Ecommerce P&L Benchmarks | Q3 2025

Geoffrey From A2X (00:00)
Hey everyone, I'm Geoff, Head of Marketing here at A2X, ecommerce accounting and automation software for the world's leading Shopify, Amazon, eBay, Etsy, and Walmart sellers, as well as their accounting partners. And speaking of accounting partners, I'm joined today by my good friend, Sam Hill, founder and CEO of Ecom CFO, as well as the author of the P&L benchmark report for ecommerce. Sam, thanks so much for joining me again.

Sam Hill (00:26)
How dare you call me just an accounting partner?

Geoffrey From A2X (00:30)
My best friend, my moon, my star, Sam Hill.

Sam Hill (00:37)
Now we got it.

Geoffrey From A2X (00:38)
So Ecom CFO recently released their Q3 2025 report, and in this video we're gonna cover the key insights from that report and also share the specific insights that ecommerce sellers should know going into 2026 and how they can bake it into their plan. So Sam, I'm really excited for you to share your expertise with us yet again.

If you're new to the Ecom CFO benchmark report series, we strongly recommend checking out our video where we cover the basics of the report, including how it's put together, what data it compiles, and we've put a link in the description below. And if you'd like to download the Q3 2025 P&L benchmark report, we've also added that link in the description below. Sam, let's get right into it, because I know that although you want to cover the past, what has happened, you do want to spend a considerable amount of time talking about the future and how ecommerce businesses can use the data to plan accordingly and to set themselves up for a successful 2026. So let's dive.

Okay, so Sam, we usually start with revenue growth, and this video isn't gonna be any different. The Q3 report showed a continuation of what we saw in Q2. The 95th percentile of businesses continued to grow roughly by 35%, showing that best-in-class companies are still finding meaningful growth opportunities, even in a tougher environment. From your perspective, what's the key takeaway here?

Sam Hill (02:07)
Yeah, a couple of key takeaways and, as always, Geoff, thanks for having me again. And I'm just proud of the consistency that we've been able to publish this benchmark report, because it's easy to throw up a screenshot on LinkedIn or DTC Twitter, but we've tried to maintain as much consistency as possible. And there's so many other things that we can benchmark, but we wanted to report on the exact same benchmarks for the entire year to be able to tell the real story about what's happening and just give people the data so they can make better decisions, period.

So on revenue growth specifically, you know, when I present this to clients, they actually have a different response when I show them the 95th percentile of companies growing 35 to 40%. They actually see that as more negative than positive. But it's what's actually happening, because if you think back to prior years, you know, pre-COVID of course, I would expect the 95th percentile of companies to be growing 50%, 75%, 100%. And we absolutely have that in some of our clients, but this is the 95th percentile within that cohort.

So I think it actually, the takeaway is it gives clients looking for 2026 specifically, in a lot of ways, a ceiling, I think, of growth to put yourself at that 35 to 40% max. And if you plan or you're forecasting to grow greater than that, you better have a damn good reason why. You're expanding geographies, you're expanding channels, you're launching not just a new product, but another product that can compete or rival your current hero product, or you're doing something else meaningfully different. You're opening up a wholesale channel. But even wholesale, we're not seeing wholesale drive 20 to 30% of our clients' growth.

So I think that's the big takeaway on the kind of upper percentile. But overall, if you look at the under-10-million cohort and the greater-than-50 cohort, lo and behold, they're about the same. And the average is right around that 10 to 15% mark. And I think that that is, currently from the data that we're seeing, the best benchmark if you're just a run-of-the-mill ecommerce brand or reseller. If you're a physical product through a digital channel and you would ask me off the street how much you should expect to grow, I'll even say next year it's around that 10 to 15% mark.

Geoffrey From A2X (05:17)
10 to 15% for your average ecommerce business is considered to be good. And on that 35% for the 95th percentile, you've totally reframed that. And when I originally asked the question, I said, finding meaningful growth opportunities, even in a tough environment. And your counter is, hey, that's actually not that meaningful. So it's good, 35%, like nobody's sticking their nose up at that. But if you're in the 95th percentile, you should probably be expecting 50% plus. So it might be an indication that the industry is softening a little bit.

Sam Hill (05:56)
Yeah. And like, Mike Beckham from the Operators podcast was just talking about this in their latest episode. And he said, you know, keep in mind that whether you're selling into Target or you're selling on Amazon, if Target, for example, if they're only growing at 5% and you're growing at 10%, you're not increasing the TAM or the customer base. You're taking someone else's market share. And that's the same story for Amazon. If Amazon is only growing at 10% and you're growing at 20, you are stealing market share from a competitor, period. And again, you better have a damn good reason why you're stealing market share from a competitor to continue to see that 30+% growth.

