site, Amazon, wholesale, retail, marketplace
- Each channel has distinct unit economics — model them separately, never blend
- Sequence: most brands start DTC, add Amazon, add wholesale / retail
Time Estimate: Continuous, with major decisions every 6-12 months.
Tools
ecom_unit_economics_calculator.py
Models per-order, per-month, and CAC-payback economics from a structured input.
python scripts/ecom_unit_economics_calculator.py model.json
python scripts/ecom_unit_economics_calculator.py model.json --json
Input model schema in the script's docstring; example in assets/unit_economics_template.json.
Outputs:
- Gross margin (% and absolute)
- Contribution margin (after marginal CAC)
- CAC payback period (months)
- Break-even repeat rate
Reference Guides
references/fulfillment_models.md— DTC self, 3PL, FBA, dropship, retail — when each fitsreferences/channel_strategy.md— DTC site, Amazon, wholesale, retail — economics per channel
Templates
assets/unit_economics_template.json— Input file for the calculator with example values
Best Practices
- Model channels separately. A blended LTV across DTC and Amazon hides the fact that Amazon may be unprofitable.
- Returns and refunds compound. A 15% return rate eats into margin twice — once on the initial sale, once on the reverse logistics.
- Plan for inventory. Working capital tied up in inventory is the #1 cash-flow killer for product brands.
- Don't fall in love with revenue. $10M revenue at 5% contribution margin is worse than $3M revenue at 30% contribution margin.
- Be honest about CAC. Most DTC brands subsidize CAC and call it growth. CAC payback under 6 months is the bar.