The era of growth at any cost is over. With TikTok ad costs ranging from $6-$8 CPM, Meta averaging $6.59 CPM, and Snapchat hitting highs of $12.84 CPM, combined with Apple’s privacy policies limiting data collection, customer acquisition costs (CAC) continue their relentless climb in an increasingly competitive market.
But here’s the thing: ecommerce profitability isn’t just about cutting costs — it’s about optimizing the entire equation. CAC must be less than customer lifetime value (LTV), while simultaneously improving conversion rates, average order value, and gross margins.
At Bloomreach, we’ve identified the top use cases that drive this balance. Using Loomi AI (our commerce-specific artificial intelligence), we’ve seen brands transform their profitability by focusing on six critical areas. Let’s dive in.
Use Case 1: Reduce Returns To Stop the Profit Drain
Returns are a silent killer of profitability, with an estimated 19.3% of online sales being returned in 2025, totaling $849.9 billion. Beyond lost revenue, you’re hit with restocking fees, shipping costs, and potential product damage. Above all, serial returners cost exponentially more than their purchase value suggests.
To solve this, Loomi AI analyzes purchase and return history to identify patterns before they become problems, essentially predicting which customers are likely to return items and segmenting them accordingly. This allows you to:
- Warn customers buying multiple sizes of the same item (bracketing behavior)
- Suppress marketing campaigns to serial returners
- Provide targeted sizing assistance to reduce unnecessary returns
Cycling retailer Isadore saw its potential return rate drop 29% by implementing these targeted interventions, directly improving its bottom line.
Use Case 2: Optimize Free Shipping Costs Strategically
Customers want free shipping (in fact, 70% have abandoned their online shopping cart as a result of shipping and/or delivery options), but this can be costly for brands if not implemented strategically. While free shipping can be critical for both conversion and retention, the challenge is knowing which customers truly need this incentive versus those who will convert anyway.
Instead of blanket free shipping offers, use contextual personalization to understand customer behavior. Loomi AI can analyze purchase history and browsing patterns to determine:
- Who actually needs free shipping incentives to convert
- The optimal minimum order value for each customer segment
- When to trigger free shipping coupons for maximum impact
Dynamic weblayers can show real-time progress toward free shipping thresholds, naturally increasing average order value while making customers feel guided rather than manipulated. This is especially important given that the average cart abandonment rate sits at 70.22%, with additional shipping costs being the #1 reason for abandonment.
Use Case 3: Reduce Discount Volume and Amount
Blanket discounting hurts profitability, especially when customers would have purchased at full price. On the other hand, failing to discount when needed costs you sales to price-sensitive customers.
To address this, you need to predict purchase likelihood with and without discounts. Loomi AI’s behavioral analysis identifies:
- Price-sensitive customers who genuinely need discount incentives
- Discount-independent shoppers who respond better to value propositions
- Serial discounters who should be excluded from paid advertising
This targeted approach means you’re only offering discounts where they’re truly needed, maximizing both conversion rates and profit margins.
Use Case 4: Drive Repeat Purchases and Loyalty
Acquiring new customers costs significantly more than retaining existing ones, yet many brands still invest disproportionately in acquisition. Smart brands focus on lifetime value optimization, especially considering that the average repeat customer rate in ecommerce is around 28.2%.
You can boost repeat purchases by personalizing loyalty communications based on customer behavior and lifecycle stage. This includes:
- Tier-specific messaging that highlights relevant benefits
- Product recommendations that accelerate loyalty tier advancement
- Automated replenishment flows based on product consumption cycles
Loomi AI analyzes purchase patterns to predict when customers need to reorder consumable products, sending perfectly timed reminders with personalized recommendations.
Use Case 5: Convert More Customers From Existing Traffic
Every visitor represents an acquisition cost. Maximizing conversion rates from existing traffic is often more profitable than driving additional traffic, making this a critical focus area for sustainable growth.
You should deploy intelligent conversion optimization that adapts to customer behavior:
- Social proof banners that create urgency without being pushy
- Intent-driven discount pop-ups that only appear for engaged browsers
- First-visit personalization based on referral source and demographics
- Channel optimization to reach customers via their preferred communication method
These micro-optimizations compound over time. Even a 2% improvement in conversion rate can translate to significant marketing ROI gains.
Use Case 6: Optimize Paid Media Spend
With tracking limitations and increased competition, generic paid media targeting can waste your budget on unlikely converters. Instead, being efficient with your paid media is critical for profitability.
Use predictive audiences and real-time event tracking to improve ad platform performance:
- Send conversion events in real time to help platforms optimize
- Create predictive audiences based on likelihood to convert
- Suppress ads to existing customers, serial returners, and discount-dependent buyers
- Personalize retargeting based on specific behavioral triggers
Music and entertainment retailer HMV used Loomi AI to automatically uncover new customer segmentation opportunities for paid campaigns, leading to a 14% lift in campaign revenue and a 425% increase in landing page views.
The Complete Profitability Formula
These six use cases work together to optimize the complete profitability equation:
- Reduced returns improve gross margins
- Optimized shipping reduces operational costs
- Strategic discounting protects profit margins
- Repeat purchases increase lifetime value
- Higher conversion rates improve marketing efficiency
- Smarter paid media reduces acquisition costs
The result? CAC stays well below LTV while driving sustainable growth.
When implemented together, these strategies create a compound effect that transforms your unit economics. Brands focusing on these fundamentals are building sustainable competitive advantages in an increasingly challenging market.
Transform Your Profitability With Bloomreach
The brands that will thrive in the next phase of ecommerce aren’t just growing fast — they’re growing profitably. By focusing on these six critical use cases, you can optimize every aspect of your customer journey to maximize both growth and margins.
Ready to see these strategies in action with your own data? Schedule a personalized demo to explore how Loomi AI can optimize your specific profitability challenges.
