Is it Harder for eCommerce to Be Profitable in 2025?

The eCommerce landscape is evolving rapidly, and in 2025, businesses are facing a more complex and competitive environment than ever before. While the industry continues to grow in terms of total sales and user adoption, the path to profitability has become increasingly challenging for many merchants. Rising costs, smarter consumers, and shifting digital strategies are reshaping what it means to run a successful and profitable online shop.

Rising Costs Across the Board

One of the most significant barriers to profitability in 2025 is the increase in operating costs across virtually every category.

Advertising Costs

Digital advertising has become more expensive, with platforms like Meta (Facebook/Instagram), Google, and TikTok charging higher rates due to increased demand and limited ad inventory.

Customer acquisition cost (CAC) has risen notably, making it harder for businesses to maintain healthy profit margins. Businesses must now invest more to reach the same number of potential customers they did just a year or two ago.

Fulfilment and Shipping

While global supply chains have largely stabilised since the disruptions of the COVID-19 pandemic, fulfilment and shipping remain costly.

Consumers expect fast, often free delivery, which puts additional pressure on sellers to absorb or subsidise these expenses. This is especially difficult for smaller retailers who lack the scale to negotiate better shipping rates or manage in-house logistics.

Platform and Service Fees

Whether selling through marketplaces like Amazon or using SaaS platforms like Shopify, eCommerce businesses are seeing increased fees. Marketplace commissions, payment processing costs, and the growing reliance on third-party apps all contribute to the financial burden. Each of these fees chips away at margins and makes it more difficult to turn a profit.

Smarter Shoppers, Lower Conversion Rates

Consumers in 2025 are savvier than ever. With access to a wealth of information, comparison tools, and AI-powered shopping assistants, shoppers can make more informed decisions. This reduces the likelihood of impulse purchases and increases the time and effort needed to convert leads into customers.

Buyers are also more value-conscious. With inflation and economic uncertainty still impacting many households, customers are prioritising deals, reviews, and social proof. Brands must work harder to earn trust and attention, often through discounts, loyalty programmes, or free trials—each of which adds cost or reduces revenue per sale.

The Decline of Traditional Marketing ROI

Another challenge is the declining return on investment from traditional digital marketing tactics.

Privacy Changes

Privacy regulations and platform updates have made it harder to track user behaviour and retarget effectively. Apple’s iOS privacy updates and Google’s plan to phase out third-party cookies mean that marketers can no longer rely on granular tracking to optimise their ad spend. This has driven up costs while reducing performance for many campaigns.

Email and SMS Saturation

Although email and SMS remain valuable tools, their effectiveness is diminishing due to saturation. Consumers are overwhelmed with marketing messages, and open and click-through rates are declining. The once-reliable channels now require more sophisticated segmentation and personalisation to remain effective.

Bright Spots: Strategies That Still Work

Despite these challenges, many eCommerce businesses are still thriving by shifting their focus and adapting to the new landscape.

Retention Over Acquisition

One of the most effective strategies in 2025 is prioritising customer retention over constant acquisition. Brands that focus on increasing the lifetime value (LTV) of their customers through loyalty programmes, subscriptions, and excellent post-purchase experiences are better positioned to stay profitable.

Retention marketing is more cost-effective and allows businesses to build a stable, predictable revenue stream. It’s not just about making the sale—it’s about creating long-term relationships.

Emphasis on Owned Channels

As reliance on paid advertising becomes less sustainable, businesses are investing more in owned marketing channels. Content marketing, SEO, and community building are proving to be effective alternatives. For example, brands are growing communities on platforms like Discord or private Facebook Groups to engage with loyal customers and create organic brand advocates.

These channels offer higher ROI in the long run and provide more control over customer interactions.

Focus on Niche Markets

Niche brands catering to specific audiences often see higher conversion rates and stronger customer loyalty. Whether it’s eco-conscious consumers, pet owners, hobbyists, or other targeted groups, niche eCommerce allows brands to stand out in a crowded marketplace.

These businesses can often charge premium prices and face less competition, making profitability more achievable even with higher acquisition costs.

A Tougher but Not Impossible Landscape

Yes, eCommerce profitability is harder to achieve in 2025, but it is far from impossible. The businesses that will thrive are those that adapt to the changing dynamics of the market. By reducing dependence on expensive advertising, focusing on customer loyalty, building owned media channels, and finding a niche, eCommerce brands can not only survive but succeed in this new era.

Profitability now requires a smarter, more strategic approach than in years past. The playbook has changed—and those who evolve with it will be the ones who lead the way forward.

Struggling to make your eCommerce Marketing profitable?

Book a call with a growth expert and we'll be able to help.