Your KPIs Are Bullshit (Because No One’s Using the Same Definitions)
£100m Fashion Brand KPI definitions, defined.
At £100m turnover, your biggest problem isn’t your ERP, your planning tool, or your merch team.
It’s that no one in your business is using the same definition for the numbers that matter.
We’ve sat in trade meetings where Net Revenue meant three different things to three different directors. Everyone left thinking they won the argument. No one left with the truth.
Why this happens
Shopify reports use definitions optimised for transactions, not for strategic decisions. Finance redefines metrics to match their statutory needs. Merch tweaks definitions to track product performance. Buying just wants a number that justifies next week’s buy.
No standardisation across systems, no single definition library. Just different flavours of ‘truth’, each suited to its owner’s goals.
And here’s the kicker:
At £100m turnover, these aren’t rounding errors. They’re seven-figure mistakes.
The definitions your business actually needs
Here’s what real fashion brands use when they’re tired of bullshit.
Gross Revenue
Definition: Total value of all confirmed and paid orders placed, including product value, shipping charges, and taxes. Excludes cancelled, pending, and unpaid orders.
Why it matters: If you’re using Shopify’s gross revenue (which includes unapproved finance orders and cancelled carts), your board reports are inflated nonsense.
Net Revenue
Definition: Gross Revenue minus returns, refunds, total discounts, and adjustments.
Why it matters: This is your actual top-line performance. If Finance, Buying, and Merch aren’t using the same net revenue definition, your business decisions are based on guesswork.
COGS (Cost of Goods Sold)
Definition: Direct costs to acquire or produce products sold, including materials, manufacturing, freight to warehouse, and landed costs. Excludes marketing, staff, fulfilment.
Calculation: (Opening Stock + Purchases + Freight/Duties) − Closing Stock
Why it matters: Using Shopify’s partial cost price field? You’re not calculating margin, you’re fantasising.
Discount Breakdown
Discount Code: Customer-applied promotional code reductions at checkout.
Markdowns: Permanent price reductions (seasonal sales, clearance).
Promotions: Temporary campaign-based offers (BOGOF, bundles).
Gesture of Goodwill: Refunds, credits, or discounts given for CS reasons without product return.
Why it matters: Shopify lumps discounts together. You can’t optimise promotional strategy if you can’t see what’s actually working.
Margin Metrics (GP1 – GP4)
Your true margin isn’t just net revenue minus COGS. Here’s what best-in-class brands track:
GP1 (Product Margin): Net Revenue - COGS
GP2 (After Fulfilment): GP1 - Fulfilment Costs (picking, packing, shipping, returns processing)
GP3 (After Payment Processing): GP2 - Payment Processing Fees and Transaction Fees
GP4 (After Direct Marketing): GP3 - Performance Marketing Spend
Why it matters: GP4 is the closest thing to real profit before overheads. Most brands only get to GP1 and wonder why cash is tight.
Stock Metrics
Stock Units: Physical sellable inventory items. Count of all SKUs x quantity available.
Stock Value: Total monetary value of sellable inventory at fully-loaded cost price.
Stock Cover: Days current stock will last at current sales velocity.
Why it matters: Stock cover is life or death for fashion brands. Buying decisions without it are gambling.
Marketing Metrics
Aggregated Performance Marketing Spend: Combined spend across all paid channels plus agency fees.
Aggregated ROAS: Attributed Net Revenue divided by total performance marketing spend.
Why it matters: Blended CAC and ROAS metrics are only useful if you’re including everything you spent.
Returns & Refunds
Cash Flow Recognition: Refunds recognised in the period paid out. Good for cash flow management.
Revenue Recognition: Refunds attributed back to the order date. Good for historical performance analysis.
Rolling 60-Day Refund Rate
Definition: Predictive metric showing expected refund rate based on historical patterns.
Why it matters: Forecasting replenishment without it means you’re ignoring future stock coming back into the business.
Why this all matters
Because without standardised definitions, trade meetings turn into performance art rather than decision-making, your replenishment plans are built on sand with no solid grounding in true stock and return realities, and Finance and Ecom remain forever locked in pointless reconciliations trying to align numbers that were never speaking the same language in the first place.
Implementation guide
Putting these definitions in place isn’t just about writing them down. It’s about embedding them into how your business operates day to day.
That means extracting raw data from Shopify and processing it using these definitions, not relying on Shopify Analytics aggregated figures that were never designed for strategic decision-making.
It means regularly reconciling calculations with finance systems and actual cash flows to ensure accuracy. Every department – from finance to buying to ecommerce – must use these exact definitions.
Consistency isn’t optional.
Accuracy means using fully-loaded cost prices, not Shopify’s partial cost fields. Refunds need both cash flow and revenue recognition methods to give a complete commercial picture. Data should always be viewed in context, with comparisons to previous periods and trends, not isolated numbers.
And the common pitfalls – including cancelled or pending orders in revenue, using aggregated discount figures without a breakdown, mixing refund recognition methods, or ignoring shipping revenue entirely – will undermine everything if ignored.
Implement these definitions properly or keep living in commercial chaos. The choice is yours.
Commerce Thinking’s take
Choose the 10 KPIs that matter most.
Define them properly – finance-led but trade-informed.
Publish them. Embed them. Live by them.
Because at £100m turnover, it’s not your definitions that are bullshit.
It’s your lack of them.
Need help creating definitions that stop your weekly meetings going off the rails? You know where to find us.