The Financial Metrics Most Ecommerce Businesses Aren’t Tracking (and Why You Should!)

Geoff: Hey everyone. My name is Geoff. I'm the head of marketing here at A2X, which is e-commerce accounting automation software for the top Amazon, Shopify, eBay, Etsy and Walmart sellers as well as their accounting partners. And speaking of accounting partners, I'm joined here by Danny and Rachel from Kelly+Partners. Kelly+Partners is a full service accounting firm, based out of Australia. They also have offices internationally. But in this video we're going to focus on Australia specifically. And we're going to talk about some of the key financial metrics as well as benchmarks every e-commerce business needs to know and why. It's sometimes important to compare yourselves against peers. And then I'd say the most important thing is how do you use that information to make informed decisions as well as build strategies for growth? So before we get started, Rachel and Danny, I'd love if you could introduce Kelly+Partners as well as yourselves.

Rachel: So yeah, I'm Rachel, I'm a client manager at Kelly+Partners. We work out of the Northern Beaches office of Sydney, which is pretty incredible. Yeah, we're a full service accounting firm. We obviously do your sort of bread and butter compliance, but we are e-commerce specialists, so we work a lot with, you know, financial control and business advisory, just really helping e-comm business owners and their teams just get a grip on their numbers and feed that growth mentality.

Danny: Yeah. I'm Danny, senior partner at the Kelly+Partners business with Rachel. Much of what she said, we just live, breathe and sleep e-commerce accounting for businesses every day.

Geoff: So Rachel talks about Kelly+Partners providing services for bread and butter compliance. But what we're talking about today, I think, is kind of the next level of that, which is how to really get clear financial insights and then make informed decisions. Danny, do you mind providing a little bit of additional context in terms of why an e-commerce business would work with a practice like Kelly+Partners?

Danny: Yeah, I think most people, when they first start working with an accountant or when they first start their business, they think about their accountant as a partner to just lodge a tax return, meet their government responsibilities. I don't know if that's our upbringing or not, but we're brought up to think, I need an accountant to do a tax return. But largely what we're doing here is essentially bridging that gap, re-engineering what you use your accountant for. It should not just be for tax compliance. And you'll see through this conversation the level of depth and understanding that you should be working with your accounting partner on to understand — the accounting relationship should be much more about how do I understand my business better, how do I make better decisions, etc. And if all you're doing is telling the accountant to lodge a tax return once a year, you're definitely not going to get that. There's going to be a gap in the advice you're getting. So largely what we're doing at Kelly+Partners is building the relationship where we're the accounting partner for the client's business, basically feels like we're part of their internal team, helping them get the information to make those decisions.

Geoff: Okay, so if you're watching this video, you're likely doing six, seven or eight figures a year. And one of the things I want to make note of is that you should be able to answer a lot of the questions that we're going to be going through. But if you can't and you want to work with an accounting partner, Kelly+Partners is available. We've put their link in the description below, so please do get in touch with them if you'd like additional support with your accounting and finance questions. So in this video we're going to be talking about the key financial benchmarks for e-commerce. One of the core themes that you're going to see is the importance of having accurate data. Because given the systems that we use, the reports that exist within each of these systems, we all have access to a multitude of data sources. But the challenge is, and as you'll see from this conversation, a lot of the time it isn't right. Garbage in, garbage out, if you will. So before we dive into the individual metrics that you should be tracking and how you can compare, I want to make clear the importance of accurate financial data — through using tools like A2X, working with accounting partners like Kelly+Partners. Critically important. Danny and Rachel, anything to add on that statement?

Danny: I think that's spot on. The way we think about it is you need a great process firstly. So before we do anything else, we need a great process for how we're going to operate. Then we need a great bookkeeper or bookkeeping team — whether that's internally in an accounting firm or your own bookkeeper — that can actually execute on that process, a great accountant that can translate and help you understand those numbers, and then great software and tools to allow you to get to like 95% accurate relatively quickly. Because if we don't have those things, we don't have great data coming through the system, and we can't actually have these conversations. Garbage goes into the data, the conversations are garbage, everything's rubbish. So we need to combine process, bookkeeping, accounting knowledge and software tools to be able to deliver this effectively and give the business owner what they need to understand that business and make decisions.

Geoff: So the cool thing about Kelly+Partners is that you work with a wide variety of e-commerce businesses, and you get unbelievable insight into their financial performance. So I'd imagine that when a new client comes on board, you could quickly see if they're under or over performing compared to other businesses, and then from there you could really quickly give them some incredible advice and insights. Rachel, what are some of the questions an e-commerce business typically has when they're knocking on the doors of Kelly+Partners?

