Ecommerce Playbook: Numbers, Struggles & Growth Margins Are Shrinking, Debt Is Rising – What’s Next for Ecom?
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Feb 6, 2025 Drew Fallon, co-founder and CEO of Iris Finance, shares his expertise in financial modeling for ecommerce brands. He discusses the troubling trends of rising debt and shrinking margins, emphasizing that while revenue is increasing, profitability is waning. Drew breaks down the financial health of 8-figure brands and offers practical strategies for navigating cash flow challenges. He highlights the importance of adapting to new economic realities, urging brands to rethink their financial metrics for sustainable growth amidst a shifting landscape.
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Financial Reality Check
- Ecommerce success hinges on profitability, not just marketing metrics.
- Focus on whether businesses are truly making money and growing sustainably.
Declining Profitability
- While revenue grows, profitability decreases for many e-commerce brands.
- This trend is concerning, especially when considering rising costs and debt.
Rising Debt Levels
- The leverage profile of many e-commerce businesses is increasing, indicating rising debt levels.
- This poses risks if earnings growth doesn't keep pace, especially with higher interest rates.