The 2026 eCom Trends Report | The Rules Are Changing

This is our sixth Trends Report with 300 owners representing $3.5 billion in combined revenue participating. A huge thank you to members of the eComFuel Community and the Operators Network for participating and promoting.

Something in this report always changes how I think. I’ve spent years side-eyeing heavy paid traffic dependency, convinced it was a margin trap. This year’s data changed my mind. My hope is something in here challenges your thinking, too.

Table of Contents and Section Links

In Part 1, we cover look at where the conventional wisdom in eCom is wrong. Specifically around paid traffic, the margin divergence, Amazon’s decline, the warehouse myth, and AI’s missing ROI.

In Part 2, we look at broader trends around business model shifts, tariffs, financial intelligence, capital extraction, and what’s ahead for 2026.

Part 1: The New Blueprint

The conventional wisdom said to diversify away from paid traffic or it’ll crush your margins. It said Amazon is a growth engine. It said adopt AI, it’s your future edge. And it said if gross margins are rising, business must be good.

On all of these fronts, the conventional wisdom is either outdated or flat wrong.

Paid is Table Stakes. But It Doesn’t Have to Crush Your Margins.

I’ll lead with this one because it’s the finding that changed my own mind.

Paid traffic is a fact of life. 97% of stores now use it, and most can’t run their business without it. But there’s always been a stigma — the single-channel, building-on-a-sandcastle, one-trick-pony narrative. “Free” organic traffic is what the long-term thinkers pursue. Right?

Turns out that’s all garbage. Stores leaning hardest into paid are crushing it — and not just on topline growth, which you’d expect. They’re growing net income 71.7% versus 18.0% for everyone else. Net margins are shockingly higher, not lower.

How is this P&L-defying feat possible?

Winning with paid is about great margins and low overhead – not ROAS.

Being great at paid is less about top-notch ROAS and more about building a business model that supports ads as a major line item. The brands winning at paid don’t have the best ROAS — their average is actually 2.5x, well below the survey-wide 4.0x. What they do have are fat gross margins (63.7%) and very lean overhead (16.6%).

The P&L anatomy tells the story clearly. Self-identified paid traffic experts run COGS at 39.1% of revenue and overhead at 16.6%. Everyone else? 55.1% and 21.7%. That gap, not the ad account, is where the real edge lives.

Like it or not, it’s a paid traffic world now. And the operators with lean, high-margin business models are the ones who get to make money playing in it.

It’s Day 2 At Amazon

The Amazon era is sputtering, at least for U.S. sellers.

Amazon’s share of community revenue has fallen to 20.1% — the same level as when we started tracking in 2017. What makes that number remarkable: more operators sell on Amazon today (63%) than at any point in survey history. Amazon has quietly transitioned from growth engine to supplemental channel.

DTC, meanwhile, is winning on nearly every metric that matters. DTC-primary operators grow revenue 65% faster than Amazon-primary peers (30.2% vs. 18.3%) and carry meaningfully higher gross margins (52.7% vs. 41.9%). The sentiment gap is just as stark: 91% of operators who sell DTC love it. Only 17% feel that way about Amazon, while 39% actively dislike it.

Amazon’s share of sales fell back to 2017 levels

The next generation isn’t being seduced either. Operators with fewer than six years of experience are among the least likely to make Amazon their primary channel. They’re building DTC-first from the start.

Smugness in our tone? We’ll own it. Amazon’s customer obsession is admirable. But years of fee creep and operator indifference have consequences, and brand owners are responding accordingly.

AI is Amazing. But It Isn’t Generating ROI.

We live in astonishing times. You can talk to machines. Build software without writing code. Generate images from a sentence. It’s thrilling and 72% of store owners have jumped in.

So we were surprised when the data came back and said it isn’t translating into more money.

Revenue growth? Virtually identical — 26.7% for AI adopters versus 27.8% for non-adopters. Net margins? A coin flip. Team sizes? Similar. Non-adopters are actually growing profits faster: 55.3% net income growth versus 32.7% for adopters.

