Fan Bi, Co-Founder of The Hedgehog Company, delves into the harsh realities of e-commerce valuations. He reveals that 50% of Shopify businesses could actually be worth nothing, despite their revenue figures. Bi shares insights from analyzing over 300 P&Ls, highlighting the pitfalls of margin traps and mispriced equity. He discusses why revenue isn’t synonymous with value, the importance of financial discipline, and how to identify red flags in valuations. This conversation is essential for founders who prioritize profit over vanity metrics.
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insights INSIGHT
Half of Shopify Businesses Struggle
About 50% of Shopify businesses operate with very low or negative profitability due to low gross margins and high marketing spend.
These businesses struggle with retention and lack a strong underlying asset to build value on.
insights INSIGHT
Younger Brands Are Financially Healthier
Newer e-commerce businesses (within last four years) tend to have healthier financial discipline and margins than older ones.
Many older brands misunderstood or miscalculated fully landed gross margins, causing operational strain.
insights INSIGHT
Debt Traps Limit Many Businesses
About 25% of Shopify businesses have decent attributes but are trapped by bad balance sheets or excessive debt.
These financial constraints severely limit operational flexibility and growth potential.
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INTELLIGEMSIntelligems is the ultimate profit-optimization tool for DTC brands. Use it for all of your CRO efforts by visiting https://intelligems.io.RICHPANELCut your support costs by 30% and reduce tickets by 30%—guaranteed—with Richpanel's AI-first Customer Service Platform that will reduce costs, improve agent productivity & delight customers at https://www.richpanel.com/.//Fan Bi is the Co-Founder of The Hedgehog Company, a buyer and advisor of ecommerce brands with 4 brands in your portfolio. Follow Fan on X at https://x.com/lifeofbi and LinkedIn at https://www.linkedin.com/in/fanbi/.//
//Are half of Shopify brands building businesses… or illusions?In this brutally honest episode, Fan Bi (The Hedgehog Company) breaks down why 50% of eCommerce brands may be worth nothing—despite flashy revenue. After reviewing 300+ P&Ls, Fan shares hard-earned insights about margin traps, mispriced equity, and the brutal realities behind “successful” DTC brands.You’ll learn:Why revenue doesn't equal valueThe red flags investors see in most Shopify P&LsWhat healthy eComm businesses actually look like todayWhen growth becomes a liability, not an assetAnd how to evaluate your business before it’s too lateThis is a must-watch for 7–8 figure founders and operators who care more about profit and enterprise value than vanity metrics.
//1:15 - Why Fan Bi Has Looked At 300+ Businesses6:00 - Importance of being Financially Disciplined14:21 - Learning From Failure24:56 - Risk vs Reward To Increase Your Margins33:00 - Why After 15 Years Fan Is Still In E-Commerce?42:12 - Business Problems vs Desired Problems// SUBSCRIBE TO MY CHANNEL FOR 2X WEEKLY UPLOADS!//Get the best media buying training on the Internet + a free coaching call with Common Thread Collective's media buyers when you sign up for ADmission here: https://bit.ly/3x99lip //FOLLOW UP WITH ANDREW X: https://x.com/andrewjfaris Email: podcast@ajfgrowth.comWork with Andrew: https://ajfgrowth.com
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