Ecommerce Profit Benchmarks: P&L + Performance Metrics That Matter

Rayla Rappaport & Aaron Orendorff

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Ecommerce Profit Benchmarks: P&L + Performance Metrics That Matter

Ecommerce is hard. And only getting harder.

Founding teams have multiple responsibilities — operations, product, marketing, sales, finance, and more.

As opposed to the heyday of Covid, when everyone and everything were moving online, dropshipping was king, and ecommerce could do no wrong, many things have gone south. External funding has dried up, and large retailers have entered the online space — making competition tougher and margins compressed.

Last, but definitely not least, are macroeconomic trends.

Sticky inflation, high interest rates that won’t go down, and trade wars with wacky tariff rates that could not have been imagined years or even months ago.

To help, we’ve prepared this ecommerce KPI guide to give brand founders and operators the visibility they so desperately need.

In addition, we reached out to the top voices in the ecommerce industry to provide original contributions and priceless guidance.

Methodology

This data is based on hundreds of 7 and 8-figure brands with Finaloop financials. The data is pulled from our databases for the years 2023–2025.
The various P&L metrics we have used are shown as a certain percentage of net sales.
When analyzing KPIs and margins within a specific year or period (e.g., gross margin in 2024), the data shown is the mean within that period.
When looking at overall market trends (e.g., topline sales), we use the total amount of USD sales, and (in some cases) median (and not the mean).
In total, the data set represents $3.16b in annual sales and $808M in annual marketing spend. In every comparison, we have only included same-store sets.

Profit and Loss Benchmarks: 2024 H1 vs 2025 H1

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Accounting for Ecommerce - Template and Guide

Ecommerce metrics and KPIs

Total sales

The first question is not, “Is online shopping growing?” Ecommerce sales, both in total and as a percentage of retail, can be a positive indicator of the wider market opportunity. But a rising tide does not lift all ships.

In the wake of COVID’s clawback, ecommerce sales in the US and worldwide have rebounded — this is especially true of ecommerce sales as a percentage of total sales.

State of US Ecommerce: Percent of Retail (By Quarter)

State of US Ecommerce: Quarter Over Quarter Change

Although comparative growth (YoY or QoQ) in the US still pales in comparison to lockdown’s highs, an up-and-to-the-right trend line has finally returned.

The same is true at a global level, where ecommerce YoY growth continues to outpace retail and penetration (ecommerce as a percentage of retail) outstrips the US. Better still, absolute dollars have an even more pronounced trendline.

State of Global Ecommerce: Percent of Retail (By Year)

State of Global Ecommerce: Year Over Year Change

However, the problem with market-wide data isn’t just that it’s directionally true but functionally worthless.

More to the point, online retail’s biggest of the big have devoured the majority of new growth.

Last year alone, Walmart’s online sales exceeded the combined totals of the next five retailers in North America. Where US ecommerce expanded 7.6% in total, Walmart’s ecommerce business grew 17% and its marketplace 32%. As for Amazon, its 2024 sales surpassed the combined totals of the next 51 largest retailers.

Combined, Amazon + Walmart contributed over 50% of mass‑merchant online sales growth; with Amazon’s share exceeding half of the category on its own.

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The real question: “Is DTC ecommerce growing?”

As represented by the hundreds of 7–8 figures in our data set … yes. Total sales among that same-store cohort rose an impressive 37% — small in absolute comparison to the enterprise behemoths, but a potent antidote to much of the naysaying that surrounds mid-market DTC. The optimistic trend we are seeing, which is a welcome surprise to many readers, is also consistent with data published by CNBC and National Retail Federation's Retail Monitor in their June 2025 report.

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US Ecommerce Sales Growth: H1 2024 vs H1 2025

What about businesses excluded from that cohort due to bankruptcy or closure? Inclusive of cancellations, the percentage of Finaloop brands that closed in April was ~1%. Not an insignificant number, but only a fraction of the GMV.

