You know the old saying: revenue is vanity, profit is sanity (and cash is reality)? Here's the 2025 take on it. For years, e-commerce founders have lived by one number: ROAS (Return on Ad Spend). If the Facebook dashboard looked good on Monday morning, the business “felt healthy”. But as Thomas Gleeson, co-founder and COO of StoreHero, argues in our recent Treyd Secrets episode, this obsession has led too many brands into a false sense of security.
Today, the real growth driver isn’t revenue at all – it’s contribution margin. And the shift from “ROAS land” to contribution margin thinking is changing how e-commerce businesses scale.
We've gathered the key lessons from the conversation with Thomas on why profitability – not just revenue – needs to be the new North Star, and how to build forecasts and dashboards that actually guide growth.
Lesson 1: Don’t scale losses
Many DTC brands scale aggressively, only to realize years later that their impressive topline has been masking deep losses. Thomas put it plainly:
"Revenue and profit are not directly correlated. Often there's a trade-off. If you don't track profitability week by week, you're flying blind."
With ad spend often consuming 20-40% of revenue, the person or agency managing Facebook and Google budgets is effectively the biggest investor in the business. Yet in most cases, they’re measured only on ROAS – a flawed, channel-specific metric that ignores true profitability.
Takeaway: If you aren’t tracking contribution margin weekly, you’re at risk of scaling losses instead of profits.
Lesson 2: Make sure you all understand contribution margin
So what is contribution margin, really? Thomas breaks it down into three parts and gives a simple, straightforward definition.
Definition of contribution margin:
Net sales (after discounts, taxes, returns)
Fully loaded COGS (not just product costs, but shipping, 3PL, transaction fees, free returns, etc.)
Marketing spend
The contribution margin formula:
Contribution margin = net sales – fully loaded COGS – marketing spend
Instead of chasing revenue or ROAS, contribution margin tells you: after you’ve paid for your product and ads, how much profit is left in the bank? Make sure relevant people in your organization truly understand contribution margin. In our talk, Thomas Gleeson also shares the benchmark for a good contribution margin. Check and see how you are pacing.
Contribution margin benchmark:
If you're wondering what is a good contribution benchmark, here's the answer. Many strong DTC brands aim for 25–30% contribution margin and 8–12% net profit margin after operating expenses.
Lesson 3: Marketers must think like CFOs
Or at least, they need to know how to talk to finance people. Now, if you’re an avid listener to the Treyd Secrets podcast, you know this is a reoccurring topic. And for good reason.
E-commerce, and we would argue – other industries as well, has shifted from a marketing-first game to a numbers-first discipline. The best marketers today are drilled in gross margin, COGS, and contribution margin – not just CTRs and CPMs. Thomas Gleeson explains why:
"The best marketers I see today are thinking more like finance people than marketers. If you can't speak financial language, you won't get budget our buy-in to scale."
We couldn’t agree more. Making a case for your marketing budget is key. Or from the CFO side of things – understanding the potential business value being driven from that marketing budget is critical. Agencies that can talk profitability, not just ROAS, have a huge competitive advantage against those who don’t.
Keen to learn more on this topic? Check out our episode with Steve Worgan, a masterclass in e-commerce finance.
Lesson 4: Forecasting isn't about being right – it's about being ready
We know, forecasts in e-commerce are notoriously unreliable. And if you’re in the business of hyper seasonal products, you know this to be especially true. Ads fluctuate, inventory runs out, and seasonality wreaks havoc. But Thomas emphasizes that while we all want to improve supply chain forecasting, it isn’t about perfect predictions:
"The best forecasts are never right. They're just a good guideline to help you understand where you're wrong."
So imagine you sell funny Christmas sweaters. Somehow your sweater ended up viral on TikTok, and it's great, but you hadn't stocked up ahead of that possibility. Well, tough luck. As Thomas Gleeson stresses in the episode:
"You need a plan B. If you don't have a plan B, you're gonna be forced to make one up on the spot."
Thomas recommends doing the below ahead of your peak season(s), whether it be Black Friday, Christmas Holidays, Summer or anything else.
How to improve supply chain forecasting for peak season
Retro last year’s campaign (what worked, what didn’t)
Operational prep (team schedules, 3PL readiness, CRO audits)
Week-by-week (or day-by-day) forecasts
Plan B discounts or campaigns ready to launch if plan A underperforms
He elaborates that it’s easier to make a plan B for a Q4 unexpected situation now, than in the heat of the moment. And once it’s over, you can do a retro with your team and keep the learnings with you for next peak season planning. The key is not just to maximize revenue, but to protect profitability during high-pressure sales windows.
Lesson 5: Discounts, COGS, and the hidden margin killers
One of the biggest traps? Discounting as a lazy growth lever. As Thomas explains in the episode:
"Sitewide discounts juice revenue, but they destroy your margins. Worse, they train your customers to only buy on sale."
Equally dangerous is ignoring the real COGS. Founders who think they’re at 70% margins often discover they’re closer to 50% once fees, free shipping, and returns are accounted for. No need for panic, here’s a simple way for you to lull you out of that imaginary percentage.
Checklist to stress-test your margins:
Include transaction fees
Include 3PL and shipping
Factor in return rates
Review discounting policies
Lesson 6: Build a founder’s dashboard with four numbers
Forget staring at Shopify revenue or Facebook ROAS. And by the way, ROAS is a good metric for...ROAS. Not profit. Blindly focusing on vanity metrics is in vain. To move towards real profitability, Thomas suggests every founder should track these four numbers daily/weekly. This simple dashboard keeps your finger on the pulse.
The four figures framework for founders:
Net sales (post-tax, post-discounts)
Marketing spend (total, not channel only)
MER (Marketing Efficiency Ratio) = net revenue ÷ total ad spend
Contribution margin (in currency, not just %)
"As you spend more money, are you making more profit? If you can't answer that in real time, you're too late." Thomas Gleeson
Final words on going from ROAS to real profit
The e-commerce playbook is being rewritten. Founders who cling to ROAS as their North Star risk scaling themselves into bankruptcy. Those who adopt contribution margin, real forecasting, and profitability-first dashboards will be positioned not just to survive – but to scale sustainably. Thanks for the read!
💜 Did you learn something? Please share to a colleague, and we’ll owe you one.
💜 If you want to hear more on this talk, here’s the Spotify link for Treyd Secrets episode 15.
→ Want to learn more about growing your business? Do what tech companies do. Lessons from tech growth here.