Geoffrey From A2X (06:27)
Yeah. So as people look into the future in terms of what they can forecast in 2026, how would you apply that to your thinking?

Sam Hill (06:59)
Oh my God, I'm so fired up about this. I got really frustrated, and I said this to someone yesterday, that whenever you get really angry or irritated about a particular topic, that should tell you to lean into that topic more and explore that. And I got really frustrated because there's so much macroeconomic data available to everyone. And you know, there's different inflation numbers, there are different CPI numbers, there's different consumer-sentiment numbers. You've got consumer debt numbers, and you've got all these different metrics to look at.

And what I spent the weekend doing is trying to parse out the ones that were most meaningful to ecommerce and then also combine real Shopify data, meaning big, big Shopify data, and try to figure out, how can brand owners actually use all this information and put it into action in their forecast for next year?

And if you look at Shopify's GMV data, or their gross merchandise value, and the growth of that over time, and sorry, we're getting really technical, but I think it's important. Long story short, you will find that this year has been about 30% growth.

Geoffrey From A2X (08:37)
Yeah.

Sam Hill (08:39)
Okay, no big surprise there. Shopify is a big company, they're continuing to grow. Guess what's included in that value? Launching into new countries, Shopify launching new products, Shopify launching their B2B functionality, which a lot of people have started, and also all of their enterprise-level customers converting from whatever they were doing to Shopify.

Geoffrey From A2X (08:49)
Yeah. Yeah.

Sam Hill (09:08)
So let's say, you know, if Nike started using Shopify this year, if Lulu started using Shopify this year, great, that's included in that GMV. So the takeaway for me is not only if we look at our benchmark data that we're seeing and actual big Shopify aggregated data and the macroeconomic data, it just makes me feel more confident that that 30% number is actually a ceiling.

And you know, Shopify is never gonna publish this, but in a perfect world we would see same-store GMV value growth, either year over year, quarter over quarter, whatever. That's the number that you actually want. And I'm taking a guess that that number is probably between 10 and 15% because that's what I'm actually seeing with our clients.

Geoffrey From A2X (10:00)
Got it, okay. So key takeaway is, if you are forecasting into 2026 and you're forecasting 35% growth, that's epic. And anything above that is going to be very hard to justify unless you have one of the reasons that you outlined previously.

Sam Hill (10:20)
Yep. And it should go without saying, and this was what the Operators podcast said as well, and this is where I 100% agree with them. The ramifications of missing your forecast are far and above worse than exceeding your forecast. And that's the common theme as well that I want to get through to people. And it's the experience that I'm having and seeing the data on the ground.

If I look at every client that actually created a budget, some did, some didn't, but of the clients that actually created a budget, I can think of off the top of my head maybe two that actually exceeded their budget. Most have missed, and they're dealing with the consequences of that. A weaker balance sheet.

Geoffrey From A2X (11:16)
Layoffs.

Sam Hill (11:17)
Higher G&A costs as a percentage of revenue, obviously less money in their pocket, their ability to hire and do all these new marketing initiatives is just more hindered. So I know we have a bunch of other benchmarks to cover, but what I think we're talking about right now is the absolute most important takeaway. If you don't take away anything else, take that away going into 2026.

Geoffrey From A2X (11:46)
And starting at the front end, I also find it to be incredibly hilarious that I frame the question positively, like, look at this great data, and then you're like, no, no, no, not that great, buddy. Which I appreciate. Speaking of other data, let's dive into gross margins and tariffs. When we did the Q2 2025 P&L benchmark report, you and I were chatting about our surprise that tariffs hadn't at that point necessarily impacted most ecommerce businesses. But it seems like in Q3, the narrative is starting to shift. Can you talk to me a bit more about that?

Sam Hill (12:29)
Yeah, yeah. And you know, in the data, I would have honestly expected a larger impact here. But if we look at the difference between the cohorts that we benchmark on, under 10, 10 to 50, 50+, it actually impacted the 10- to 50-million-dollar businesses the most. The under-10, my assumption here, just anecdotally, is they probably over-ordered inventory, so they had to order less, and they were able to more easily skirt around the tariffs in one way or another, and so they were less impacted. My anecdotal experience for the over-50 cohort is that they probably were more diligent about raising prices.

The 10 to 50 is... honestly, I don't have a great answer as to why. I think that they were just slower to react and raise prices. And also because, this sounds weird, but almost because they were able to afford the tariffs. They didn't react as much to try and skirt around them or have a more methodical plan. That's my guess.