Rachel: Usually it comes from a pain point of some description. Nine times out of ten in e-comm, that's cash — it's stagnating their growth, they can't get past a certain point because they can't get enough cash on hand to fund the growth. So that's the biggest one. Usually we need to dive deeper into why that's happening. That's where we come in — to give integrity of data, making sure they've got the reporting in place to be able to tell where the pain is coming from. So yeah, that's by far the most common one — cash issues. And then we quite often go into building on their process, the bookkeeping — go back to basics and make sure they have a bookkeeping process in place, make sure they're using the right tech stack in terms of what software they're using. We always say — if my client is having a conversation with someone and they want to know what their GP is, they should be able to call me and ask me, and I should be able to tell them what that is. That's the type of relationship the client should be able to have with their accountant, and know that they can rely on their data and their GP.

Geoff: For those watching, we're going to dive into it quite deeply as we go.

Danny: Correct. And I think the other thing you can go deeper into is they're actually looking for validation as well. They're often showing up and revealing their numbers for the first time to you — it's kind of like standing naked in front of you, like, "Hey, look at my real performance, not the stories I tell on the podcast, what's actually happening." And yeah, they want to be told everything's okay, or how do I compare? And more often than not we have to say, well, we can't actually tell you that answer today until we fix a lot of these issues because the data's a mess.

Rachel: It makes it so much more satisfying then, once it's fixed — the before and afters are obviously incredible.

Danny: We should do transformation videos, like you know how you have the house before and after — the financial year, before and after.

Geoff: When you say revealing their numbers, I'm assuming you're talking about your classic financial statements — profit and loss statement, balance sheet, cash flow. Do the businesses that come knocking at your door typically have these in place?

Rachel: Because we have software like Xero, anybody that sets up a Xero account can have access to those reports. But if their input is incorrect, they are meaningless. So nine times out of ten you speak to them and they say "yes, I have Xero," and then you open it and look at the reports and ask them what data they're relying on, and they say, "I didn't even know I had the ability to pull a P&L from my Xero." So they do have the ability, given that accounting software isn't designed to be used only by accountants anymore. So yes, they have access, but—

Danny: There are still data and knowledge gaps that we can help manage. Essentially they bring us a P&L or a Xero file that has the ability to produce a P&L, but the data in there is rubbish, so we have to rebuild that. Generally the only thing they really know is their sales number and maybe the number of employees they have — that's their measure of success to compare to their peers. And we have to reframe that: actually, we need profit. And more important than profit, we need cash. So we cycle through what does a profit and loss look like, what does a balance sheet look like, how does that turn into cash flow, how do I plan my inventory purchases — get them to understand not just what sales mean, but all the way to cash. We go into it today — the metrics around gross profit, overhead costs, cash flow, marketing spend, etc. — getting them to really delve in and become experts in their business. Because you have an obligation as a business owner to learn the language of your business. Otherwise you don't really have the right to — it's like wanting to live in France but not wanting to learn how to speak French. You kind of have to learn the language if you're going to live there.

Geoff: And a lot of times these folks are marketing individuals or product individuals — they're not finance people. So they do an incredible job in those areas, and if you're an e-comm business watching this, you're probably recognizing yourself in what we're describing. That's the really cool thing about e-commerce — it has a low barrier to entry, but it's also one of the fastest growing segments. There aren't many industries where you can start a business and within a year or two be generating multiple millions of dollars in revenue.

Danny: And it is complex. It's not simple, which we'll go through today — there's a lot of complexity in not just getting the revenue but actually making profit.

Rachel: Yeah, they're also usually making that level of revenue with a very small team. They don't have the people around them that another type of business would have, hiring people onto their team to help them grow and move forward. But usually they get to such a high level of revenue without having that in place. So quite often that's where we step in — and we see it all the time. It's not just someone who's just starting — we've seen $30-40 million e-com businesses that just don't have a handle on their financials.

Geoff: Yeah, 100%. And we talked about this idea that everyone has a Xero account, which effectively makes most of these financial statements quite accessible. Talk to me a little bit about the technology you might use to ensure the financial data is actually accurate before you even start to drill into the individual metrics and their benchmarks.

