The gap between sales and earnings
Powell has seen that gap across the eCommerce brands Cart Capital manages. When the expense of winning and fulfilling orders grows faster than sales, even a store that doubles its revenue can lose money or struggle to break even. A business with $100,000 in monthly sales may therefore be less financially secure than one selling $40,000 a month, depending on the costs behind those orders.
The reporting cycle can obscure the problem. Advertising platforms display revenue as sales happen, while changes in shipping expenses, returns and supplier prices may not become apparent until an owner reviews a monthly statement. An owner focused on sales can continue spending for months before recognizing that profitability has deteriorated.
Cart Capital manages supplier relationships, paid media and fulfillment for a select group of partners, giving Powell visibility into both sales and operating costs. According to its website, the company was founded in 2017 and is headquartered at 333 SE 2nd Ave in Miami. It reports having built more than 500 brands and generated more than $80 million in sales, with a team of more than 40 people. The company also says it launches partner brands within 30 days of onboarding.
Acquisition costs put pressure on each order
Powell identifies paid advertising as one source of gradual margin erosion. As campaigns mature and exhaust their least expensive audiences, platforms can require more spending to reach the same number of buyers. Sales may still rise, leaving an owner who watches revenue alone unaware that acquisition costs are increasing faster.
DTC Dispatch's August 2026 reporting put average eCommerce customer acquisition cost at $68 to $84 in 2025. The outlet reported a 222% increase over the preceding eight years, with 40% to 60% of that increase occurring between 2023 and 2025.
The same outlet reported that the average eCommerce brand loses $29 for each newly acquired customer, describing profitability on the first purchase as an exception rather than the norm. Its category figures varied substantially: average cost per acquisition was lowest for pet products at $23, followed by fashion and apparel at $37 and beauty and skincare at $42. Supplements had the highest figure, at $89.
A separate 2026 unit-economics guide from Base.com reported that median direct-to-consumer contribution margin fell from 35% in 2021 to 22% in 2025 as paid acquisition became more expensive. That guide put the increase in average eCommerce customer acquisition cost since 2021 at 40% to 60%.
Base.com also cited published net margin benchmarks: medians of 2% to 8% for public DTC companies, with leaders above 14%, and broader DTC medians of 3% to 10% for 2026. It identified businesses with $10 million to $50 million in revenue as the group facing the steepest margin compression.
Shipping, suppliers and returns add up
Advertising is only part of the calculation. Powell also points to shipping rate changes, supplier price adjustments made with little notice and shifts in return rates as a catalog expands. Several modest increases can together eliminate the profit on an order, even when no single expense appears alarming.
The National Retail Federation and Happy Returns estimated in their 2025 Retail Returns Landscape report that 19.3% of online sales would be returned in 2025, compared with 15.8% of retail sales overall. The report, released October 15, 2025, projected total retail returns of $849.9 billion.
That survey covered 358 eCommerce professionals at U.S. merchants with more than $500 million in revenue. Its sample represents large retailers, not the smallest online stores.
Build reporting around margin, not just revenue
Powell's recommendation is to review margin per order every week rather than wait for a monthly check. He argues that owners do not need advanced financial training to identify deterioration early, but they do need reporting that shows where costs are changing.
That means recording advertising spending separately from fulfillment expenses instead of combining them into a single cost figure. Supplier prices should also be reviewed on a regular schedule, rather than only after a supplier announces a change.
He also recommends establishing a minimum margin alongside a sales target. Keeping margin above 20%, for example, calls for different decisions than pursuing 10% sales growth alone. Those figures illustrate the distinction between the two goals, rather than prescribing a universal margin benchmark.
In Powell's view, profitability problems often reflect incomplete information rather than poor judgment. Without an early reporting routine, owners may not recognize the cumulative effect of small cost changes until a disappointing month forces a closer review.
Cart Capital incorporates margin reporting into its management of partner brands. Powell describes the operating standard as a weekly review in which the owner or brand operator can explain, within a day or two, how margin compares with the previous week and what caused the change.
