If you’re running or scaling an e-commerce business, your marketing metrics aren’t the only numbers that matter. Finance KPIs (Key Performance Indicators) help operators, marketers, and founders make smarter decisions by tying performance to bottom-line health. In this blog, we’ll break down the most critical financial KPIs — from MER and Net Burn to Inventory Turnover — and explain how to use them in your business.

1. MER (Marketing Efficiency Ratio)

MER = Total Revenue ÷ Total Marketing Spend
MER gives you a bird’s-eye view of how efficiently your ad dollars are turning into revenue. Unlike ROAS, MER looks at total business performance, not just campaign-level data.

Good MER Benchmarks:

  • 4+ for lean e-commerce ops

  • 2–3 for brands in aggressive growth mode

MER is especially helpful for assessing scalability. If your MER is shrinking as revenue grows, it’s time to check CACs, margin compression, or discounting effects.

2. Net Burn Rate

Net Burn = (Cash In – Cash Out) per Month
This is critical for understanding how fast your business is spending cash relative to income. It helps you calculate runway and manage cash flow in scaling stages.

Formula:

  • Net Burn = Operating Expenses – Gross Profit

  • Runway = Cash on Hand ÷ Net Burn

Use this to model how long you can sustain growth, invest in inventory, or hire before needing additional capital.

3. Inventory Turnover Ratio

Inventory Turnover = COGS ÷ Average Inventory
This tells you how many times you’ve sold and replaced inventory in a given time period.

Why it matters:

  • High turnover = lean, efficient supply chain

  • Low turnover = cash tied up in slow movers

Pair this with product-level velocity tracking to identify overstock or underperforming SKUs. Slow inventory kills cash flow.

4. Contribution Margin

Contribution Margin = (Revenue – Variable Costs) ÷ Revenue
This shows how much profit is left after variable costs (like shipping, packaging, fulfillment) — which is the money available to cover fixed costs.

Target:

  • 30–50% is healthy depending on your model

Watch this closely if you’re scaling with paid ads — low contribution margin + rising CAC = danger zone.

5. CAC Payback Period

Payback Period = CAC ÷ Monthly Gross Profit per Customer
This tells you how long it takes to earn back your customer acquisition costs.

Ideal: Under 3 months for DTC e-commerce
This helps you control cash flow and understand how sustainable your marketing engine is.

Bringing It All Together

Tracking these KPIs in a single dashboard (even a Google Sheet!) helps you see where growth is healthy — and where it’s fragile.

For example:

  • MER tells you if your ads are efficient

  • Inventory Turn shows how fast you’re turning stock into cash

  • Net Burn shows how long you can keep operating at your current pace

Don’t just look at revenue and ROAS. Finance KPIs help you scale profitably, avoid cash crunches, and make better strategic bets.

📚 Recommended Resources

→ Example: If you made $100,000 in revenue and spent $20,000 on marketing, your MER would be 5.0.
→ A good MER in e-commerce varies by business type but often falls between 4–6 for profitable campaigns.
→ Example: If you generated $50,000 in revenue and had $70,000 in expenses, your net burn would be -$20,000/month.
→ Used to assess runway: e.g., a $100,000 cash reserve and -$20,000 monthly burn rate = 5 months runway.
→ Example: If your average inventory was $50,000 and your cost of goods sold (COGS) was $200,000, your inventory turn is 4x/year.
→ Low inventory turn (e.g., <2x/year) might indicate overstocking or weak product-market fit.

👉 Schedule a free consult with Modonix: https://modonix.com/contact-us