Ecom CFO Newsletter – Q1 Revenue

In this week’s edition

📈 Featured Topic: Q1 Revenue for 7- to 9-Figure Brands

💼 DTC DealFlow + Talent Flow: Buy, Sell, Hire, Connect

🔗 Best Links + Resources: TK

FEATURED TOPIC

(what got the most thinking time)

To summarize a few key revenue themes from Q1 I’ve mentioned elsewhere:

• Half the companies we tracked saw revenue increase in Q1, but gains weren’t experienced evenly.

• Those under $50M often suffered, with a 5-6% decline at the 50th percentile. Yet even the worst of our $50M+ brands saw significant growth.

• Brands of every size saw immense growth at the 95th percentile, leading to our first key finding – despite headwinds, the best companies are still growing. Period.

But this doesn’t tell the whole story so let’s take a closer look at three key areas…

1. Price, Volume, Mix

When we talk about revenue, we’re really talking about the effect of three forces: price, volume, and mix. We don’t have perfect insight into how every client handled each, but overall, my sense has been:

• Price: Increases here seem to be driving most revenue growth 

• Volume: We’re seeing wholesale becoming a larger part of the pie

• Mix: Some clients are doing a good job launching higher-margin products, but on the whole, we’re still not seeing a lot of discipline. 

Following up on mix, it’s still far too rare to see disciplined catalog rationalization and low-margin SKU cutting. But the tariffs have been a forcing function on this. 

So if brands weren’t doing it before, they’re about to now.

2. Wholesale

As I mentioned last week, wholesale revenue is up across every cohort, and for brands under $50M, it’s the fastest-growing revenue category.

That reinforces a key insight from our annual report – that brands looking to build antifragility, and reduce their reliance on Google and Meta, need to be looking at this channel seriously.

That said, it’s not a fit for everyone.

To decide whether wholesale is right for your brand, you need to ask yourself important questions like…

• Is your product wholesalable? Not every DTC product works well on a shelf.

• Do you have the infrastructure? Meaning staff, EDI connection, etc. needed to handle orders

• Can you sell it? You’ve still got to market to this audience, often in ways that are completely foreign to DTC founders.

On top of all that, you have to make decisions about which path into wholesale is best for you, and whether it’s the biggest growth opportunity you have (often, it’s not).

We’ve written much more about this here, but suffice it to say, this isn’t a magic bullet. It’s a solid opportunity for some brands, and others are better off doubling down on whatever’s already working.

3. Refunds

Refunds are up for companies under $50M in revenue, and we saw large gaps between the best and worst performers there. Companies over $50M had much less variability.

Historically, clients have scrapped returns altogether, telling customers to either keep the product, donate it, or simply throw it away. 

But in the face of rising COGS, it’s becoming more valuable to have a sound reverse logistics strategy in place.

We expect this to become even more important if tariffs stick around.

In May, we hosted a group call for readers with tariff expert Tom Gould (you can watch the full recording here)

Gould pointed out that the government has a program of duty drawbacks, that will refund a portion of duties paid on products that are imported and later either exported or destroyed.

As his former colleague, Flexport CEO, Ryan Petersen, told us in another interview, it doesn’t even have to be the same physical item, as long as it has the same HS code.

It’s changing the math on whether reverse logistics are worthwhile.

Conclusion

It’s tough out there, and many brands are feeling the pain. But it’s not universally bad.

The data shows there are still clear opportunities for growth. Proactive brands are having conversations about:

• How they’re adjusting price, volume, mix

• Whether wholesale makes sense for their situation

• Improving reverse logistics (especially in the face of tariffs)

These are all conversations you can and should be having with your CFO, so if you want help doing that, grab time on my calendar here.

🛠️ Work With Us

Ecom CFO is one of the only fractional finance and accounting firms that specializes exclusively in 7- to 9-figure DTC clients. This email is part of our effort to share industry-best insights with founders, for free.

But when you're ready, here’s how to get in touch:

📊 Compare Your P&L to Other Private Brands

We analyzed financials across 30+ companies to show you exactly what happened – including revenue growth, margins, ad spend, and more. The full report is free and un-gated. Use it to battle test your 2025 plans.

💼 DTC Dealflow + Talent Flow

As trusted advisors, specializing in 7- to 9-figure ecommerce, we get an early look at a lot of the most important financial and hiring decisions clients and colleagues make, and are always happy to help with introductions…

• Seeking Acquisition: Sleep accessory brand, with $1m+ in rev L365. Reportedly has great margins, solid inventory, is profitable, and has domestic/offshore manufacturing lined up

• Seeking Acquisition: A few of our larger clients are in the early stages of exploring acquisition. If you’re a buyer writing checks for more than $10M, message me privately.

• Seeking Talent: Bill DAlessandro is hiring a brand manager for Natural Dog Company

• Seeking Talent: Dr. Paul Saladino’s company, Lineage Provisions is looking for their next Director of Growth. Fully Remote.

• Seeking Talent: Boston-based Force Factor is bringing on a staff accountant.

• Seeking Talent: Eric Schechter is hiring someone to build aggressive DTC funnels and optimize a portfolio of 7- to 9-figure brands for scale over at GiddyUp

If you’re buying, selling, or hiring in this space, and want more visibility, reply to this email or grab a call with me here. Everything you say is fully confidential.

🔗 Best Links & Resources

My team reviews industry insights every week to stay current. We curate the best, so you don't have to...

1. Manufacturing in the US: Coming on the heels of yet more tariff announcements, this video was fascinating. Destin Sandlin, from Smarter Every Day, spent four years developing a product in the US. His conclusion: That skill is becoming even more important. (Pairs well with this chat between Scott Galloway and geopolitical strategist, Peter Zeihan)

2. Behind Growth at Ilia Beauty: Andrew Faris did this great interview with Cherene Aubert, who led growth at Common Thread Collective and Bobbi (a 9-figure brand) before moving to the juggernaut that is Ilia

3. Uber Throwback: My Youtube algo’s been serving up throwbacks, including this 13-year old episode of TWiSt with Travis Kalanick. I love it. Feels like he’s so much more open than he could be today, and it’s interesting to revisit this knowing everything that Uber became

🧭 Footnotes

Other Resources Clients Find Helpful: Here are a few tools we've built for clients and find ourselves sharing over and over...

• Responsibility Map

• Tariff Solution Calculator

• Our Ecom-Specific Chart of Accounts

If you missed last week, we talked about a high-level overview of the full report, and you can find it here.

Until next time,

-Sam