How to Prepare Order-level or Unit Economics?

You are the Growth Lead of ShopEase, a burgeoning e-commerce platform in India. Despite a growing customer base driven by aggressive marketing and a diverse product range, the increase in operational complexity has raised concerns.

You are tasked with presenting an analysis of Order Level Economics for the last quarter to the CEO, including insights and recommendations for improving the company's financial health.


Data for the last quarter:

  • - Total Orders: 50,000
  • - Gross Revenue: ₹18,75,00,000 (₹18.75 crore)
  • - Returns Rate: 10%
  • - Cost of Goods Sold (COGS): ₹7,50,00,000 (₹7.5 crore)
  • - Logistics Costs: ₹2,25,00,000 (₹2.25 crore)
  • - Marketing Costs: ₹1,50,00,000 (₹1.5 crore)
  • - Technology Costs: ₹75,00,000 (₹75 lakh)
  • - Content Costs: ₹37,50,000 (₹37.5 lakh)
  • - Customer Support Costs: ₹56,25,000 (₹56.25 lakh)
  • - General and Administrative Costs: ₹1,12,50,000 (₹1.125 crore)


Questions:
1. Calculate the Net Revenue.
2. Calculate the Gross Margin and Gross Margin Percentage.
3. Calculate Contribution Margin 1 (CM1) and CM1 Percentage.
4. Calculate Contribution Margin 2 (CM2) and CM2 Percentage.
5. Identify and explain the type of costs associated with Logistics, Marketing, and Technology.
6. Predict the impact on CM1 if marketing spend is increased by 20% next quarter.
7. Provide recommendations to the CEO based on the current order level economics to enhance the financial health of ShopEase.

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