E-commerce Portfolio Metrics: Use Contribution Margin and LTV:CAC to Allocate Resources

The Portfolio Mindset: From Brand Metrics to Portfolio Intelligence

Managing one e-commerce brand is a significant challenge. Managing two, three, or more often feels like trying to read several different maps at once. Each Shopify dashboard, Google Ads account, and financial spreadsheet tells a piece of the story, but consolidating them into a single, reliable picture is a constant struggle. The critical question for founders running multiple online stores is not just about individual brand performance. It is about allocation. With limited time and capital, you need a clear answer to where your next dollar and your next hour will generate the best return for the entire portfolio. Learning how to track metrics for multiple ecommerce brands effectively moves from a bookkeeping task to a core strategic function, especially when cash flow is king.

Successful multi-brand operators make an essential mental shift. They stop thinking only in terms of individual brand metrics and start analyzing their business as a portfolio. The question evolves from "Is Brand A profitable?" to "Is Brand A's contribution to the portfolio more valuable than Brand B's, and why?" This approach is the foundation of effective ecommerce portfolio performance analysis.

This mindset forces you to compare brands on an even playing field, using standardized metrics that reveal true performance. It uncovers which brands are genuine growth engines, which are stable cash generators, and which are draining resources that could be better used elsewhere. The goal is to gain portfolio intelligence, an overarching view that allows you to make strategic capital and time allocation decisions. It is about understanding the interplay between your brands and ensuring each one is pulling its weight and contributing to your overall business objectives, whether that is rapid growth, maximum profitability, or a balanced combination of both.

Step 1: Consolidate Your Data into a Single Source of Truth

Consolidating siloed data is the most common roadblock to effective multi-brand sales tracking. Your performance data lives in different Shopify stores, Meta and Google ad accounts, email platforms, and your accounting software like QuickBooks or Xero. The first step is creating a single source of truth to enable a clean ecommerce brand comparison.

The reality for most early-stage businesses is pragmatic: you do not need a complex, expensive business intelligence platform from day one. In fact, founders can typically manage data consolidation with spreadsheets up to around $5M in combined revenue. A well-structured Google Sheet is your most powerful initial tool. For a fast start, you can use our Quick E-commerce Metrics Dashboard guide for a one-hour setup.

To build your own, create a master spreadsheet with separate tabs for each primary data source. For example:

• Shopify Brand A: Export monthly sales reports with Gross Revenue, Discounts, Net Revenue, and Shipping Collected.
• Shopify Brand B: Repeat the same export process for your second brand.
• Ad Platforms: Create a tab to manually input total monthly spend for each brand from Meta Ads, Google Ads, and any other channels.
• COGS & Variable Costs: This tab tracks your Cost of Goods Sold, transaction fees (from Shopify Payments or Stripe), and shipping or fulfillment costs for each brand, often pulled from your accounting system.

Finally, create a summary tab to pull it all together. This dashboard becomes the central hub for your portfolio revenue analysis. Structure it with each brand as a row. The columns should represent the key metrics you need to track on a monthly basis: Gross Revenue, Discounts, Net Revenue, Cost of Goods Sold (COGS), Gross Margin, Ad Spend (total and by channel), Transaction Fees, and Shipping and Fulfillment Costs. This simple consolidation immediately provides a high-level view and a foundation for deeper analysis.

As you scale, this manual process becomes cumbersome and prone to error. A robust data system is typically needed when your combined revenue exceeds $1M to $2M ARR. At that point, the time saved and accuracy gained justifies investing in a dedicated tool like Triple Whale, Glew, or Daasity. These platforms automate data aggregation, saving you valuable time and providing more sophisticated insights.

Step 2: How to Track Metrics for Multiple Ecommerce Brands

With your data organized, the focus shifts to tracking the right Key Performance Indicators (KPIs). Looking at top-line revenue alone is one of the most dangerous mistakes in portfolio management. True performance is measured further down the profit and loss statement, where actual cash generation is revealed.

Move Beyond Gross Margin to Contribution Margin

The first and most critical metric for ecommerce KPI benchmarking is Contribution Margin. This metric reveals how much cash each brand generates to cover fixed overhead costs (like salaries and rent) and contribute to net profit. It provides a true apples-to-apples comparison of profitability between brands.

A simple and effective formula for e-commerce is:

Contribution Margin = Net Revenue - COGS - Ad Spend - Variable Transaction Fees - Shipping & Fulfillment Costs.

Calculating this for each brand every month is non-negotiable. It strips away the noise of top-line revenue and shows you which brands are efficiently converting sales into cash. A high-revenue brand with a low contribution margin may be less valuable to the portfolio than a smaller brand with a high contribution margin.

Master Your Unit Economics with LTV and CAC

Second, you must understand your unit economics at the brand level. This requires tracking two essential metrics: Customer Lifetime Value (LTV) and Customer Acquisition Cost (CAC). LTV is the total profit you expect from a customer over their entire relationship with a brand, while CAC is the total cost to acquire that customer.

These figures are crucial for assessing marketing efficiency and long-term viability. A scenario we repeatedly see is founders blending ad spend across brands, making it impossible to know which marketing dollars are actually working. You must calculate CAC for each brand individually by dividing its total marketing and sales spend by the number of new customers acquired in a period. This precision is fundamental to effective capital allocation.

Use the LTV:CAC Ratio as Your North Star

The most powerful KPI for decision-making is the LTV:CAC ratio. This single number tells you the return on your customer acquisition investment. A common benchmark for a healthy direct-to-consumer brand is an LTV:CAC ratio of at least 3:1 over a 12-month period. This means for every dollar you spend acquiring a customer, you generate three dollars back in contribution margin over a year.

