Summary
Stephen Brown, Founder of LedgerGurus, and Kelley Birrell, Head of Marketing at LedgerGurus, look back at the ecommerce predictions they made at the start of 2025. They review what actually happened across ecommerce growth, marketing costs, interest rates, inflation, and AI adoption. Each prediction is graded with real data and real-world operator context.
They also unpack the biggest curveballs of the year, including tariffs, de minimis rule changes, TikTok Shop growth, and the limits of new ad channels. Stephen shares where he underestimated risk, what surprised him about consumer spending, and why 2025 felt harder than expected for many brands. The episode helps sellers think more clearly about planning for 2026.
Takeaways
- Ecommerce returned to peak levels as a share of total retail sales.
- Marketing efficiency mattered more than chasing cheaper ads.
- Interest rate cuts did not meaningfully lower ecommerce lending costs.
- Inflation eased but continued to pressure consumer spending.
- Tariffs became the most disruptive force for ecommerce in 2025.
- De minimis rule changes reshaped dropshipping economics fast.
- TikTok Shop showed real growth but limited broad adoption.
- AI meaningfully reduced time and costs across teams.
- Supply chain risks faded compared to late 2024 fears.
- New sales channels added options but not replacements.
What We Cover:
- 00:00 Ecommerce Trends and Predictions for 2025
- 03:27 Marketing Costs and Brand Strategies
- 06:16 Interest Rates, Inflation, and Economic Impact
- 07:15 Business Regulations and Tariffs
- 09:15 The Rise of TikTok Shop
- 11:18 AI’s Role in E-Commerce
- 13:46 Supply Chain Complexities
- 14:31 De Minimis Rule Changes
- 16:00 Emerging Sales and Marketing Avenues
Guest Information
Kelley Birrell is the Marketing Manager at LedgerGurus, an ecommerce accounting firm serving growing online businesses. She built and runs LedgerGurus’ marketing engine, focusing on making complicated ecommerce accounting topics easier to understand so business owners can make better decisions with their numbers.
Work with LedgerGurus
If 2025 exposed weaknesses in your cash flow, inventory, or margins, LedgerGurus can help you fix the numbers behind your growth. Reach out to us at LedgerGurus.
Transcript
Stephen Brown (00:00)
We made predictions around 10 trends in ecommerce at the beginning of 2025. Now it’s time to see how we did. I’m Stephen Brown with LedgerGurus. Today I have with me Kelley Byrell, who runs our marketing, and we are gonna grade our predictions that we made at the beginning of the year. It was also our first episode for this podcast, and so it’ll be good test to see how we do. I wanted to do these predictions, shameless plug. I was inspired by ecommerce fuel.
But my predictions were more grounded in reality because I’m trying to decide how to plan a year. And so as we go about predictions and try and learn from what we saw, I’m hoping when we do the next episode on 2026 predictions, they can be useful for anybody who’s listening and planning their year. Kelley, welcome back to the episode.
Kelley Birrell (00:44)
Thank you very much. Okay, so.
Stephen Brown (00:45)
You’re gonna be
my interrogator, so go ahead and interrogate me on the 10 predictions we made.
Kelley Birrell (00:49)
Okay,
actually I’m really excited about this because I am interested to see how it went. I’ve been reading your newsletter and just paying attention to things this year. So I’m interested to see where this goes. So the first part, first thing that you said was that you expected that ecommerce was going to rebound and even climb back towards its 2020 peaks. So looking back, did it actually do that?
Stephen Brown (01:10)
Yeah, so
So we So, we talked about the ecommerce market, retail sales as a percentage of total sales. And I want to bring this up again. We looked at it the beginning of the year. One of the things you saw was a peak in Q2 of 2020, and then it dived. And then the market climbed, climbed. Right now we only have data through Q2 of 2025.
and it was 16.3%, which was the same number we had in Q2 of 2020. So five years later, the ecommerce retail sales as a percentage of total sales is back. I’ll be curious to see what Q3 and Q4 is, my guess is it’s growing. So we are back to where ecommerce is ahead of retail, is continuing to grow, and it’s at an all-time high. Now, why does this matter? Some other data points that I was reading about Black Friday.
Ecommerce sales grew faster than retail sales. That’s where I want to ask you a question, Kelley. As a Moms, tend to be consumers. How’s your holiday shopping? Have you got most of it done?
Kelley Birrell (02:07)
⁓ Almost all of it, yeah.
Stephen Brown (02:09)
How much of it did you do online versus in store?
Kelley Birrell (02:12)
about 99 % of it.
