The ecommerce landscape is a dynamic and ever-evolving world. As we kick off 2025, many of you are likely coming off a boosted Q4 and the holiday sales season. With the start of a new year, now is the perfect time to think about your business’s performance, evaluate what worked, and identify opportunities to build on your success.
But what now? How can you use that momentum to ensure 2025 is both profitable and sustainable? Let’s dive into three key strategies to help you maximize sales and profitability in the year ahead.
Make Advertising Work Smarter, Not Harder
Advertising is a powerful tool—but only when it’s aligned with your goals and inventory. Start by asking yourself:
- Are my ad campaigns aligned with my inventory levels? There’s no sense in pushing ads for products that are running low or out of stock. Review your inventory forecast and adjust ad spend to focus on profitable products while avoiding stockouts.
- Am I thinking about inventory and advertising as a portfolio? Not all products are created equal. High-cost items with slow turnover can tie up cash, while items with strong margins and quick sell-through rates often deliver better returns. Evaluate your entire product portfolio to prioritize items that support cash flow and profitability.
- Am I seeing a return on my ad spend? Track your Media Efficiency Ratio (MER) monthly to measure how well your advertising dollars are working for you. Simply divide revenue by ad spend for a specific period. This metric helps you spot trends and identify which channels and ads are driving results.
Don’t Get Caught in the Competitive Ad Trap
We’ve all felt the pressure to “keep up” with competitors, but aggressive ad spend doesn’t always translate to higher profits. In fact, it can often do the opposite.
As Seth Godin said, competitive pressures can make a good deal unsustainable. The cost of a single click can skyrocket, forcing businesses to pour money into ads, influencers, and more—all while operating at a loss.
Instead of chasing the next trend, focus on your existing customers. Turn them into your brand advocates, and let their loyalty bring in new buyers. This strategy often yields better results than an endless cycle of paid ads.
Experiment with Profit-First Advertising
I was a guest on a podcast once where the host shared an eye-opening story. After cutting all ads from a particular platform, his sales saw only a minor dip—but his profits soared into five figures for the month!
This approach isn’t about eliminating advertising altogether; it’s about prioritizing profitability over volume. When we analyze client data, we often see that high ad spend correlates with lower profits. While this isn’t a universal rule, it’s a trend worth exploring.
If you’re feeling stuck, try a small experiment. Adjust one aspect of your ad strategy and monitor the results. Keep refining until you find the right balance of ad spend and profitability for your business.
The start of a new year is the perfect time to reflect and refine. In the fast-paced ecommerce world, balancing growth and profitability takes intentional planning and strategy. By aligning your advertising efforts with inventory, leveraging customer loyalty, and experimenting with profitability-focused ad strategies, you can set your business up for long-term success. Need help making 2025 your most profitable year yet? Reach out to the bookskeep team today—we’d love to partner with you!
Interested in Profit First?
You can also sign up for the Profit First for Ecommerce Sellers Online Course. As a Mastery Level, Certified Profit First Professional, I will teach you why Profit First works so well for ecommerce businesses and the particular challenges for businesses that have physical products requiring inventory management. You will learn how your behavior drives your money management habits for your business and how you can set up your business bank accounts to work with your habits.
Check out all our ecommerce accounting and profit advising services here!
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