In many e-commerce businesses, growth happens faster than improvement in profitability.
Orders increase, but margins remain under pressure, cash cycles stretch, and founders struggle to understand why scale is not translating into financial comfort.This usually indicates that unit economics is being tracked, but not actively improved.A well-structured E-commerce Unit Economics MIS should not only report numbers.It must drive corrective action.
Below are 7 practical actions that directly improve unit economics and can be reviewed monthly through MIS.
1. Eliminate Loss-Making Orders at the SKU Level
Not all sales are good sales.
Action:
Prepare a product-wise contribution statement:
- Selling price
- Less: platform fees, logistics, packaging, payment charges
- Less: average return cost
Example:
If a ₹1,200 product leaves only ₹40 after all costs, while a ₹900 product leaves ₹160, pushing volume on the first SKU weakens unit economics.
Improvement Impact:
Stops cash leakage from high-volume but low-contribution products.
2. Reduce Marketing Dependency on Low-Margin Products
Marketing often amplifies products that convert easily, not those that are financially strong.
Action:
Map CAC (customer acquisition cost) against contribution per product.
Example:
If a product earns ₹150 contribution but needs ₹220 ad spend to sell, the order is economically negative even though ROAS may look acceptable.
Improvement Impact:
Redirects ad spend toward products that recover acquisition costs sustainably.
3. Reprice Products Where Discounts Are Structurally Embedded
When discounts become permanent, they silently redefine unit economics.
Action:
Track:
- Contribution with discount
- Contribution without discount
Example:
If a product is profitable only with a 20% discount, then its list price is artificial and pricing needs correction.
Improvement Impact:
Restores pricing discipline and protects margin.
4. Reduce Return and RTO Exposure in High-Risk Segments
Returns are not just operational issues they directly damage unit economics.
Action:
Track returns and RTO:
- By product category
- By pin code
- By courier partner
Example:
If fashion products shipped to certain regions show 35% returns vs 10% elsewhere, restrict COD or revise policies for that zone.
Improvement Impact:
Cuts reverse logistics cost and blocked inventory.
5. Improve Unit Economics Through Faster Inventory Rotation
Unit economics is not only about margin, but also about time.
Action:
Review:
- Product-wise inventory days
- Contribution per day, not just per order
Example:
A product earning ₹100 with 30-day stock rotation is financially stronger than one earning ₹180 with 120-day holding.
Improvement Impact:
Improves cash velocity and reduces working capital pressure.
6. Shift Focus From First Order Profit to Repeat Order Economics
Some businesses sacrifice first-order margin assuming lifetime value will compensate but never track it properly.
Action:
Separate MIS for:
- First-time orders
- Repeat orders
- Contribution across customer lifecycle
Example:
If repeat customers contribute ₹300 over 3 orders with minimal marketing cost, they justify higher acquisition spend initially.
Improvement Impact:
Aligns unit economics with long-term profitability instead of short-term margins.
7. Control Fulfilment Cost Volatility
Logistics variance often destroys otherwise sound unit economics.
Action:
Track fulfilment cost:
- By weight slab
- By delivery zone
- By courier partner
Example:
If one courier consistently costs ₹40 more per order with similar delivery performance, switching improves unit economics instantly.
Improvement Impact:
Stabilises contribution and protects margins from operational drift.
How These Actions Should Reflect in MIS
A practical E-commerce Unit Economics MIS should show:
- SKU-wise contribution trends
- CAC vs contribution mismatch
- Discount dependency ratio
- Return-adjusted profitability
- Contribution per inventory day
- Repeat order contribution
- Fulfilment variance impact
If MIS only reports revenue, orders, and gross margin, it is not supporting unit economics improvement.
Conclusion
Unit economics improves not through scale, but through discipline.
When these seven actions are tracked and reviewed monthly:
- Cash pressure reduces
- Margin becomes predictable
- Scaling becomes financially controlled
That is when e-commerce growth shifts from volume-driven to value-driven.
