Back Market
Back Market operates in a low-margin market: refurbished products have lower prices than new ones, and the marketplace commission (typically 10-15%) on a €500 refurbished iPhone generates lower absolute revenue than a generalist marketplace.
The critical unit economics question for Back Market was not margin per transaction — it was Customer Acquisition Cost. And here the model became interesting.
Back Market built almost entirely on SEO and organic word of mouth in the early years. Average CAC was a fraction of the CAC of any comparable consumer marketplace. This transformed the numbers: an apparently low per-transaction margin became excellent if the customer cost almost nothing to acquire and had high LTV (those who buy refurbished return to buy refurbished).
Back Market's unit economics insight was: in a low-margin market, the only path to profitability runs through the lowest possible CAC, not through margin improvement. Every euro spent on paid acquisition would have eroded the economic structure of the model.
This guided every channel choice for years: invest in SEO (organic results for "refurbished iPhone"), in PR and brand awareness, in community trust — everything that generated demand without direct acquisition cost.
In low unit-margin markets, LTV/CAC is the only metric that matters. A 5% margin with a €2 CAC and €80 LTV is an excellent business. A 30% margin with a €60 CAC is a problem.