This ratio is your primary lever for resource allocation. A brand with a 5:1 LTV:CAC ratio likely deserves more investment than one with a 2:1 ratio, even if the latter has higher revenue. It signals a more efficient, sustainable, and scalable business model. To validate the impact of specific channels, run incrementality tests. As a general guideline, Google recommends studies of at least 14 days to gather meaningful data.

Step 3: Using Portfolio Insights to Make Strategic Decisions

Once you have reliable, brand-level data on Contribution Margin and LTV:CAC, you can stop guessing and start making strategic decisions. This is where portfolio analysis moves from a reporting exercise to a tool for active management. Underperforming brands can no longer hide behind the success of stronger ones.

Consider this common scenario: Brand A generates $2M in annual revenue with a 15% contribution margin, producing $300k in cash. Brand B generates only $1M in revenue but has a 40% contribution margin, producing $400k in cash. On the surface, Brand A looks like the star. But Brand B is actually generating $100k more in cash for the business to reinvest or cover overhead. Without this portfolio view, you might mistakenly allocate more marketing budget to the less profitable Brand A, accelerating cash burn. Adding LTV:CAC data further clarifies the picture. If Brand A has a 2:1 ratio and Brand B has a 4:1 ratio, the decision becomes clear: channel resources to Brand B and diagnose the efficiency problems in Brand A.

The Growth vs. Profit Matrix Framework

A simple but effective framework for making these tough calls is the Growth vs. Profit Matrix. Imagine a 2x2 grid. The vertical axis is Contribution Margin Growth (Year-over-Year), and the horizontal axis is Contribution Margin (as a percentage). Each of your brands falls into one of four quadrants, each with a clear strategic directive.

1. Invest (High Growth, High Margin): These are your winners. They are growing quickly and profitably. Your primary action is to allocate more capital here to scale marketing, expand product lines, and capture market share. Protect their winning formula while carefully fueling their growth.
2. Optimize (Low Growth, High Margin): These are your cash cows. They are highly profitable but have slowing growth. The focus here is on protection and efficiency. Defend their margins, invest in high-ROI retention efforts like email marketing, and explore low-cost channels to find incremental gains. Use the cash they generate to fund your "Invest" quadrant brands.
3. Fix (High Growth, Low Margin): These brands are growing fast but burning cash. Their LTV:CAC ratio is likely low or unhealthy. You must dive deep into their economics. Can you improve profitability by raising prices, negotiating lower COGS, or improving ad efficiency? The goal is to fix the underlying unit economics without killing growth. For help with channel efficiency, refer to our e-commerce attribution models guide for multi-touch allocation.
4. Divest (Low Growth, Low Margin): These are the problem children. They are a drag on capital and, just as importantly, your focus. It is time for a hard, objective decision. Is there a clear, low-cost path to turn the brand around? If not, you should consider selling the brand, pivoting its strategy dramatically, or shutting it down to redeploy your limited resources to your winners.

Putting It All Together

Effectively managing multiple e-commerce brands hinges on a disciplined, portfolio-level approach to metrics. It is the only way to escape the trap of judging brands on vanity metrics like revenue and instead focus on what truly matters: profitable, sustainable growth for the entire business. The path forward is a clear, three-step process where every dollar and every hour counts.

First, consolidate your data from disparate sources like Shopify, ad platforms, and your accounting software into a single source of truth, starting with a simple spreadsheet. Second, track the metrics that actually drive decisions: Contribution Margin to compare profitability and the LTV:CAC ratio to measure marketing efficiency. Finally, use a framework like the Growth vs. Profit matrix to translate those insights into action, helping you decide whether to invest, optimize, fix, or divest a brand.

The lesson that emerges across the businesses we see is that perfect, real-time data is not the initial goal. Directional accuracy is. Having a good enough picture to make 80% of your resource allocation decisions correctly is a massive competitive advantage. It ensures your limited resources are always flowing to the parts of your portfolio with the highest potential return. To continue learning, explore our acquisition and retention hub for deeper resources.

Frequently Asked Questions

Q: How often should I review my e-commerce portfolio metrics?
A: For high-level decision making, a comprehensive portfolio review should be conducted monthly. This cadence allows you to spot trends and make strategic adjustments without overreacting to daily fluctuations. Key operational metrics like ad spend and daily sales should, of course, be monitored more frequently.

Q: What is the biggest mistake founders make in multi-brand sales tracking?
A: The most common and costly mistake is blending marketing expenses across brands. Without attributing ad spend and calculating Customer Acquisition Cost (CAC) for each brand individually, it is impossible to know which marketing efforts are profitable. This leads directly to misallocated capital and slower portfolio growth.

Q: Can I use a blended CAC across my entire portfolio?
A: A blended portfolio-level CAC is useful for a quick health check, but it should never be used for allocation decisions. A profitable brand can easily hide the poor performance of another. To make smart investment choices, you must calculate CAC on a per-brand basis to understand each one’s unique marketing efficiency.

Q: What if a low-margin brand is strategic for customer acquisition?
A: This can be a valid strategy, but it must be intentional and measured. If Brand A acts as a low-margin "feeder" for a high-margin Brand B (a form of cross-brand customer retention), you must track that customer journey explicitly. Measure the rate at which Brand A customers purchase from Brand B and calculate a "blended LTV" for those customers to justify the initial low margin.