Rachel: Our first step as soon as we onboard a client is to set up — we use software called A2X to reconcile our clients' sales. It's by far the most efficient way for us to get better data, and it's the easiest to use, in that a bookkeeper who doesn't work in e-com specifically can still use it and it will work, as long as it's been set up correctly and you've got the correct eyes on it. So from a sales reconciliation perspective, that's always priority one. Second to that, we always talk about the inventory piece — whether they have an IMS (inventory management software) or whether that even works for the business. We're not in a position to tell them exactly what inventory management software would work for them because there are so many factors, but having a good inventory management software that works for the business is the second thing we make sure is in place. So: accounting software, sales reconciliation via A2X, and having a strong handle on your inventory, whether through an external IMS or through the likes of Amazon and Shopify.

Geoff: Awesome. A lot of the financial metrics we're going to talk about today live on the profit and loss statement. So probably the best way to get started is to give us the 10,000-foot view of what a good profit and loss statement looks like to you and the Kelly+Partners team.

Rachel: A good profit and loss is one where everything has its place and everything has its bucket. Nine times out of ten, when a client comes on board, their P&L is so long you could print it out and make a book — categories are all over the place, we don't have a handle on quickly seeing what's COGS, what's staffing expenses, what's marketing. So everything having its bucket and everything being capitalized correctly — my team love getting review points from me like "can you put a capital letter on that please" — is the quickest way to get to a meaningful conversation with the business owner. That's really what we want to do: put everything in place so we can show the P&L to the business owner clearly, easy to read, for someone who isn't an accountant, and make sure they can pull the same conversation points that we would as finance professionals.

Danny: Numbers are the language of business, and it's our job to help translate that in the easiest way possible so clients can actually understand the numbers and metrics of the business they're operating. So many micro decisions and details go into running the business month to month. The P&L is essentially the scoreboard of all those decisions at the end of the month. We want to make sure they're actually getting the scoreboard, and then they can see what impacted the decision-making. It takes some time and a bit of education, but our job is to help translate that so they can run that report themselves in Xero, read the numbers, and actually understand what the business is telling them from those thousands of micro movements and decisions that happen every day at the operational level.

Geoff: And speaking of reading the book, how often would you recommend a business owner look at their profit and loss statement?

Rachel: We normally do it monthly. They track their sales and metrics from other sources too, but we'd recommend a month-end process be in place at the business, so they get financial reports they know have been bookkept correctly and looked over by us. Then we prefer to have the conversation monthly with the client — repeatedly having the same conversation about where costs sat this month, whether GP or opex was too high. Usually our clients get to a stage where they don't need to have the conversation monthly because they've learned the language and the reports make sense. But yeah, usually monthly, even though they may be pulling data from other sources weekly.

Danny: I think as a business in general — not just e-commerce — you're looking at that full scoreboard monthly. Get me my report, make sure the full data's clean monthly, we have to have a good closed period, generally a month, for most people. But then daily or weekly, they need to be monitoring different KPIs — that could be marketing spend over sales on a daily basis, for example. But the full P&L is monthly.

Geoff: Just a quick follow-up — for e-commerce businesses watching this, what should they expect from their accountants and bookkeepers in terms of number of days per month to have their books ready to review and accurate?

Rachel: It's a difficult one to give a hard number on. We always say by the 15th the business should have a report. The one thing that tends to hold that up is the inventory space, because it still requires too much manual input for most businesses. Usually that's what takes the longest to get the numbers over the line. But we always say the 15th — it gives them long enough to react before the end of the next month if there's anything they want to switch off or change that they've noticed.

Danny: There's a wide range — not everyone's getting their report on the 15th, but we build a schedule around the sophistication of the owner. The more software and systems in place that allow us to pull data without input from other people, the faster we can run things. But if we're waiting on someone to reconcile something, business owners are busy being business owners, not always reconciling numbers, so we have to build buffers around that.

Geoff: And I think the cool thing about working with a practice that specializes in e-commerce is that those windows — 15 days, as an example — are more than possible, and potentially even shorter with the right technology and input. Whereas working with a more traditional accounting practice without e-commerce experience, you could expect longer delays or even inaccurate data.

Danny: You could go to a firm that doesn't specialize in e-commerce and get a report back in one day — super fast — but is it accurate?

Geoff: Right, an accurate report.

Danny: The more accurate we want it, the longer it's going to take. You have to find the balance between speed and accuracy. Even at 15 days it's not going to be 100% accurate — it's probably 95% accurate. But the cost of chasing that extra 5% versus the time cost isn't always worth it. So it's a trade-off.