The technology is real and improving rapidly and the first quarter of 2026 has seen dramatic advancements. But the time required to stay current on everything happening, let alone learn, adopt, and integrate these tools into real workflows, seems to be negating any financial gains. At least so far.

One surprising finding: this isn’t a young person’s game the way you’d expect. Operators in their 50s adopt AI at higher rates (80%) than those in their 30s (66%). And owners aged 40–55 are more likely to be building with Claude Code than those in their 30s. Perhaps it’s the operators with the most operational complexity who see the clearest use cases.

We believe the edge is coming. But over the last twelve months, it hasn’t shown up.

Fatter Product Margins, Thinner Profits

The gatekeepers of eyeballs are often villainized. Every eCom conference has a panel about rising ad costs eating margins. It’s time to stop solely blaming them as we saw above.

The stampede toward manufacturing — with its higher margin profiles — has resulted in the highest gross margins we’ve ever recorded: 49.5%. And yet, net profit margins have never been lower at 10.6%. That’s a nearly 39-point spread, the widest gap since we started tracking in 2017.

The culprit isn’t advertising. When we control for how much brands spend on paid traffic, profitability stays surprisingly consistent. The real thieves are product economics and overhead. Stores netting 20%+ margins spent 38% less on COGS and 30% less on fixed costs than those below 5% profit margins.

The compounding cost of modern eCommerce — tariff pressures (more below), intensifying foreign competition, and the sheer operational complexity of running a brand in 2025 — is squeezing that spread from the bottom.

One bright spot: the $25–50M revenue tier stands out as a profitability sweet spot, netting 13.8% versus roughly 10% for most other tiers. That tier is concentrated with well-run manufacturers who’ve achieved scale without the complexity tax that seems to hit north of $50M.

Owning a Warehouse Dramatically Slows Growth

For years, the conventional playbook for scaling was buy a warehouse, build a team, stock the shelves, control the operation.

That playbook is showing its age.

Stores with owned warehouses grew revenue at just 3.9% — compared to 33.5% for leasers and 22.2% for those outsourcing fulfillment entirely. Even when we controlled for revenue size ($1M–$10M businesses), the gap held. Warehouse owners carry twice the inventory burden, run the least remote teams, and report the lowest hopefulness for the future of any cohort.

Warehouse owners grow revenue at 4% vs. 22-33% for non-owners

The remote work data reinforces the point. Remote-first teams (75%+ remote) grew net income 51.8% versus 26.9% for in-office teams, while running leaner: 10.5 employees on average versus 30.5, at nearly double the median revenue per employee ($1.25M vs. $583K).

There’s one owned-warehouse edge we can’t measure: business durability. Having your own warehouse with deep SKU selection — especially if you’re a niche leader — is a meaningful moat. But based on everything we can measure, operators who own the least are winning the most.

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Part 2: The Real Landscape

The first half covered where conventional wisdom breaks down. This half covers the broader forces shaping eCommerce right now: the structural shifts, external pressures, and operator realities that form the backdrop for everything above.

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A Massive Shift Toward Manufacturing

The shift toward manufacturing has dramatically accelerated. The share of store owners making their own products jumped nearly 50% over the last few years — from 41% to 58% — and the rise in “proprietary product” as the number one cited competitive advantage tracks right alongside it, climbing from 26% to 35%.

Meanwhile, almost every other business model and competitive edge shrank. Reselling, drop shipping, lowest cost — all contracting. Foreign competition has made it brutal to sell me-too products, and rising ad costs mean you need fatter margins just to stay in the game. Manufacturing your own product addresses both.

Brands manufacturing their own products jumped 50% in the last 3 years.

International stores performed as well or better than their U.S. peers on nearly every metric, despite 74% of respondents being U.S.-based. The U.S. boasts the world’s largest consumer market — and seemingly the competitive pressures to match.