Of course, mounting sales do nothing to address the value of that revenue if it’s purchased on the back of ever-increasing discounts.

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Net sales

Net sales out of total sales (%) subtracts refunds, returns, and discounts from total sales ($) and divides this number by total sales.

High discounts obviously have a huge impact on your profitability and cash; the greater the discount, the smaller the chance you’ll see that cash trickle down the P&L.

Looking at your net sales, and at fluctuations in your net sales over time, can paint a real picture as to how your sales are actually hitting your P&L over time.

In 2024, the median ranges from 80% (consumer electronics) to 93% (home, garden and office).

Net Sales Out of Total Sales: Median by Industry

In every industry, there is a spread that makes up this median.

For health and beauty, the top performing quartile of net sales out of total sales is 99%, followed by 94%, 90% (median), 86% and closing with 67%.

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Net Sales Out of Total Sales: Quartiles by Industry

Likewise, when looking at trends over time, certain months have a higher variance between net sales and gross sales than others. Within the apparel and accessories category, Nov 2024 is the low point based on seasonality and holiday discounts.

Net sales out of total sales: Apparel and accessories

Interestingly, this is one of the few metrics where 7-figure brands slightly outperform their 8-figure counterparts:

Net Sales Our of Total Sales: Median 7 and 8-figure brands

Seasonality aside, are net sales increasing or decreasing?

Comparing H1 2024 to H1 2025, net sales rose 35% with a slightly higher 37% increase in total sales.

These numbers demonstrate that the brands making it through are growing at a healthy pace. Likewise, they signify consumer spend is still growing … and fast.

Gross profit

Gross profit’s importance goes without saying.

It is the key determinant for defining whether your business as a whole is profitable. Moreover, divided into channels and SKUs, it clearly shows whether a specific channel has a profitable gross margin and whether a SKU is a loss leader.

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This subtracts all costs associated with getting your product to your customers:

Full landed costs
Merchant (payment) fees
Shipping and fulfillment costs

Without having this granularity, many brands end up “cross-financing” — profitable SKUs cover for loss-making SKUs, instead of cutting out SKUs or changing pricing or selling strategies.

Last year, median gross margin was significantly higher for 8-figure brands (56%) versus 7-figure brands (52%).

Gross Profit Out of Net Sales: Median 7 and 8-figure brands

When looking at gross margin median breakdown by industry, the figures range from 43% for sporting goods to 66% for leisure and lifestyle. The rest of the categories fall somewhere between them.

Gross Profit Out of Net Sales: Median by Industry

Each industry has a breakdown of top performers, worse performers, and those in between.

For example, in 2024, animal and pet gross margin ranges from 74% (top quartile) to 66%, 50%, 38% and 27% for the lowest performing quartile.

Gross Profit Out of Net Sales: Animal Pet

On the other hand, sporting goods range from 66% (top quartile), down to 28% of the lowest performing quartile.

Gross Profit Out of Net Sales: Sporting goods

Gross Profit Out of Net Sales: Quartiles Across Industries

Data over time does not show a significant gross margin variance across different months. Presumably, inflation impacts both sales and gross margin in a similar manner. However, it could easily vary within a business.

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As a percentage of net sales, gross profit has increased within the same cohort of companies YoY — from 51% to 55%.

This increase of gross profit (i.e., decrease of COGS out of net sales) may be based on inventory that brands held prior to tariff enactment and were able to sell at a higher price, with similar COGS to pre-tariff times.

It will be telling to see how COGS that relate to inventory purchased under the new tariff regime translate into P&L COGS. For now, if inflationary effects have impacted COGS, they have impacted topline sales in at least an equal manner.

Contribution profit

As there are many definitions and methodologies of computing contribution margin, it is important to delineate how our contribution profit is calculated.

Our calculation takes net profit and subtracts all variable costs and ad spend (not including fixed marketing fees, such as agency retainers).

