Ecom CFO Notebook - Q2 Benchmark Report Released

Welcome to this issue of Ecom CFO Notebook – a weekly letter for 7–9 figure ecommerce founders and CFOs, sharing my perspective and stories for profitable growth.

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Sam here.

As promised, we're releasing our full Q2 P&L Benchmark Report this week. 

Eighteen companies, revenues ranging from under $10M to $100M+, dissected line by line to show you what's actually happening in the market.

You’ll also see we’ve partnered with A2X for our benchmark report series - the only tool we trust for accurate ecommerce revenue reconciliation. I would say that even if they weren’t helping us get this report in more founder’s hands.

Last week, I gave an overview of big stories but wanted to talk more about gross margins and tariffs specifically.

The gross margin story

Looking at the data, Q2 gross margins looked fine. Even healthy in some cases.

I expected to see some margin compression from tariffs in Q2, but it didn't show up. We know companies loaded up on inventory in Q1/Q2 amid tariff fear and confusion, but that higher-cost inventory won't really hit cost of goods sold until Q3 and Q4.

The cash impact was immediate with the Treasury Department just auto-debiting from some client accounts. But that’s a balance sheet item, not gross margin. The real margin impact is delayed until Q3 and Q4.

This creates a timing mismatch that I hope doesn’t surprise founders when margins actually start compressing later this year. The healthy margins you're seeing today don't reflect your true cost environment.

What we've been seeing

We've been having a lot of internal meetings about how to address this on a client-by-client basis. It's not a one-method-fits-all situation, but what's important is understanding how your accounting firm or your internal team is addressing it.

Generally, we’re using two different methods. Booking the tariffs as a separate line item with the COGS section as incurred OR adding the tariff to the unit costs and continuing to book as units are sold. The latter is GAAP but may come with more administrative burden.

What to still do about it

Aside from the accounting treatment, I’m still not hearing about companies negotiating with suppliers as much as I should.

If you're in an advantageous cash position, use this in your negotiation with suppliers. They may be willing to eat more of the tariff costs for higher deposits and/or faster payment terms.

If you're in a high-tariff product category and don't have cash, that's a tough spot. Your cash conversion cycle just got much worse because you're front-loading all of the new costs up front. Assuming you can still actually operate under these conditions, raising prices and cutting fixed costs is the only solution.

Quick recap

• Make sure you and your accounting firm understand how tariffs are translating to your financials.

• Have hard conversations with your suppliers if you haven't already.

• Know your cash position because it affects your negotiating power.

• The healthy margins you're seeing in Q2 data don't necessarily reflect what's coming.

For even more…

Check out the full report for all this, plus more data, insights, and CFO perspective on things like…

• G&A spending jumping 10-40% across all cohorts

• ROAS declining everywhere (and what Meta's earnings say about ad costs)

• Why 95th percentile companies saw 31-57% growth while others stayed flat

• And more…

And if you have an audience of ecom founders, and you’d like us to come do a detailed breakdown for them (e.g., blog post, podcast interview, newsletter write-up, etc.) hit reply and let me know.

— Sam

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