Smaller stores (under $1M) struggled disproportionately, even when controlling for years in business. Economies of scale and rising customer acquisition costs are leaving them at a structural disadvantage.

Brands Absorbed The Majority of Tariff Costs

Businesses absorbed a significant chunk of tariff costs. Among brands that reported seeing their income decline due to tariffs, they only passed along 42% of costs to consumers in price increases — absorbing the remaining 58% as a direct margin hit. 40% of U.S. brands didn’t raise prices at all.

The stated goal of bringing manufacturing back to America is off to a slow start. Of brands that weren’t already manufacturing domestically, only 4% have decided to actively move their supply chains to the U.S.

Brands impacted by tariffs absorbed 58% of the costs by not raising prices

Perhaps the most revealing data point: tariffs ranked as only the fourth biggest struggle for owners, behind margins/rising costs, growth/scaling, and hiring/talent.

The good news? eCom brands will survive tariffs. The bad news? eCommerce is difficult enough that tariffs don’t crack the top three biggest challenges.

Financial Fluency: The Most Underrated Edge in eCom?

Finances and accounting are among the least sexy aspects of running a business. But the cost of not being financially fluent is staggering.

We asked owners to self-rate their financial expertise on a 1-to-5 scale. Those reporting mastery (5/5) have significantly higher net margins, more cash in the bank, faster income growth, and extract capital at higher rates.

The most surprising part: the difference between a self-rated 4/5 and 5/5 isn’t subtle. That fifth star translated to a 37% increase in net margins (9.4% → 12.9%), nearly double the financial runway (48 months → 109 months), and meaningfully faster income growth.

Going from “good” to “great” with financial literacy put 37% more money into owner’s pockets.

This pattern held even when we controlled for business size. It’s not just that larger businesses accumulate more expertise and cash — financial knowledge independently predicts better outcomes at every level.

80% of owners rated themselves below 5/5. Which means 80% stand to see a dramatic payoff from investing more deeply in their financial education.

It’s not just you. Most eCom owners don’t see meaningful financial rewards until mid-seven figures. 53% of owners take a modest salary or nothing at all.

It’s especially hard to extract capital if you’re fast-growing or under $1M. Among companies growing 50%+, only 13% take meaningful dividends — and among sub-$1M fast growers, the number is zero. Both groups are plowing everything into working capital and building the machine.

The data surfaced a sweet spot: salary plus small distributions. That cohort posts the top-tier net income growth in the survey (+45.3%), above-average margins (12.0%), and the highest hopefulness of any group. It turns out that small, consistent distributions don’t hurt growth — and they diversify your wealth, encourage operational discipline, and keep you sane.

Aggressive extraction and rapid growth are mutually exclusive. You can’t fund scaling while pulling big dividends. But making small distributions a habit appears to be a triple win.

The Future: Optimistic, Lean, and Betting on AI

Despite getting hammered by tariffs, navigating a brand new AI landscape, and facing a margin squeeze from every direction — 80% of owners are still optimistic about the future of their businesses. Average hopefulness sits at 7.8 out of 10.

What separates the optimists from the pessimists? Operational leanness. The optimistic cohort runs lower fixed overhead (19% vs. 24% of revenue), carries lighter inventory (11.9% vs. 14.6% of revenue), and is far more likely to lease a warehouse than own one.

The number one investment priority for 2026? AI.

The number one investment priority for 2026? AI and automation, cited by more owners than any other category. Marketing and advertising came in second. Simplifying operations and cutting SKUs ranked third — a clear signal that operators are getting the message about the value of staying lean.

Younger founders and larger stores are both meaningfully more optimistic: fewer battle scars on one end, more resources and resilience on the other. But across the board, this community remains remarkably resilient.

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The 2026 Trends Report is produced by eComFuel, the private community where seven- and eight-figure store owners share what’s actually working — all year long.

The 300 operators who made this report possible are the same ones trading insights daily inside the community. You can learn more and apply here.