This metric is even more precise than determining pricing or profitability using gross margin. It is particularly helpful in terms of operational leverage and can easily be compared to a business’s fixed costs.

As an aside, it is worth noting that a metric that comes up time and time again within successful brands that we see, is contribution margin from recurring revenue exceeding operating costs. This is carried out by bifurcating a company's contribution margin into two different segments, first time purchase contribution margin, and recurring (or re-occuring) contribution margin.

The logic behind this is clear — if a company has sufficient recurring revenue to cover its fixed costs, first time revenue can be used to grow the brand, being a much cheaper alternative to debt financing.

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The median contribution margin for 7-8 figure brands is ~25%.

Contribution Profit Out of Net Sales: Median 7 and 8-figure brands

This figure is spread across quartiles, as the top-performing brands have about 56% contribution margin, while the bottom-performing brands are just about 3% at the contribution margin level.

Contribution profit out of net sales: By quartile

As before, each category has higher and lower performers.

For example, Home and Gardens’ contribution margin ranges from 54%, to 35%, 26%, 16% and 4% for the lowest performing brands.

Contribution profit out of net sales: Quartiles by category

Unlike gross profit, contribution margin shows seasonal trends. The apparel industry, for instance, ranges from 29% in Nov to 19% in Jan.

Contribution profit of out net sales: Apparel & Accessories

This may be due to the fact that, as opposed to COGS which stay relatively constant compared to sales, variable ad spend and ROAS alternate based on seasonality, driving changes to the contribution margin.

YoY displays an increase in variable ad spend, with a relatively steady contribution margin.

This obviously has deep implications across the market, and can impact brands in a variety of ways, one of which being minimum AOV that is feasible given current CAC and market conditions, and scaling, which can enable lower margins but higher amount of total margin dollars.

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As discussed above, this trend may be due to the high level of sales of pre-tariff inventory, tapping into consumer fear of increased prices, which increased both gross margin and contribution margin efficiency, together with increased costs of variable marketing, which ended up leading to a similar contribution margin year over year.

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EBITDA

For the uninitiated, EBITDA stands for earnings before interest, taxes, depreciation, and amortization. It is the key indicator of a brand’s operating performance. Especially in terms of valuation.

When measuring EBITDA, I am always reminded of Warren Buffett’s quote: “Does management think the tooth fairy pays for capital expenditures?”

With that said, depreciation and amortization play relatively minor roles within most ecommerce P&Ls. As a result, EBITDA is similar to taking operating profit or margin.

Median EBITDA in 2024 was about 5% — 4% for 7-figure brands and trending higher with 8-figure brands at 7%.

Much like contribution profit, EBITDA follows a seasonal path with its peak in November (11%) followed by its low point in October (2%).

As with any other category, each industry has its top performers. Health and beauty’s top quartile have an EBITDA of 23%, second quartile with 14%, followed by 6% (median), -6% and -24% for the worst performing brands.

An interesting point that we noted when comparing H1 2024 vs H1 2025, is that within a large cohort of brands — the percentage of OpEx out of net sales decreased as they scaled, presumably based on economies of scale and operational efficiencies, boosting their operational leverage:

This allowed brands within this cohort to actually increase EBITDA YoY, despite the margin compression driven by variable marketing increases. Meaning, the OpEx driver comprised a smaller percentage of their P&L, which allowed them to increase profits year over year, in which ad spend was cheaper.

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Better still, total EBITDA dollars significantly increased YoY by 126%.

US Ecommerce EBITDA Growth: H1 2024 vs H1 2025

This large increase in EBITDA is attributable to the solid top line growth we discussed earlier (37% YoY sales growth) compounded by just a couple of percentage points uplift in EBITDA margin. This multiplier effect highlights the importance of protecting margins as you scale.