Geoff: It's a great point, and materiality matters. This comes up quite a bit in terms of expectations, so I appreciate you answering — 15 days for 95% accurate data, I'll take that trade-off any day.

Danny: Yeah, yeah, yeah.

Geoff: So, Rachel, you've talked about what a great profit and loss statement looks like — accurate data, appropriate capitalization, and categorization. Let's start talking about the metrics within it. I'd love for us to go over gross profit, which is an incredibly important metric in e-commerce — it's number one on your metrics list. Do you mind giving us a brief description of what gross profit is, and a decent understanding of what a good gross profit margin looks like?

Rachel: Your gross profit is basically your sales minus the cost to make that sale. In product-based businesses, what goes into cost of goods sold is the cost of the product you're selling, any freight to your customers, and merchant fees — those are the bits and pieces that go into cost of goods sold. Your GP is your sales minus the cost to make that sale, and your GP percentage is that over your total sales. We usually work off the basis that you need at least 50% — though we see a wide range depending on product and product type. Take the beauty industry as an example — small products, low cost, low freight — the GP tends to be quite high. Whereas clothing, higher cost, not necessarily cheaper freight, and high return rates because of sizing issues — GP is usually slightly lower. So when we benchmark an individual client, going back to what we discussed about where they sit against their peers, we wouldn't compare someone who sells a beauty product to someone who sells bikes, because it's a completely different product, and the P&L looks completely different. Usually we try to benchmark against product type, rather than putting everyone in e-com into the same bucket.

Danny: And just to explain a bit more — obviously the higher the gross margin percentage, the better for the business, because it means we've got more money left over to spend on marketing and other growth items. Clients — the sales people — are often quoting revenue numbers as their measure of how they're winning, but really they should be quoting gross profit, because that's the money left over after selling the product to actually spend on growing the business. That's what really matters. When we hop on the call with business owners, they often have no idea, and we have to really drive home the importance of getting that margin up by 1 or 2%, wherever they can. Fifty percent is our kind of baseline for own-brand products — if you don't have 50%, it's going to be really hard to make money after you spend on marketing, people, rent, etc.

Geoff: When you get the accurate data and get those insights, how often do you see people below 50%?

Rachel: We do, but usually for a variety of reasons. And once you have the data and everything's in different buckets and neat, it's actually really easy to pick up on what's causing it. We don't see it super often that it's less than 50 — the most common conversation I have is "it's less than I thought it was," which is almost a more difficult conversation to have because the business owner has an expectation for how their business is operating.

Danny: If we talk about the variance, it's often one of two things — maybe a couple of major ones. Discounting is a huge problem — business owners don't actually realize the impact of discounting on their margin; they just see "I got more sales" without understanding the true impact. Foreign exchange is another — they don't mentally register the impact of dollar movements, say between Australia and the US, sales tax, GST, import duties — these all come into that number. And freight costs have gone through the roof in the last 12 months compared to the 12 months before, but that's often not top of mind either.

Geoff: Such a brilliant point, and it comes back to the main point — you need accurate data to be able to understand where the difference is coming from in the first place.

Danny: Yeah, and it might just be a combo of, hey, that 20% discount strategy needs to change, or the marketing strategy needs to change because of the appropriate margin — or charge more for shipping.

Rachel: Being more thoughtful about which products you discount — that's a really big one as well. The ABC analysis of what you should actually be discounting is huge. On Black Friday, for instance, discounting your best-selling product by the same amount you're discounting a C-tier product is like a cardinal sin — it happens all the time and eats into people's margins so much.

Geoff: And Danny, a component of gross profit is obviously cost of goods sold. Do you mind walking us through what's included in cost of goods sold and why it's so important for gross profit?

Danny: Yeah. When we're talking about gross profit and trying to get to that 50%, the costs included are: our direct product cost — what we're buying it for in order to sell it; our merchant fees — every time we get a sale we pay Shopify Payments, Stripe, Afterpay, someone takes a clip of our revenue; and our logistics costs — inbound costs often build into our product costs, and outbound costs to get the product to the customer are a cost we incur every time we sell an item. Those are the three major ones. If we're manufacturing our own products — we have some jewelry clients who make their own jewelry — that production labor builds into inventory and COGS too. Basically, anything we incur to sell our product that we only incur if we sell it, on a per-unit basis — that's what should go into COGS, and the total of those items is what we're trying to keep below 50% of sales.

Geoff: Totally makes sense. Rachel, you talked earlier about people coming to you with incorrect numbers — what mistakes do you see clients make in the way they calculate their COGS?

