Measuring E-commerce Investment Returns
For e-commerce businesses, ROI calculations need to account for multiple cost layers: product cost (COGS), advertising spend (Google, Meta, TikTok), platform fees (Shopify, Amazon), shipping, and returns. The key metrics to track: ROI on total investment, ROAS (Return on Ad Spend = Revenue / Ad Cost), and Profit Margin ((Revenue − COGS) / Revenue × 100%). A healthy e-commerce operation typically targets ROAS of 3-5x (300-500%) and net margin of 10-20%.