What’s the real cost of growth? In a world where brands chase high ROAS and rapid scale, the true levers of profitability are often hidden beneath the surface.
In episode 7 of The Leaf Collectivo, we sat down with expansion architect Thomas Parrott to uncover what it really takes to expand profitably, whether you’re growing your DTC brand, launching into marketplaces, or eyeing international markets.
Start with Contribution, Not ROAS
Many brands begin their scaling strategy with a fixed ROAS target. But that’s the wrong place to start. True growth begins by understanding contribution margin, what’s left after costs like product, fulfilment, returns, and customer service, but before media spend.
You might be hitting 10x ROAS and still losing money.
Contribution margin helps brands answer the more important question: how much can you really afford to spend on acquisition? And once you understand that, you can confidently invest in growth.
The Power of Radical Transparency
One of the biggest missed opportunities in eCommerce brands is siloed financial data. Finance guards the P&L, while marketing and ops fly blind. The solution? Share your numbers.
What’s the risk of sharing your P&L with the team? The upside is huge.
Brands that embed contribution thinking across teams, from marketers to merchandisers to customer service, gain clarity and unlock smarter decision-making.
Marketplaces: A Blessing and a Trap
Marketplaces like Amazon, Debenhams, and even Next offer huge visibility, but they come with complexity.
You’re not just competing with other brands, you’re competing with yourself.
When your product appears on multiple platforms through multiple partners, you risk cannibalisation, inconsistent pricing, and attribution chaos. Brands need to treat each marketplace as its own business unit, with its own contribution analysis and margin model.
The Mirage of International Growth
Platforms like Shopify Markets make it tempting to go global with a click. But that ease is misleading. Behind the scenes are returns from Corsica costing £80, lost packages in customs, and tax issues from shipping into unintended markets.
Just because you can switch on 10 countries doesn’t mean you should.
Thomas outlines a better approach: start small, validate profitability SKU-by-SKU, and build from a strong operational base.
Operational Problems Masquerading as Marketing Challenges
What looks like a creative or media issue often traces back to deeper operational flaws like shipping inefficiencies, unclear cost structures, or underperforming scripts.
Most of the growth problems I see aren’t media problems, they’re margin problems.
By tightening up processes across the board and aligning everyone around contribution, brands create room to scale, not just with confidence, but with control.
Key Signals to Watch For
- High ROAS but declining profit
- Growing return rates with no clear ownership
- Inconsistent margins across channels or markets
- Lack of clarity on acquisition costs post-expansion
Final ThoughtS
Profitability isn’t about trimming spend. It’s about understanding where your money goes, what’s driving value, and what’s quietly eating into your margins.
Brands that build this level of clarity into their DNA will be the ones still standing in 2025 and thriving.