Free cash flow from a sample of 8-figure companies in 2024 is 6% at the median. Free cash flow equals operating cash flow less capex, divided by net sales, and shows how much of your working capital less capex actually amounts to out of your net sales.

To sum up this point …

Among scaling brands, OpEx becomes less significant from a percentage perspective, allowing brands to utilize operational leverage to overcome margin compression and increase total EBITDA dollars.

Net profit

Net profit out of net sales is what we might call “trickle effect” margin — subtracting ITDA (interest, tax, depreciation, and amortization) from EBITDA. Calculated by dividing net profit by net sales.

Median net profit margin in 2024 was just 3% (trending much higher for 8 figure brands).

Net profit out of net sales: Median 7 and 8-figure brands

In a similar manner to other metrics, net profit is seasonal and varies greatly: 10% in November versus multiple valleys at 2% in July, September, and October (and a brief dip to 1% in December).

Net Profit Out of Net Sales: Median by Month

Viewed categorically, home and garden as well as animal and pet possess the highest performing quartiles with 34% net profit. Those same two verticals, however, also contain the poor bottom-quartile outcomes with -26% and -14% respectively.

Net Profit Out of Sales: Quartiles by industry

This picture isn’t particularly rosy.

When looking at median data, one needs to take into account that 50% of the brands are below this point. As some social media posts state, including from our friend Fan Bi …

50% of ecommerce brands have no value.

Why are so many brands struggling?

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Nonetheless, within a cohort of brands we looked at from 2024 and H1 2025, we were pleasantly surprised by their overall topline, net sales, and EBITDA growth. Compression of operating margins, which compensated for higher marketing costs, left these brands with similar or higher margins.

Inventory efficiency metrics

Days inventory outstanding and inventory turnover

While focusing mainly on P&L margins and benchmarks, we would be remiss if we didn’t briefly address inventory metrics, as this impacts COGS in a clear and direct manner.

We recently published a piece on ecommerce inventory management and software. Here, we’ll narrow our attention to days inventory outstanding (DIO) and inventory turnover.

How long inventory is being held on average in a specific period of time: Generally on an annual basis (days inventory outstanding); and
How often my inventory is turned over in that time: Inventory turnover, which is the inverse of days inventory outstanding

Despite the fact that these metrics could impact the P&L (better turnover equals more sales etc), their main purpose is to measure inventory efficiency.

Why? Because inventory efficiency has a clear dotted line to cash efficiency.

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Our median data from 2024 shows days inventory outstanding of about 129 days, with top-performing brands with DIO of about 42, and the worst-performing brands holding inventory for 466 days.

Inventory turnover, the inverse of DIO, shows similar data in 2024, ranging from turnover of over 7 (highest performing quartile), down to 0.66 (on an annual basis!).

Contrary to the common saying, that states that the higher the inventory turnover, the better (up until the point of stockouts perhaps), it is possible that brands with a greater inventory stockpile managed to take advantage of the tariff uncertainty in 2025, and were able to increase sales and drive up margins, due to the larger holdings.

This is an anomaly. The best practice is to accelerate inventory turnover and decrease days inventory outstanding.

Tying together the various pieces of this paper — as certain margins are compressed on the one hand, but sales are increasing in emerging brands on the other — there is definitely room for growth and for successful brands in the world of ecommerce.

Margins are quite tight, and with such little leeway, management of cash and optimal inventory levels and turnover are crucial for building a successful ecommerce business.

Otherwise, the entire cash position of a company flowing from the P&L might end up stuck in inventory.