Stephen Brown (02:14)
Yeah, and I’ve done 100 % of mine so far online. I think this is just, this is a tailwind for the industry. Even if retail is soft, ecommerce is still growing as a percentage of retail sales just because it’s easy, right?
Kelley Birrell (02:28)
Yes, exactly. That’s exactly it. It’s so much easier to just go to my computer and pull up a ⁓ site and just get every bit of shopping out of the way. I don’t have to traipse all over the stores. I don’t have to go to multiple stores. It’s easy.
Stephen Brown (02:41)
Yeah.
Yeah. And so there’s a lot of tailwinds and at 16 % there’s a huge opportunity for market growth. So why does this matter? Like regardless of the economy, I think there’s tailwinds for ecommerce. There’s the convenience fee. There’s the ability to find exactly what you want. You know, I do like a couple of retail experiences. I like Costco. I like Best Buy. I like the Lego store, like the Apple store, but for the most part I don’t. It’s a pain in the butt.
And so I think, I mean, this was a softball, but I’m gonna give myself an A. I think this year has proved that ecommerce is continuing to have a lot of strength. And I would say, you know, looking ahead, it’s gonna continue to do so.
Kelley Birrell (03:22)
I mean, can’t imagine why it wouldn’t because the things that make it so good are not going to go away.
Stephen Brown (03:27)
Yep. All right, let’s go to the next prediction.
Kelley Birrell (03:29)
Awesome. Okay, so you said that you expected that marketing was going to get more expensive and that brands were going to need to get more hands-on. So I have a couple of different ways that we could ask this question. Did it end up being as big of a challenge as we thought leading into 2025? And where did you see brands, if it was a challenge, where did you see brands struggling the most with rising costs this year?
Stephen Brown (03:52)
So yeah, this prediction was around marketing efficiency. As I’ve done some research, I don’t feel like costs have gone up significantly like we’ve seen in some years, costs of advertising, but they definitely haven’t gone down. Again, this was another softball. I think the one thing we can predict, although I am gonna make an interesting prediction when we get into the next episode on 2026, but I think for the most part, the cost of marketing,
is continuing to put a lot of pressure. I’ve seen in the data, I haven’t seen anybody’s costs go down significantly. No, this was a softball. I’m gonna give myself an A.
Kelley Birrell (04:26)
Okay, awesome. Okay, so the next one, This was about interest rates and inflation. You predicted that the rates were dropping, but the inflation would still stay really sticky. So did it actually play out the way that you expected it this year?
Stephen Brown (04:38)
Yeah, think I’m going to give myself another A. We did see rates come down, but it’s an A with an asterisk. We saw the Federal Reserve reduce interest rates, but the cuts, there were fewer cuts than predicted, and they came in the latter part of the year. We just had one here in December. Afflation has been really sticky. It’s sticking around that high 2%.
Now here’s some interesting things about interest rates and why I feel like this is important to watch. Lending is a really important part of a consumer products business because of the cash cycle around buying inventory. Unfortunately, the interest rates that are cut at the Federal Reserve don’t always trickle down to like a lot of loans. What I’ve seen is if you had a loan that was tied to the prime rate, the prime rate is really closely tied to the federal funds.
rate, you probably saw your cost of lending go down. A lot of the stuff we see in ecommerce is kind of specialized lending. I did not see those costs going down. So even though we’ve seen interest rates going down, these specialized lenders, I have not seen them reduce their rates. And inflation, you know, I guess compared to what we were a couple years ago, this feels pretty good, but it’s still, you know,
We had almost two decades of inflation below 2 % and in some cases much lower. So there’s still a lot of pressure on the consumer and I think we see pockets of inflation. So I feel bad. I think I got it right. I’ll give me maybe an A minus or B. ⁓ Pretty accurate on this one. Unfortunately, I don’t think the outcome for ecommerce businesses was great from this prediction, but I do feel like I had an accurate.
pulse on this.
Kelley Birrell (06:16)
Okay, that makes sense. Okay, The fourth one was on business friendly regulations and the environment. So was there more breathing room for businesses or did it get any better?
Stephen Brown (06:27)
So business friendly Trump administration. I think this is a mixed bag. I think for ecommerce, I would say it’s a C at best. ⁓ I think for overall business, let me tell you where I think it’s good. And then I think this will lead into the next prediction. We have seen a lot of deregulation at the beginning of the year. There was talk about ⁓ beneficial ownership information reporting that went away. The big beautiful bill.
very controversial, but there’s a lot of provisions in there that are really good for business. There’s gonna be greater depreciation, a lot of incentives to buying equipment, to making investments. Doge was interesting. I think there’s a mixed bag there. We had the government shut down. I don’t think that was great, it shut down SBA loans. So overall, I think the new administration is
business friendly, but I think when you look at ecommerce, you can’t ignore tariffs, which is one of our projections. So I’m gonna give myself a C as it relates to ecommerce. I think there are some things to be optimistic about, but overall I think there was a lot of headwinds from the economic policy of the administration.
