5 Profit-Killing Mistakes eCommerce Brands Make (and How to Fix Them)

Scaling an eCommerce brand is exciting, but here’s the hard truth: revenue does not equal profit.

We’ve worked with dozens of online sellers who thought they were “crushing it” because sales were growing, only to realize their bank account was shrinking. Why? Because small mistakes in bookkeeping and financial management quietly eat away at profit margins.

In this article, we’ll break down 5 common mistakes that kill eCommerce profits — and how you can avoid them.

1. Ignoring True Cost of Goods Sold (COGS)

Most founders only look at the price they paid the supplier. But real COGS includes:

• Manufacturing or wholesale cost

• Shipping & freight

• Customs duties & tariffs

• Packaging costs

• Amazon/Shopify fulfillment fees

👉 If you don’t capture all of these, your gross profit will always look better than reality. That means you’ll overspend on ads or inventory, thinking you’re profitable when you’re not.

Fix: Track landed cost per unit (supplier cost + shipping + duties). Use tools like A2X or Synder to automate this in your books.

2. Running Ads Without Profit Tracking

Many brands spend aggressively on Facebook, TikTok, or Google ads — and celebrate revenue growth. But without tying ad spend back to profit, you risk scaling unprofitably.

👉 Example: A campaign may bring $100K in sales, but if it costs $70K in ads and your COGS are $40K, you just lost money.

Fix: Always track Contribution Margin:

Contribution Margin = (Revenue – COGS – Ad Spend) ÷ Revenue

This tells you whether ads are truly profitable or just buying vanity sales.

3. Forgetting About Returns & Refunds

Returns are a fact of life in eCommerce, especially in fashion, electronics, and high-ticket items. But many brands don’t properly account for them.

👉 On paper, your revenue looks amazing — but when you process refunds later, you’re suddenly in the red.

Fix: Dedicate a separate line item in your books for returns & allowances. Forecast your return rate (5%? 15%?) so you’re not blindsided.

4. Mixing Personal and Business Expenses

It’s tempting to pay for ads or software subscriptions with your personal card. But this creates chaos in your books — and may cost you tax deductions.

👉 We’ve seen founders lose tens of thousands because their accountant couldn’t justify “mixed” expenses during tax season.

Fix: Open a separate bank account and card strictly for business. Keep it clean.

5. Not Planning for Taxes Until It’s Too Late

ECommerce founders often wait until April to think about taxes. By then, it’s too late to apply most strategies.

👉 Without planning, you may miss out on:

• Deducting home office, internet, or mileage

• Structuring your business entity for lower tax liability

• Quarterly estimated tax payments to avoid penalties

Fix: Treat taxes as year-round strategy, not a last-minute chore. Plan with your accountant every quarter, not once a year.

Bonus: Not Having a CFO Perspective

Bookkeepers keep records. Accountants file taxes. But who helps you actually grow profitably? That’s where CFO advisory comes in.

A CFO (even part-time) helps you answer:

• Can I afford to launch a new product line?

• When should I raise prices without losing sales?

• How much cash do I need to scale ads 2x?

This is the “secret weapon” that separates struggling eCom brands from the ones that break 7–8 figures profitably.

Final Thoughts

ECommerce is competitive, and the winners are those who treat finances as a growth engine — not an afterthought.

If you avoid these 5 profit-killing mistakes and build smarter financial systems, you’ll:

• See true profit margins

• Avoid cash flow surprises

• Keep more of what you earn

👉 The good news? With the right bookkeeping + tax planning + CFO insights, you don’t need to learn all of this the hard way.