Geoffrey From A2X (14:05)
That's a fair guess, right? Like wider, more consistent margin gives you more flexibility when it comes to these pricing pressures.

So tariffs started to hit the P&L in Q3. And I want to take this into 2026 and how people can now take this information and apply it to their 2026 strategy. I'm taken back to, I think it was two quarters ago, where you held a power hour with Tom Gould, who is a tariff expert. And one of the themes in that session was a lot of people were hoping that tariffs were just going to go away and that this would be a problem that they wouldn't have to address. And it feels like unless the Supreme Court rules against the executive authority to be able to put on these tariffs, they're here to stay. So in that case, what are we telling people to do here?

Sam Hill (15:05)
Yeah. Yeah. And not only, I mean, if the Supreme Court does happen to rule, there's no promise that the administration is not going to find another way to levy the tariffs. So to me, it's relatively simple, it's just not easy. There needs to be a scenario plan to say, if tariffs remain the same, what am I going to do about it? Am I going to cut SKUs? Am I going to negotiate with my supplier? How much am I going to raise prices? And we've done a lot of that scenario planning with some clients to say, okay, everything's a what-if, right?

Geoffrey From A2X (15:51)
Yeah.

Sam Hill (15:51)
What if the customer eats a third, I eat a third, and the supplier eats a third? What if the supplier eats half of it and I eat half of it and I pass zero of it onto the customer? And then obviously you have to weigh that against consumer demand. And by the way, we just said all the macroeconomics are... like the consumer is soft. So are they going to have a larger appetite for higher price? Gonna be difficult.

Geoffrey From A2X (16:13)
Yeah.

Sam Hill (16:22)
But that is not an excuse to not have a plan. And this is not a podcast or a video about tariffs and how you should think about them, but I mean, that's the 60-second version. The summary is you just have to have some really hard conversations with yourself and either spend time in the numbers yourself or pay someone to help you, because it does get complicated.

Geoffrey From A2X (16:50)
Yeah, totally makes sense to me. And in addition to that, I completely empathize with the idea of kicking the can down the road, especially for the 10- to 50-million-dollar sellers. The more you talk about the path forward, the more I understand the rationale for that decision.

Sam Hill (17:06)
Yeah. And if we're talking about SKU rationalization, and if you're going to tell me that, hey, maybe 25% of my SKU catalog is now break-even or I'm losing margin on it. Okay, great. I'm going to cut those SKUs. Okay, great. Am I still going to be able to grow 15% next year with a quarter less of my catalog? That's going to be difficult.

Geoffrey From A2X (17:36)
Yeah.

Sam Hill (17:36)
So, I mean, obviously it's all related, and ultimately it's about how much risk do you want to assume as the owner. Because you have to believe that interest rates are gonna get cut, consumer sentiment improves, and the tariff situation gets figured out in your favor, and consumer demand is gonna be there. And all of the initiatives that you're doing are also going to work out. So that's a lot to believe.

And that's what upsets me about, even the Operators podcast. I think that they... I mean, they don't want to sound negative and they want to find the silver linings in everything. But the reality is all of them have these giant businesses that are spitting out millions of dollars of cash.

Geoffrey From A2X (18:31)
Well above a million dollars. Yeah. Hmm. Yeah.

Sam Hill (19:00)
And like all of them are gonna be completely fine. But some of our clients, even at the 10-million-dollar level, a lot of them are not profitable. And their personal net worth and the performance of their business are the same. They are the same, they are linked. And so I just would rather have someone go into 2026, eyes wide open, and look at all of the data in the face and still be a viable business at the end of next year instead of getting one of the emails that I literally just got this morning with our clients deciding to close down their business. So nobody wants to talk about the negative. I have to be. If no one else is gonna do it, I'll do it.

Geoffrey From A2X (19:25)
I mean, like, we've only gone through two data points, and we're gonna go through two more before the end of this video, but it sounds like the plan for 2026 is be conservative. Conservative in your forecast, conservative in your tariff planning, conservative in your costs. So, and I'll let you kind of make that conclusion by the end, but that's the conclusion I'm coming to based on everything that you're communicating up to this point.

Sam Hill (19:56)
Yeah, I would honestly take it a step further and say whatever your idea of conservative is, cut that by 20%. I'm dead serious. Now, I'll just keep driving us forward because I do think there are some bright spots.

Geoffrey From A2X (20:03)
Yeah.

