E-commerce brands fly blind on revenue and gross margin
Published on · Updated on
French DTC fashion · €40M revenue · 22% international · Germany, first export market
Composite case, built from several real diagnoses run on comparable DTC brands. Representative figures, not attributable to a single client. More client cases will be published as the next missions complete.
The situation seen from the board
- Group revenue : €40M
- Int'l growth : +31% / year
- Reported gross margin : 51%
- Exec team verdict : « All is well »
The formula: three steps between revenue and the truth
- CM1 : Revenue minus product cost (gross margin, the one in the dashboards)
- CM2 : CM1 minus cost of sale (freight, platform, FX, customs, returns)
- CM3 : CM2 minus acquisition (what a sale really brings in, everything paid)
Germany, per €100 sold
Observed return rate: 42% (fashion, German market)
| Revenue | 100 € |
| Product | -49 € |
| CM1 | 51 € |
| Freight | -12 € |
| Platform | -8 € |
| FX | -2 € |
| Customs | 0 € |
| Returns | -18 € |
| CM2 | 11 € |
| Acquisition | -14 € |
| CM3 | -3 € |
Returns alone (€18) weigh more than the remaining margin: return label, 3PL reception, inspection, stock depreciation. One item in five does not come back in a resellable condition.
No customs duties here: France and Germany sit in the same intra-EU market. But in the US, with tariffs, as in many other major export markets, duties are often high and change from one quarter to the next. That single line can flip a country's profitability.
The revelation
The largest export market by revenue is the only market in the group losing money. Every acquisition campaign in Germany accelerates the loss. France subsidises Germany. Nobody had seen it.
- France : +€14
- Group (average) : +€9
- Germany : -€3
The group average is positive: that is precisely why the problem stayed invisible for three years.
Kai-Li Global | Case studies | FAQ | contact@kai-li.global