What I like about Michael's approach is that it brings together best practice from the worlds of online marketing and offline retailing.
It is all too easy for eCommerce startups to think purely in Internet terms: traffic, conversion, CPO by channel. Many -- if not most -- of these companies are run by young entrepreneurs without any traditional retail experience. That is (mostly) to their advantage, as they try to disrupt traditional retail. But that doesn't mean they can't learn from the highly optimised, analytical world of old retail.
That is why Michael preaches concepts like 'Lost Profit per Order' and 'Return on Inventory' as being key to eCommerce success. Read the article for more, including some basic rules to follow to make sure your custom KPIs are really useful.