The path forward for ecommerce

Yes, ecommerce is harder than ever. The data confirms what operators feel daily:

Marketing and customer acquisition costs are rising
Competition is fierce: 4% median net margin in 2024
Complexity is increasing: Tariffs, inflation, channel proliferation

But the data also reveals a clear playbook for success:

Operational Excellence Beats Marketing Brilliance: Brands that reduced OpEx as a percentage of sales maintained profitability despite rising CAC
Inventory Strategy is Profit Strategy: The tariff situation proved that strategic inventory management can create margin opportunities
Margin dollars increasing: But small room for error, as the actual margins remain slim
Scale Still Matters: 8-figure brands consistently outperform 7-figure brands

The action plan

For brands looking to thrive, not just survive:

Monitor Revenue Quality: Keep net sales above 88% of gross sales
Protect Contribution Margin: Target 30%+ to create breathing room
Leverage Operations: Every 1% reduction in OpEx drops straight to bottom line
Strategic Inventory: Balance efficiency with opportunity

The bottom line

The median ecommerce brand makes 4% net margin. But medians hide the full story.

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In an industry where, per many industry voices, 50% of brands may have “no value,” the other 50% are building sustainable, profitable businesses by mastering the fundamentals: efficient operations, strategic inventory management, and ruthless focus on unit economics.

The question isn’t whether ecommerce is still viable

It’s whether you’re willing to do what it takes to be in the winning half. The data shows the path. The execution is up to you.

Want to save every data point from this entire report?

No problem. Grab the charts, visualizations, and benchmarks in one gloriously packed playbook right here.

Addendum: State of ecommerce profitability from public companies

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As an addendum, we partnered with Nate Littlewood, founder and Fractional CFO at Future Ready CFO to pull data from 50+ public companies across a variety of ecommerce sectors.

Data and analysis below were largely provided by Future Ready CFO based off of public company data.

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Revenue growth (YoY)

Looking at Revenue Growth across industries really shines a light on just how varied the lives of ecommerce founders must be in today’s environment.

Some industries, like Health & Beauty, appear to have avoided their ‘post COVID’ era entirely; consistently posting >20% YoY growth.

Meanwhile, other industries — like Home, Garden & Office and Sporting Goods — have now seen several years in a row of negative YoY growth. The one piece of good news for businesses in these sectors is that the ‘COVID correction’ now appears to be at or near its end.

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Gross profit margins

Some people are lucky to have the best of both worlds. In addition to having the strongest YoY revenue growth, public companies in the Health & Beauty space also have the strongest Gross Profit margins; by a long shot.

Things have gone from bad to worse for Food & Beverage brands; reporting the lowest Gross Profit margins in over five years in 2025.

An optimists’ interpretation of Gross Profit margins would highlight the fact that Gross Profit margins, on average, increased by +4% in Dec 2024 which is one of the best YoY improvements we’ve seen since 2020.

EBITDA margins

EBITDA margins for ecommerce businesses in 2024 continued their downward trend for the fourth year in a row, as business struggled with rising costs, supply chain, and increasing customer acquisition costs.

Looking at available 2025 data, the downward trend may finally be coming to an end with a promising uptick in September 2025.

One notable change in the EBITDA margin data, compared to Gross Profit, is that Healthy & Beauty’s outperformance is less extreme. This reflects the reality that these businesses tend to spend a much larger portion of their revenue on customer acquisition compared to other industries.

Perhaps the most interesting insight we gleaned from the EBITDA margin analysis was the divergence of the ‘Marketplace’ vs ‘non-Marketplace’ ecommerce businesses. Through the back half of 2024 Marketplace businesses appear to have taken nearly 5% of EBITDA margin away from the non-Marketplace businesses.

EBITDA margins: Marketplace vs Non-Marketplace

Net income margins

Only two types of businesses in the ecommerce space have a history of profitability in the last three years; Marketplaces and Healthy & Beauty.

Cash Conversion Cycle

Cash Conversion Cycles for ecommerce businesses more than doubled in the aftermath of COVID, causing a myriad of now well-documented issues related to balance sheet leverage, interest expenses, and price discounting.

Ecommerce businesses have spent most of the last 2-3 years trying to recover from this. Since their peak in around September Quarter 2022, we can observe the industry’s Cash Conversion Cycle nearly halving; from 135 to 77 days.