Sam Hill (20:15)
And maybe if you want to talk about contribution margin and ROAS we can, but I actually want to talk about EBITDA and G&A specifically, because that was actually one of the bright spots. Because for the first time, if you looked at all of our quarterly benchmark data, I have been screaming about G&A dollars every single quarter, and at least for the under-10 and the 10- to 50-million-dollar guys, this finally became more in line.

If we look at the actual G&A dollars that were deployed, not necessarily as a percentage of revenue, that still looks a little rough, especially for the bigger guys. But if we look at just the actual G&A dollars, I would expect this number to honestly be going down. But at minimum only rising with the rate of inflation, because we're not seeing gigantic gains in revenue and contribution margin, et cetera.

And finally, G&A dollars for under-10-million-dollar businesses only went up 4.5%, and G&A dollars for 10- to 50-million-dollar businesses only went up 1%. Now, the over-50 is a little bit more challenging. Theirs increased pretty dramatically. But even though those numbers are red, it was nice to see the rate of change slow down some.

Geoffrey From A2X (21:49)
Is there enough room to keep cutting in 2026 to really meaningfully make an impact, especially, you know, just continuing on this concept of be conservative and, to your point, cut another 20%?

Sam Hill (22:05)
Well, yeah, the question that you asked is, is there enough room? And my rebuttal is, do you have a choice? And I think what we're seeing is just clients making deeper cuts in areas that they may not have cut before, redeploying those dollars in a different way.

Geoffrey From A2X (22:15)
That's a good point.

Sam Hill (22:32)
You know, for example, we have a client that used to shoot all of their content in the US and now they're shooting their content in Nigeria because it fits with their brand, etc., etc.

Geoffrey From A2X (22:41)
Hmm. It costs less.

Sam Hill (23:02)
Or the founder is becoming more involved. Like these brands that grew to 20, 30, 50, 60 million where the founder kind of took their foot off the gas a little bit and they let other people do stuff. I think we're seeing founders come back into the business and be more of the face, be more involved, tighten down on stuff.

Also, I mean, you know, it's not tooting our own horn because there are other firms out there, but we're seeing larger clients cut their internal, their in-house finance and accounting teams.

Geoffrey From A2X (23:30)
We're seeing that a lot more as well.

Sam Hill (23:32)
And they're... yeah, I mean, they're able to save, you know, 40 to 50% on that, and they never thought that they'd have to do that. They just assumed that they were going to have a full in-house team. And that's not just for finance and accounting. That's for HR, that's for marketing, that's for operations, all the different departments.

Geoffrey From A2X (23:56)
Remember, Taylor Holliday from Common Thread Collective did a presentation at Camp A2X and he talked about kind of like the trajectory of cost. You start in-house, you then move outsource, and then eventually AI potentially.

I think this is a great segue into contribution margin because, in the spirit of efficiency gains, AI is a potential silver bullet, if you will. Or at least that's what it's being communicated as in the media and in the market. You specifically call out in the report that you're still not seeing meaningful AI-driven efficiency gains in the numbers, especially in contribution margin. Can you talk to us a little bit about that?

Sam Hill (24:48)
Yeah, I just fundamentally would have expected return on ad spend to remain flat or if not increase. And I'm just not hearing any of our clients say, my gosh, we really figured out how to drive 20% efficiency in our marketing departments, and our ads are just absolutely crushing. And part of that is, if you look on... I think we've talked about this before, but I'll say it again because I think it's really important.

Guess whose margin also is expanding, or they have the desire to expand, and their name is Meta. And if you actually look in their data that they publish in their quarterly earnings report, they tell you that the cost per ad is increasing for them by roughly 10%. So within your... after you're done forecasting revenue in whatever way you want to do that, whatever number you want to pick, when you're also forecasting return on ad spend, guess what? It's probably going to be worse.

Geoffrey From A2X (25:57)
Mm.

Sam Hill (26:12)
And it may not have anything to do with what you're doing, but it's... Meta is incentivized for their cost per ad dollars or their cost per ad percentage to continue growing. And that means more expensive ads for you.

Geoffrey From A2X (26:26)
Think of it as a price increase, right?

Okay, Sam, I really appreciate you jumping into revenue growth, gross margin and tariffs, talked about contribution margin, EBITDA and G&A. These are kind of the key metrics that we typically cover in these P&L benchmark report videos. I do want you to bring us home though. What is the key takeaway here? How should we think about 2026 planning? How should we think about 2026 budgeting?

Sam Hill (26:59)
Yeah. It's not complicated. It's really not complicated, and I truly wish that I had something different to say, but I've been saying this for the last five years since I've been running this company, and I'm going to say it again, that the universe does not care about your product.

Geoffrey From A2X (27:03)
You...

