Building an ecommerce business

The math: you'll lose 30-40% of revenue to platform fees, shipping, returns, ads, and customer support. You need at least 50-60% gross margin to survive at scale.

Practical product filters:

• Cost to make < 20% of retail price. Anything above that is fragile.
• Lightweight if shipping internationally.
• Doesn't need a huge size catalogue. Apparel without sizes is way easier than apparel with 6 sizes × 3 colors.
• Has repeat-purchase logic. Consumables beat one-off purchases for LTV.

Don't pick a product with a great story but bad margin math. The margin math wins eventually.

Inventory-based ecommerce is brutal on cash flow. You pay your supplier in week 1, collect from customers over months 2-6, repeat.

Practical cash-flow rules:

• Don't order more inventory than you can sell in 90 days. Stockouts are cheaper than dead stock.
• Use SKU velocity to forecast. If a SKU sells 30/week, order 12-week supply, not 12-month supply.
• Don't fund inventory with credit cards. The interest will eat your margin.

The Runway Calculator is doubly important for ecommerce because cash is locked in inventory.

Paid ads to a new ecommerce store usually lose money. The channels that work for first $10k of sales:

1. Your existing network. "I made this; want to try?"
2. One niche community that loves this category.
3. Press / influencer outreach to ~20 micro-influencers (10k-50k followers, your ICP).
4. SEO for very specific product searches (months 2-12).
5. Marketplace presence (Etsy, Amazon, etc.) for specific categories.

Ads can work — eventually — once you have data on which products convert, which audiences buy, and what your real CAC payback is. Not day one.

Acquisition gets all the attention. Retention is where ecommerce profitability lives.

Practical retention levers:

• Email/SMS post-purchase flow — 6-8 messages that drive the second purchase.
• Subscription / replenishment for consumables.
• Bundles that increase AOV (average order value).
• Personalised recommendations based on first purchase.
• The actual product being good enough that they want more.

If your first-purchase cohort doesn't make a second purchase within 90 days, your business is on a treadmill — every dollar you earn goes back into acquiring the next customer.