Supply Chain Optimization Shopify

Cost Structure (Shopify/DTC)

Selling Price $XX
├── Product Cost
├── Inbound Shipping (to warehouse)
├── 3PL Storage Fee (e.g., ShipBob)
├── 3PL Fulfillment Fee
├── Payment Processing (2.9% + $0.30)
├── Shopify Subscription (allocated)
├── Advertising (Meta/Google/TikTok) ← Key Cost
└── Net Profit

Benchmark Configuration

BENCHMARKS = {
    "shopify": {
        "gross_margin": {
            "healthy": 0.60,    # DTC needs high margin for ads
            "warning": 0.50,
            "danger": 0.40
        },
        "shipping_ratio": {
            "healthy": 0.08,    # 3PL fees
            "warning": 0.12,
            "danger": 0.18
        },
        "inventory_days": {
            "healthy": 45,
            "warning": 60,
            "danger": 90
        },
        "cash_cycle": {
            "healthy": 45,      # Fast payment
            "warning": 70,
            "danger": 100
        },
        "net_margin": {
            "healthy": 0.20,
            "warning": 0.12,
            "danger": 0.05
        },
        # DTC-specific metrics
        "cac": {               # Customer Acquisition Cost
            "healthy": 0.25,   # CAC < 25% of price
            "warning": 0.35,
            "danger": 0.50
        },
        "ltv_cac_ratio": {     # LTV/CAC
            "healthy": 3.0,    # LTV > 3x CAC
            "warning": 2.0,
            "danger": 1.0
        },
        "ad_spend_ratio": {    # Ad spend ratio
            "healthy": 0.25,
            "warning": 0.35,
            "danger": 0.45
        }
    }
}

DTC-Specific Costs

Advertising Costs (Critical!)

Meta Ads (Facebook/Instagram): CPM $10-30
Google Ads: CPC $1-5
TikTok Ads: CPM $5-15
Influencer Marketing: Variable

DTC ad spend typically 20-40% of revenue

3PL Logistics Costs

Common 3PL Options:
├── ShipBob
├── Deliverr
├── ShipMonk
└── Red Stag

Fee Structure:
├── Receiving: $2-5/case
├── Storage: $0.5-1/cubic ft/month
├── Pick & Pack: $2-4/order
└── Shipping: By weight/zone

Payment Processing Fees

Shopify Payments: 2.9% + $0.30
PayPal: 2.9% + $0.30
Stripe: 2.9% + $0.30

High AOV: Ratio acceptable
Low AOV: Erodes profit

Input Data

**Sales (Shopify-specific)**
• Average Selling Price: $___
• Average Order Value (AOV): $___
• Payment Fee: 2.9% + $0.30

**Logistics (3PL)**
• 3PL Fulfillment Fee: $___/order
• 3PL Storage Fee: $___/unit/month
• Receiving Fee: $___/case

**Marketing (Critical!)**
• Ad Spend Ratio: ___%
• Customer Acquisition Cost (CAC): $___
• Customer Lifetime Value (LTV): $___
• Repeat Purchase Rate: ___%

API Integration

Shopify Admin API

export SHOPIFY_STORE_URL="xxx.myshopify.com"
export SHOPIFY_ACCESS_TOKEN="xxx"

Available Data

3PL API (e.g., ShipBob)

export SHIPBOB_API_TOKEN="xxx"

Bottleneck Diagnosis Focus

DTC-specific bottlenecks:

1. High CAC → Low ad efficiency, acquisition cost eating profit
2. LTV/CAC < 3 → Customer value insufficient to support CAC
3. High 3PL costs → Poor logistics choice
4. Low repeat rate → Reliant on new customers, high cost
5. Low gross margin → Cannot support ad spend

DTC Health Formula

Net Profit = Price - Product Cost - Shipping - Payment Fee - Ad Spend - Ops Cost

DTC Golden Ratios:
├── Gross Margin > 60%
├── Ad Spend < 30%
├── Shipping < 15%
├── Net Margin > 15%
└── LTV/CAC > 3

vs Amazon Comparison

Part of Nexscope AI — AI tools for e-commerce sellers.