What is contribution margin in eCommerce?
Contribution margin is what a sale leaves after the costs that scale with it: product cost, shipping and fulfilment, payment and marketplace fees, returns, and the ad spend that won the order. It is the number that tells you whether growth is making money. Gross margin alone hides shipping, returns and ad cost, which are often where the profit goes.
Measure it by SKU, by pack and by channel. Most brands cannot say which products make money after shipping, returns and ad cost, and that gap drives a lot of bad decisions.
How should a DTC brand set prices and packs across channels?
Start from contribution margin by channel, not from a single list price. A pack that works on your own store can lose money on Amazon after fees, or undercut your site if it sells cheaper there. Pack architecture (sizes, bundles and multipacks by channel) lets each channel hit its margin without the channels competing on price for the same customer. See the marketplaces for how this plays out on Amazon.
Who should own the eCommerce P&L?
One person or team with the authority to make the calls: the plan, the spend inside an agreed budget, pricing and promotions, and the agencies. When the store, Amazon and paid media each report to different people, every channel can look healthy while total contribution goes sideways.
When digital revenue is meaningful but a full-time Head of eCommerce is not yet justified, a fractional operator can own that line for a fixed term and hand it back running.
How do you hold agencies accountable?
Give each one a number tied to contribution, not a platform metric, and review it against the same P&L everyone else sees. Brief them properly, share the data they need, and replace the ones that do not deliver. Four agencies each with a reasonable explanation and none accountable for the result is a structure problem, not a talent problem.
We own the P&L line: contribution margin by SKU, pack and channel, pricing, forecasting and agency management, with one team answering for the result. See how an engagement works, or what that looked like for other brands.