Sam Hill (27:32)
The universe doesn't care about the market that you're in. The universe doesn't care about what you have going on personally. You are going to have to take matters into your own hands. Look at your unit economics. Figure things out for yourself. Use AI or don't. The universe doesn't care if you use AI or not. And invest the time now to get to the ground truth of what's happening, or at least what you believe is happening, or I am going to get an email from you eventually saying, hey, we have to close down the business. Period.

And I am doing my very best to publish data that actually matters and that people can rely on to use as ground truth in not allowing themselves to go to be on the more negative side. And for them to have a happy outcome and a good outcome that they're proud of that may not be the pie-in-the-sky thought or hope that they used to have. That is the key takeaway.

Geoffrey From A2X (29:06)
It sounds like you're telling people to be wartime CEOs, really. To hunker down. Next year is going to be rough, but it doesn't have to be as rough if you really get into the weeds and do the work and make the hard decisions, right?

Sam, I don't know if you've read The Hard Thing About Hard Things?

Sam Hill (29:31)
Of course.

Geoffrey From A2X (29:31)
Yeah, unbelievable book. And as you were kind of going through that takeaway, I kept coming back to the first and the second time that I read that book, and it feels like there's a lot of alignment between what you were saying and how they approach that problem. So A, read that book, but B, roll up your sleeves. 2026 can be a good year. Just have realistic expectations and do the hard thing. That's effectively what it sounds like you're saying.

Sam Hill (30:05)
Do you mind if I recommend one more thing if you're not reading a whole book, which I may actually have that book on my shelf here. It doesn't matter. But another recommendation is Tim Ferriss's blog post from probably eight or ten years ago, and it's titled The 17 Questions That Changed My Life.

Geoffrey From A2X (30:12)
Yeah. Mm.

Sam Hill (30:29)
I review those questions as part of my annual reflection. Because guess what? It's not like the consumer getting softer, the tariffs... it's really bad for me too. It's bad for A2X in general. Macro headwinds are not good for us. But reading The 17 Questions That Changed My Life every year and actually writing a response to at least the questions that speak to me has really given me a lot of peace and more direction in my life.

Geoffrey From A2X (31:07)
And control.

Sam Hill (30:52)
And control, yeah, thank you. And I just can't recommend that blog post enough. You can do it in an hour max, or record yourself a voice note to some of the questions.

Geoffrey From A2X (31:07)
Yeah, that's a great recommendation. About data and the data that you're bringing to the market to hopefully help ecommerce businesses plan for 2026 and for a successful financial future, but you're also putting together some pretty great resources as well. Do you mind talking to me a little bit about those?

Sam Hill (31:43)
Yeah, absolutely. One thing that we're really proud of is our budget and forecast template. And I hear a lot of talk from other founders and they're actually kind of disappointed in a lot of ways. There's not an amazing tool for budgeting, and we just think that there's a perfect Shopify app out there or something off the shelf that they can subscribe to and everything is budgeted and done. But the reality is it's not. And at the end of the day, we're still using a Google Sheet or Excel doc to manage budget and forecasting.

Guess what? Because even though all of our clients are ecommerce, they're all different. They all have different nuances. They all have a different chart of accounts, etc. So what we've tried to do is keep it as simple as possible. And our template is not 20 tabs. It's five. And I think it gives you the 80/20 visibility that you need to actually make decisions and also scenario plan to say, okay, I can put in a base budget, but then I can also run a scenario of, okay, what if I beat this by 10%? What if my margins decline? What if my contribution margin goes up? What if, what if, what if?

And I just think that the one thing that we've done really well is just make it simpler. And I've seen too many 30-tab Excel models that no one understands and that don't actually matter that much. And through our experience, we've just taken all that and condensed it down to something simpler.

Geoffrey From A2X (33:28)
Well, we like it so much that we're going to put a link in the description below. But if you want access to upcoming resources that Sam Hill and the Ecom CFO team put together, please make sure to subscribe to their newsletter. You also have a link in the description for that as well.

Well, Sam, I really appreciate you taking the time, and I'm excited to do this again next year. And I'm hopeful, very hopeful, that something falls our way because it's got to, right? Markets are cyclical. Although it might be tough, although consumer spending might be soft, it always rebounds. Always, always, right?

Sam Hill (34:08)
Yeah, absolutely.

Geoffrey From A2X (34:11)
Hopefully 2026 is that year. But to your point, plan for the worst, hope for the best, and we should be good to go. All right, well, Sam, thank you so much, and we'll see you next time.

Sam Hill (34:24)
Awesome. Thanks so much, Geoff.