Kelley Birrell (07:33)
Well, that is actually the very next thing is talking about tariffs and what that did. So
Tell us a little bit about where that went and also what smart brands did early that helped them stay ahead of these changes.
Stephen Brown (07:40)
Okay.
I’ll give myself an A. Yes, there was tariffs. I’d probably give myself a C I was blown away at the magnitude of what they ended up being. I’m looking at my notes from the beginning the episode. There seemed to be a lot of talk around Mexico and Canada. There was a lot around drugs and fentanyl. What we didn’t expect was the nuclear bomb of tariffs that we saw in April and the back and forth and the ramp up with China.
Kelley Birrell (07:55)
Yes.
Stephen Brown (08:13)
and the EU. I think this is, you if there was one theme of 2025 for ecommerce, say it was tariffs. If you were lucky enough to be manufacturing in the US and we’re having success, you’re probably having, might be having more success than ever because a lot of cost differentials have gone away. But boy, that’s been devastating. I don’t have easy answers to your other question. I think price increases,
have been one thing you can do, but that comes at its own challenges. And I don’t, I would argue that the full impact of haven’t been felt this year because there was delays in them rolling out, there was changes. And to be honest, if you think about the time it takes to buy inventory and then sell that inventory, I really only feel like about now that we’re moving into fully tariffed inventory. So 2026.
We’ll probably see a year of.
Everybody’s experiencing the tariffs in their totality and I have some predictions about the implications of that in the next episode.
Kelley Birrell (09:15)
Yeah, I’m listening. I’m interested to hear that. Okay, so this is a totally different ⁓ topic. The TikTok shop. You said that there was a huge potential, but at the moment we were looking at a possible US ban. ⁓ How did things unfold and how did, with all this uncertainty, did you see brands diversifying?
Stephen Brown (09:34)
I think depending on who you talk to, this could be an A. I think overall in the industry, this is like a B. Let me tell you why. Recently saw that TikTok had now approached the size of eBay. So there’s been huge growth. They’ve They’ve been avoiding the shutdown. It doesn’t look like that’s happening. There’s a lot of maneuvering. And I think you’re seeing growth there.
Now, why would I not give it an A? I know there’s some brands that are killing it. I know there’s some people that are huge on social commerce. I really think what TikTok Shop has done is very clever around their in product checkout or in-app checkout. I really like the model. I haven’t seen like widespread adoption. I still think we’re early in the growth curve and I’ll be really curious to see how it grows. So in terms of TikTok Shop having success,
considering that they were up against a ban. I think they’re proving success and it’s something brands should be considering. There’s a lot of nuances. Go back and listen to the episode I had with Michelle Barnum-Smith. She had a lot of really good insights there. I haven’t seen widespread adoption yet, but I still think it’s an emerging channel. And I think the realities of what it’s going to be for everybody are…
yet to be determined. And my hope is there’s some things about TikTok Shop that I really like. I hope that gets, we see that more into other social commerce elements, whether it’s YouTube or Meta, but they both have work to do.
Kelley Birrell (11:04)
Yeah, definitely. Okay, so AI. You said that AI would make things and business easier, cheaper, and more helpful. Did it end up being the game changer that you expected it to be?
Stephen Brown (11:18)
I’d say an A for that. I also think AI has evolved in ways I wasn’t thinking about. I was thinking it mostly from a cost efficiency. I’ll tell you from real world experience with the brand I co-own, Sole Toscana, Preston’s on. He’s going to actually do the 2026 predictions episode with me. He has been able to.
cut costs by using AI. Like, NanoBanana is amazing for imagery. Like, it is an incredible tool. Obviously, you got ChatGPT, got Gemini, you got Claude. I think in terms of creative and being able to do things, iterate really quickly, generate some really cool creative, I mean, I think it’s an A. The thing that I wasn’t expecting, and I’m going to talk about this in the 2026 predictions, is
I’m really excited about AI Commerce. That really wasn’t on the radar at the beginning of the year, but we’ve got in-product checkout that is rolling out with Shopify and ChatGPT. I think it’s only a matter time before we get ad channels. I don’t want to get into too many details, but I have a lot of thoughts on this. I think AI, for those that have leaned in,
has given a lot of positive outcomes. I mean, You’re in marketing, tell me, like, are you using more or less AI at the beginning of the, right now versus the beginning of the year?