Rachel: Usually what we see is COGS being recorded based on when cash is paid for inventory. So if a business buys $100K of inventory that they're not going to sell until March, or won't sell until June, we'd see that reflected in that month's cost of goods sold, causing crazy fluctuations month to month based on the business's purchasing seasonality. It usually evens out on an annual basis, but month to month you see huge swings in GP. We focus on making sure what goes into cost of goods sold each month is only reflective of the SKUs and goods actually sold that month.

Geoff: So it's one thing to get accurate COGS — I'm assuming that's why a lot of clients decide to work with you — but I'm most curious, what do they do with that information once they actually understand what their cost of goods sold is?

Rachel: One example — a business owner we brought on, we fixed up her reporting, and she was very new to reading financial reports. When we showed her she was under-recovering on shipping, she ended up changing her shipping strategy, and now she over-recovers — that was about nine months ago. She actually makes money on shipping now rather than it being a cost to the business, because she just didn't have the visibility before, and once she did, she switched up her strategy with her team.

Danny: And then it's — how much can I afford to spend on marketing? What's my margin per customer? What's the lifetime margin on that customer? If I'm spending X dollars on marketing, is it worth it to acquire that customer? You can't have that conversation without knowing the percentage margin you make on a customer.

Geoff: And what I love about the examples you've provided is sometimes accounting and finance can feel so academic — it's just giving you a picture of what's happening. But Rachel, with the shipping over-recovery example, you can now make a strategic decision during a holiday period to offer free shipping and know it's not going to be a hit to the business.

Danny: Right.

Geoff: It gives you the information you need to pull certain levers to increase sales. I really love that story. Okay, let's continue peeling this onion — we've talked about gross profit, we got into COGS. Let's talk about another big one: net profit. Rachel, do you mind breaking down what's included as part of net profit and how you calculate it?

Rachel: After you have sales minus COGS, that gets you to GP. Everything below the GP line is your other operational expenses that go into running the business — after you take those away, you get to net profit. Sitting between GP and net profit is your marketing spend, wages, rent, and other subscriptions — a huge one for e-com businesses. Advertising is by far the biggest in terms of percentage and importance for pushing sales from an e-com perspective — it usually sits around 15%, though that really depends on the product and the life cycle of the business. We typically see businesses push paid media hard at the start to drive growth, then pull back reliance on it as the business matures into a more well-known brand. It can fluctuate hugely — we have clients who spend 40% on marketing but make 20% net profit, it really depends on the group and how much they can afford to spend below that line.

Danny: We're not here to dictate that you can only spend X amount — we work with the client to understand benchmarks with a target profit number in mind. Strategically, if we say "your margin's 50%, we need to spend this much on marketing to make a 20% profit," they might decide, "actually, I'm going to overspend on marketing because I want to grow faster, and I know that's going to eat into my profit" — that's a deliberate decision, and that's what we're looking for: that knowledge in the conversation. What's often happening instead is owners are spending money and the net profit result just is what it is — they don't go in with a plan for how to achieve it. So largely it's building a framework, building a budget off that framework, and then making decisions on where to flex to get a differentiated result.

Geoff: I've absolutely loved nerding out with you all on financial metrics and benchmarks. Let's get into marketing for a bit. You've identified marketing efficiency ratio and customer acquisition cost as incredibly important metrics. Can we start by defining these, how to calculate them, and what their benchmarks look like?

Danny: Marketing efficiency ratio — once upon a time we'd sit down with e-commerce brands and ask, what's your return on ad spend on your Facebook channel, or your Google channel — try to get into channel-by-channel detail. I think it was about two years ago, when Apple did the update that removed attribution tracking, that MER became a bigger idea again. Before that we were always in detailed channel analysis, but as we started getting worse data on an individual customer basis, we started working with business owners on marketing as a whole — you can no longer easily attribute channel-based cost to return. So we went a step higher: if we spend $100,000 on marketing, what does that look like as a percentage of sales? Marketing efficiency ratio is simply — how much am I making in sales divided by how much am I spending on marketing. The higher that number, the better the results; the lower, the worse. There's a sweet spot depending on your margin — you can be spending not enough on marketing when you actually have the margin to spend more and drive more customers. Then, if we think about customer acquisition cost as the next metric — how much are we spending on marketing per customer who comes to the website and places an order? The reason it matters — if our average order value is $100 and we make a 50% margin, we make $50 per order. But if it's costing us $60 to acquire that customer, we're losing $10 every time that customer orders. It's an easy way to get to the unit economics of an order, and to have a conversation with the client about whether they should spend $60 or $40 per order and understand what's happening to their dollars on an order basis. Obviously looking at one order is shortsighted — you need to look at the lifetime value of a customer against your marketing spend. But it still rolls into the same thing — what's our cost per order versus the lifetime average margin we make on that customer, to decide whether to ramp marketing spend up or pull it back. Business owners aren't necessarily having these conversations until we present the data — "this is what it's costing you to acquire a customer." They think they're making $100 a sale because they're not accounting for margin or marketing costs — once that $100 turns into $50, and $50 turns into $10 after marketing costs, you've only got $10 left to pay for all the overheads of the business. That's how many transactions you need to make to pay your rent this month. It really gets them to understand their business — number of orders, and then a step further, how many visitors do I need to the website to get that many orders, given conversion rates — breaking the business down into the things the owner can control, like how to spend money to get more visitors to the website.

