What is a good CAC for ecommerce?

It depends entirely on your average order value and customer lifetime value. A CAC of $50 is excellent if your average customer spends $500 over their lifetime, but disastrous if they only buy once for $30. Focus on the LTV:CAC ratio rather than an absolute CAC number.

Should I include all costs in CAC or just advertising?

Include all costs directly related to acquiring customers: advertising spend, marketing team salaries, agency fees, software tools, content production, and any promotions or discounts used to attract first-time buyers. Excluding costs gives you an artificially low CAC that masks the true cost of growth.

How do I reduce CAC without cutting marketing spend?

Improve your conversion rate so more visitors become customers from the same spend. Optimise ad targeting to reach higher-intent audiences. Build organic traffic through SEO and content marketing. Launch referral programmes. Improve your website speed and checkout process. Each of these makes your existing spend work harder.

eCommerce IntelligenceIntermediate4 min read

What Is Customer Acquisition Cost in eCommerce?

Customer acquisition cost (CAC) measures how much you spend to gain each new customer. Learn how to calculate, benchmark, and reduce your ecommerce CAC.

Key Takeaways

CAC is calculated by dividing total marketing and sales spend by the number of new customers acquired in that period.
A sustainable ecommerce business needs a CAC that is significantly lower than customer lifetime value — ideally a 3:1 LTV to CAC ratio.
Rising digital advertising costs make CAC optimization increasingly critical for profitability.

Calculating CAC

Divide your total marketing and sales expenditure by the number of new customers acquired during the same period. Include advertising spend, agency fees, marketing team salaries, tools, and content production costs. If you spent $10,000 on marketing in January and acquired 200 new customers, your CAC is $50. Calculate CAC by channel — paid search, social, email, organic — to understand which channels deliver customers most efficiently.

Why CAC matters

CAC determines whether your growth is profitable or simply buying revenue at a loss. If your average order value is $30 and your CAC is $40, you lose money on every new customer unless they return for repeat purchases. The critical relationship is between CAC and customer lifetime value. A healthy ecommerce business maintains an LTV-to-CAC ratio of at least 3:1, meaning each customer generates three times what it cost to acquire them.

CAC trends in African ecommerce

African ecommerce faces unique CAC dynamics. Digital advertising costs on Facebook and Google are lower than in Western markets, but conversion rates are also lower due to trust barriers and payment friction. Platforms like Jumia invest heavily in customer acquisition, subsidising delivery and offering cash-on-delivery to reduce purchase hesitation. Smart African sellers reduce CAC by leveraging WhatsApp marketing, referral programmes, and community-based selling where trust is pre-established.

Strategies to reduce CAC

Improve conversion rates on existing traffic through better landing pages and checkout flows. Invest in organic channels — SEO and content — that acquire customers without per-click costs. Build referral programmes where existing customers bring new ones at minimal cost. Retarget website visitors who did not purchase. Focus paid spend on high-intent keywords and lookalike audiences. Every percentage point improvement in conversion rate directly reduces your effective CAC.

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