Cash Conversion Cycle (CCC): Formula, Example, and How to Improve Cash Flow for Your Shopify Store
Simplified Overview The Cash Conversion Cycle (CCC) measures how many days it takes a business to turn the money invested in inventory and operations back into cash collected from customers, after accounting for the time taken to pay suppliers. A shorter cash conversion cycle generally means a business recovers its cash investment faster, giving it […]
Repeat Purchase Rate – A Simplified Overview
Repeat Purchase Rate – A Simplified Overview Getting someone to buy from your Shopify store once is one thing. Getting them to come back and buy again is another. Repeat Purchase Rate measures the percentage of customers who make more than one purchase within a defined period. It helps answer a simple but important question: […]
Inventory Turnover Ratio – How Efficiently Does Your Shopify Store Turn Inventory Into Sales?
Inventory Turnover Ratio – How Efficiently Does Your Shopify Store Turn Inventory Into Sales? You can have a Shopify store with strong sales and still have too much money sitting in inventory. That’s because revenue alone doesn’t tell you how efficiently your store is using its inventory investment. A product might generate $50,000 in sales, […]
Sell-Through Rate (STR): Formula, Example & How to Measure Inventory Performance on Shopify
Sell-Through Rate (STR): The Metric That Shows How Quickly Your Inventory Actually Moves A product can generate thousands of dollars in sales and still create an inventory problem. Why? Because revenue tells you what you sold. Sell-Through Rate tells you how much of the inventory you actually moved. Imagine a Shopify store starts the month […]
The Profit Decay Problem: Why Your Profit Margin Changes as You Scale
The Profit Decay Problem: Why Your Profit Margin Changes as You Scale Growing an ecommerce business usually sounds simple: sell more, generate more revenue, and make more profit. But in practice, profit does not always scale at the same rate as revenue. A Shopify store can grow from $20,000 to $100,000 in monthly sales while […]
Revenue Per Visitor (RPV) – A Simplified Overview
Your Shopify Traffic Isn’t Worth What You Think: How to Calculate Revenue Per Visitor Getting more traffic sounds like a straightforward way to grow a Shopify store. But there is a problem with looking at traffic alone: 1,000 visitors can be worth $500 or $5,000. The difference comes down to what those visitors actually do. […]
Contribution Margin for Ecommerce: Formula, Example, and How to Calculate It for Shopify
Contribution Margin for Ecommerce: Formula, Example, and How to Calculate It for Shopify Revenue tells you how much your ecommerce store sold. Profit tells you how much the business kept. But there is another metric that helps connect the two: contribution margin. Contribution margin shows how much revenue remains after subtracting the variable costs associated […]
Break-Even ROAS – How to Calculate the ROAS You Actually Need
Break-Even ROAS – How to Calculate the ROAS You Actually Need A 5x ROAS sounds great. But is it actually profitable? Not necessarily. A Shopify store can generate a high return on ad spend while still losing money if its product costs, fulfillment expenses, payment fees, and other variable costs are high. That’s where Break-Even […]
What Is the Difference Between Shopify Revenue and Profit?
What Is the Difference Between Shopify Revenue and Profit? If your Shopify store made $100,000 in sales, did you make $100,000 in profit? No. Revenue is the money your store generates from selling products. Profit is the money left after you subtract the costs of running the business. This distinction is one of the most […]
How Do I Calculate Profit for a Shopify Store?
How Do I Calculate Profit for a Shopify Store? If you run a Shopify store, revenue is only the starting point. A store can generate $100,000 in sales and still make very little money after product costs, advertising, shipping, payment fees, refunds, software, payroll, and other operating expenses. So, how do you actually calculate profit? […]