Commerce unit-economics analysis

We break one order into every cost it carries in each channel and market the group sells in: product cost, payment fees, platform commission, picking, packing, delivery, returns, discounts and the cost of acquiring and keeping the customer. What remains is contribution per order, per customer and per channel.

The board decides from it which channels to grow, hold or close.

• A unit-economics model: a full waterfall from basket value to contribution, for each channel and market.
• A cost allocation method agreed with finance, so shared costs are charged to channels on a stated rule.
• A customer value view: repeat rate, contribution over twelve months, and cost to acquire by source.
• A sensitivity table showing how contribution moves with basket size, delivery cost, return rate and commission.
• A channel funding recommendation: grow, hold, reprice or exit, with the cash effect of each.
• A board paper and a model the group keeps, updated quarterly with its own data.

• Your board reads contribution per order by channel after all costs, beside the order counts it reads today.
• Contribution per customer over twelve months shows by acquisition source, so you fund the sources that pay back.
• You see the share of orders sold at negative contribution, and the channel each one sits in.
• Each channel and market carries a break-even basket value, and the board sees how far today's baskets sit from it.
• Capital released or redirected by each channel funding decision is tracked in the quarterly refresh.

Headline figures such as gross merchandise value and order count reward volume. They say nothing about the cost of delivering the last order or winning the next customer. Groups discover that a favoured channel loses money on each sale only after funding it for several quarters.

• Order growth is strong and group cash is falling.
• Discounts are used to win orders and no one has measured what they cost over a year.
• Delivery cost per order has not been calculated by zone or time slot.
• A channel is defended in board meetings by revenue alone.
• Customer acquisition cost is reported without the margin of the customers acquired.

Chairmen and chief executives of groups that report order and revenue growth and are unsure whether growth is earning, and investors who want to see contribution before they approve the next round of channel spending.

Qasim Abbas set the capital logic behind a blended last-mile delivery fleet of about 1,000 vehicles at BaladiMart, part of Al Baladi Group, so he reads a channel by what each order leaves after delivery. We apply that test to every channel the group sells through.

We build the model in the spreadsheet or business-intelligence tool the group prefers, fed from your storefront, order, payment and ledger systems, whether you run Xero, QuickBooks, Zoho Books, NetSuite or Oracle. See how fees work.

Which costs should be charged to a channel?

Each channel carries the costs it causes and a fair share of the shared costs it uses.

What does the board see for each channel?

Contribution per order after all costs, by channel and market, with a recommendation to grow, hold, reprice or exit and the cash effect of each.

Send the order data for your largest channel ahead of a private briefing. We build its waterfall from your records.