Kelley Birrell (12:33)
⁓
exponentially more. I use it…
Stephen Brown (12:36)
and has
it cut down on the time to do things.
Kelley Birrell (12:39)
Oh, yes, definitely. I think back to at the beginning of the year and the things that I was doing and how, oh, just, most of what I use it for is writing, of course. And I just use it constantly for writing now. Whereas before I was still trying to puzzle it out and figure it out. And no, I literally use it all day every day and it makes such a difference. And it has sped up all of the processes and made the result that much better.
Stephen Brown (13:04)
Even the software we’re using here, Riverside, we fell in love with it because you know, the way it edits and does the transcriptions, transcriptions are really good. It has the ability to automatically take out ums and pauses and stuff. And it’s just, I know, I still think we’re early in the curve, but I think if an ecommerce business has leveraged, has leaned into AI tools, I don’t see how they haven’t had some success. And I think…
We’re only at the beginning of the journey here.
Kelley Birrell (13:33)
Yeah, definitely. I’m excited to see where it goes, because I’m already blown away by what it’s done. Okay, next section. ⁓ The supply chain complexities. You were saying that there were potential port strikes, global route issues. ⁓ Tell me about how that ended up turning out.
Stephen Brown (13:46)
I’m gonna give myself, I’m gonna say a C, but I’m a happy C. It’s hard to believe it, but this time last year we were dealing with an East Coast port strike. There was the issues in the Red Sea with the Houthi rebels targeting ships. The strike ended up getting resolved. seems like Red Sea traffic is…
has improved. So I’m glad to say I don’t think this hasn’t seemed to have been an issue. I thought it might be. I was worried about it, but it ended up being not so far. So knock on wood. I’m glad to be wrong on that one.
Kelley Birrell (14:21)
Yeah, really some things it’s good. Okay. So de minimis rule changes. ⁓ How has, how has this been hitting the drop shippers and other brands?
Stephen Brown (14:31)
I’m mostly sad to be right. I don’t know. I’m mixed feeling to be right. I think I got an A. The wind down of this came a lot faster than I thought. This was baked into, I want to say the big, beautiful bill, but there was momentum going in to 2025 from the Biden administration. Everybody knew that Chinese sellers are abusing the de minimis rule. And I think this is mostly good.
because you had foreign sellers, particularly Chinese sellers, that were known to circumvent regulations using this loophole. And so this has gone away. I think it’s hurt anybody who’s a drop shipper, an international drop shipper. But I think for the industry as a whole, it’s a good thing.
because it equalizes the playing field, it’s gonna require foreign sellers who are using this loophole to play by the rules. It does, you know, for the consumer, is it good or bad? I think if you’re talking about low cost goods, it’s bad. You had all the team who and Shein were really built on top of this. You could sell goods at cheaper because you weren’t having to pay duties.
So, I have a mixed feeling about being right on this. I would say A for actually, and I think long-term this is probably a good thing for the market.
Kelley Birrell (15:45)
Yeah,
yeah, I think you’re probably right. Okay, last one. We were talking about new sales and marketing avenues like Applovin and streaming TV ads and new platforms. Tell me about what you’ve seen with that.
Stephen Brown (16:00)
Yeah, I mean…
Kelley Birrell (16:02)
I guess the main question is did they live up to the hype?
Stephen Brown (16:04)
Well, Tiktok Shop was one of these. I had a separate TikTok Shop prediction. I think we’ve seen a lot of growth there. AppLovin, I’ve heard mixed things. AppLovin opened up. They were somewhat limited. I’ve heard mixed feedback around AppLovin. I guess I would say a B or C. I do see…
more opportunities. I’ve seen some customers that are having success on fare, but nothing is replacing like Meta or Amazon in terms of advertising or sales channels. Like, we’ve still, none of these things.
are like on a runaway velocity. You’re always going to find that brand who’s having massive success on some new channel. But I think it’s really hard. I mean, still feel like in Amazon, let me talk about Amazon, just kind of take a tangent like, Amazon continues to be crushing.
They keep adding more fees, more, you know, it’s just painful, but they’re the biggest marketplace. So it’s kind of like, well, do I, do I sell on there or not? Meta, you know, Meta has been interesting this year. I think you’ve seen some changes that, and it’s still like just a really good discovery platform because it knows a lot about us. But none of these.