Geoff: Okay, that was great — and honestly I don't know if you'll take this as a compliment or an insult, but that's probably one of the best marketing answers I've heard from an accountant in a very long time. I appreciate that you've gone into the weeds and tried to put yourself in the shoes of your clients. Rachel, I really appreciate your insights up to this point, especially as we've double-clicked on a lot of really important individual metrics and their benchmarks. I'd love to put this into context in a different frame — look at these individual metrics as they relate to three publicly listed companies and their financial reports. Rachel, do you mind giving us a breakdown of the performance of Booktopia, Step One, and Adore, based on everything we've discussed so far?

Rachel: Looking at the three different businesses brings you back to why, when benchmarking, you need to benchmark against like businesses — there's a specific reason for that, and it's really clear here. For context, Booktopia and Adore are two businesses that resell — they don't sell their own brand or manufacture their own product. They resell others' brands. You can immediately see that has a really big effect on GP, because the cost of the product they're buying is higher than for those who manufacture their own brand — like Step One. So you can see a distinct difference between resellers selling other brands versus those manufacturing their own. Step One is smaller — the smallest by sales of the three — but it's got the highest valuation, which goes back to what we were saying about revenue being a great number, but nine times out of ten not actually a sign of the health of the business. Step One had roughly $45 million in revenue with a 66% GP, three times higher than Booktopia's — but Booktopia had double the revenue. So put side by side, you can clearly see the distinct difference. The funny thing is, Booktopia and Adore would be better known brand names in Australia — people would recognize them — but they're actually performing worse than the lesser-known Step One. Going back to GP determining what you can spend on marketing and other operating expenses — that's really clear with Step One: with 66% GP, its marketing spend as a percentage of revenue is significantly higher than the other two, sitting at 34%. Part of that is life cycle and stage — some businesses overspend on marketing while trying to get their brand name out there — but the other part is whether they can afford to, because their GP is higher, they have more to play with, so they can funnel more into marketing to grow profitably. If you go down to operating profit, Step One sits at 24% operating profit, versus a loss for Booktopia.

Danny: Booktopia actually got delisted from the Australian Stock Exchange because their performance couldn't uphold their growth.

Rachel: And Adore sits at about 2% operating profit as well, significantly lower than Step One. And then if you look at their valuations, Step One is valued higher despite having about half the sales of the other two businesses.

Danny: And this is public data — so if I'm an e-commerce owner running a brand, I'd be reading these reports and finding the ones that relate to me, running those reports every six months when they get released to the market. If you read Step One's most recent report from December, they talk about lowering marketing spend and focusing on getting marketing efficiency back up to drive margin and drive more profit. Adore talks about building out their own product range to get their margin up — the exact things we've spoken about today. These brands are putting these strategies in place, and you can learn that from reading their reports and what they're doing.

Geoff: Yeah, it's awesome — it really puts this conversation into context and demonstrates the importance of understanding each of these individual metrics and ensuring you actually have accurate data for them.

Danny: Okay.

Geoff: Well, this was fantastic and massively helpful. Rachel and Danny, I really appreciate you taking the time to have this discussion about the most important financial metrics and corresponding benchmarks for e-commerce. It's clear you both have incredible domain expertise here, and if you're an e-commerce business owner who wants to get clear about your financials and build strategy against them, I highly recommend working with the Kelly+Partners team based out of Australia. Danny and Rachel, thanks again so much, and we hope to see you soon.

Danny: Thanks for having us.

Rachel: Thank you so much.