eCommerce 5-Year Financial Model: Ad Spend / Partnerships / Organic Sales Channels
Originally published: 26/08/2020 07:41
Last version published: 16/08/2022 09:54
Publication number: ELQ-91686-3
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eCommerce 5-Year Financial Model: Ad Spend / Partnerships / Organic Sales Channels

A complete 5-year financial model for the eCommerce space. Includes three statement model and cap table.

Recently fully integrated a three statement model (IS/BS/CF) to the spreadsheet as well as a capitalization table.

Any organization or entity that is trying to sell online is likely to have one or more of the revenue drivers included in this model. The real value here is being able to do a unit sales and revenue forecast. It would fit a startup business that chooses one or more of the following sales channels:

-Drop Shipping
-Direct Sales

The revenue logic is setup to handle up to 10 categories of products, which may be individual SKUs or general categories with averages for the inputs. 1 or more of the 10 categories can be used and anything that is not relevant is easily zeroed out.

1. Driven from ad spend. The user inputs ad spend per month over 5 years and cost per sale as the second input. That drives unit sales.

2. Partnerships. This could be affiliate programs and/or larger deals where others sell for you online in return for some commission rate on all sales. Inputs include defining partner start count, monthly growth of partners, and average sales per month per partner for all 10 categories.

3. Organic. The user drives expected sales from all other sources here as well as a monthly growth of these sales. This would be from sources like web search and word of mouth i.e. people telling other people about the website where products are sold.

There is an input field for the selling price or average selling price of each category in order to drill down to revenue by category and for each of the sales channels.

There is a fairly robust range of operating costs for S&M, G&A, and R&D as well as an input for exit month if applicable, exit value, and the inputs for debt/equity requirements.

A contribution and distribution area exists for the user to see how cash flows from the project to investor and/or to owners based on the defined percentage split. In this area, the user will be able to see a DCF analysis of the entire project and each group will have their own DCF analysis as well. IRR, equity multiple, and ROI are also shows for the project and each group respectively.

There are plenty of visuals to help make the financial projections easier to digest.

This Best Practice includes
1 Excel template and 1 tutorial video

Acquire business license for $45.00

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Further information

Forecast eCommerce financial statements and DCF Analysis.

If your organization is selling digital products, drop shipping, and/or manufactured products online.

If you don't sell online.

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