I’ve yet to see somebody who is doing the majority of their cells on any of these channels. So I give it myself like a C. Like I think they are good emerging channels. There’s going to be people that are having massive success. But as an industry, I’m not bumping into anybody that has, you know, been able to redistribute a significant amount of spending. We did have an episode on,
marketing spend two episodes ago and with DashFi, Kurt from DashFi, he did talk about that they’re seeing the spending on Facebook and Google go down, but it wasn’t like significantly down. So we’re seeing some diversification, but it’s still very much, I think for ecommerce Meta is still such a huge channel for advertising and Amazon is a huge channel for selling on.
I haven’t seen a lot to break up that monopoly of that. And there’s some goodness and there’s some badness to that. So, it is an interesting landscape right now. I think it is good to see these new platforms put some pressure on the old ones that can abuse their power. But I’ve yet to see anybody really crack the empire, so to speak.
Kelley Birrell (18:29)
Yeah, that makes sense. So they’re kind of sticking with the old stuff. It’s tried and true. Experimenting a little bit with the new stuff. Yeah, that makes sense. Well, that is all of our predictions. I think you did pretty well overall, Stephen.
Stephen Brown (18:35)
Yeah, I think that’s fair.
You know, it was, let me kind of wrap up, like, why did I make the predictions? And let me talk about kind of teaser for the next episode. I want to talk about what brands should be thinking about as they’re planning their year. You know, a lot of people are either wrapping up their plans or in the middle of their plans, or maybe they’re going to start their plans in January because January tends to be a slower month. So I’m trying not to stretch too hard with some crazy
predictions, I am trying to think about what are the things that I should be thinking about from a financial perspective. As I’m going about planning my business So as I look at these, felt like a lot of them felt like softballs. But at the same time, it’s like these are the things that I was thinking about going into 2025. I think that’s pretty good.
I’m trying to think, what did I miss this year?
I mean, I think the biggest miss I had was underestimating the scope of of tarrifs
Kelley Birrell (19:36)
Who could have known that? That thing exploded.
Stephen Brown (19:39)
Clearly, yeah, I mean.
That was probably my biggest miss was, and I think everybody knew we were gonna get more tariffs, but I feel like the scope, the magnitude of them was just mind blowing and it’s still just a big suck fest. I’d say the other surprise I have, this has been an interesting year. I was really.
economically excited about this year because the Trump administration, you know, they tend to be business friendly. There’s been a lot of turmoil, which, you know, love them or hate them. The guys, he’s a roller coaster. I’m a little surprised at how much economic turmoil we’ve had with that administration between, the tariffs, all the government you’ve had, you know, you had the Doge, you had the government shutdowns.
⁓
There are some interesting things with the big beautiful bill that I think could be stimulatory. I think you could argue. I am concerned long term around some of the policies and their impacts to the US economy, but I think in the short term that’ll be stimulatory. So, it’s been a real roller coaster of a year. And one of my big surprises coming, you know, we’re recording this after Black Friday, Cyber Monday.
Never doubt the American consumer. The consumers are still showing up. I read a really great article, was in one of our recent newsletters, talking about the cranky consumer. Like, everybody’s feeling squeezed, they’re feeling stressed, but people are still spending. And so that has been helpful for ecommerce, but it’s been a hard year.
Kelley Birrell (20:53)
Yeah.
Stephen Brown (21:15)
And if you’re listening to this and you’re in ecommerce and you haven’t had a hard year, just be grateful
I think we were just experiencing a lot of challenges, but I go back to that original prediction, right? There’s a lot of opportunity for ecommerce. That’s a long-term macro tailwind.
And so if you can navigate all the craziness, the tariffs, the de minimis changes, the fees, know, never ending fees from Amazon, I still think there’s a good opportunity.
Next episode, I’ll talk about my predictions for 2026 and why a seller should think about those as they’re planning out or finalizing their plans for the next year.
Kelley Birrell (21:56)
Well, I’ll tell you, I’m excited to listen to the next one.
Stephen Brown (21:58)
Yeah, I’m excited to have the conversation. And hopefully these predictions are helpful for anybody that’s listening. If you think I’m smoke & weed, send me a comment wherever you see this content. We’d love your feedback. But if you made it through 2025, congratulations. It’s been a really hard year. And hope that you have a good end of year and are able to take a break in January. Come back stronger than ever.
So stay tuned for the next episode. We’re going to get into those predictions. For now, thanks for joining us. Until the next time.
Kelley Birrell (22:29)
Thanks, Stephen.