In the ever-evolving world of ecommerce, keeping track of your business's performance is essential.
By understanding the data behind your sales and customer behavior, you can learn more about your audience, improve the customer experience, and find the best way to run your business.
Does it seem complicated and filled with unfamiliar terms, while you just want to know the exact percentage of sales and returning customers?
That's why we've put together a comprehensive guide to the 9 ecommerce metrics to track, starting with the basics, along with supporting statistics and examples that you can use to improve these numbers.
So, if you're ready to take your ecommerce game to the next level, let's dive into the world of metrics!
In most cases, keeping track of dozens of indicators is pointless if they don't significantly affect your ecommerce business's bottom line.
So instead, we suggest narrowing down the ecommerce metrics to track to the few that have the greatest impact on your business as a whole and using those as your KPIs.
Metrics can be described as any objective, standardized way to evaluate the success of a website.
The percentage of visitors who actually make a purchase, the rate of abandoned shopping carts, and the sources those visitors use are all examples of valuable ecommerce data.
KPI stands for a key performance indicator. While it's essential to keep an eye on all metrics, KPIs are where your focus should be if you want to see progress.
The difference between metrics and key performance indicators (KPIs) is that metrics quantify processes, while KPIs evaluate their efficacy.
Even though there are a lot of ecommerce metrics to track, we've put together a list of ecommerce KPIs that all online stores should follow.
Just keep your business's goals in mind as you read, and you'll find some key performance indicators (KPIs) that would be useful to measure.
One of the most important ecommerce metrics to track is the sales conversion rate.
It represents the total number of people who visit your online store and then buy something.
Obviously, you want the conversion rate to be as high as possible.
In this case, you can achieve a 1% conversion rate if, this week, 1,000 people visited your shop but only 10 of them bought something.
Still, CVRRV varies across ecommerce sectors.
For example, in November 2022, the average conversion rate across ecommerce businesses was 2.1%, up 0.8% points from the previous month but down 0.28% points from the prior year.
Conversion rates vary widely from product to product and market to market, so you'll need to do some digging to find a good benchmark for your online shop's performance.
Currently, health and wellness products have the best ecommerce conversion rates, at 4.2%. Arts and crafts come second at 4.07%, followed by kitchen and household appliances at 3%.
When it comes to ecommerce conversion growth rates, only products in the pet care and baby and child categories have registered rising conversion rates.
To sum up, the benchmark you choose for your ecommerce conversion rate depends on your industry, market, and the device your target audience prefers to use.
For example, according to Q2 2022 statistics, the average conversion rate for ecommerce shoppers on their mobile phones in the US is 2%, while conversion rates for desktops and tablets are higher at 3%.
In contrast, consumers in the United Kingdom using mobile phones and tablets to buy online generate a conversion rate of 4%.
In comparison, those using desktop computers have a conversion rate of 5%.
Some things you can do to increase your conversion rate are:
You should maintain or even improve your conversion rate over time.
Remember that considerable decreases in traffic could be a sign that you need to double-check that everything is fine with your website.
One goal of your online shop should be to maximize customer spending.
So, the average cost of a purchase in your shop is your average order value.
AOV = Total Revenue / Total Number of Orders
Keeping tabs on your AOV will help you establish goals and determine what changes to make so that customers will spend more money with each transaction they make.
For example, if your average purchase value is $55 and you want to make $15,000 in sales this month, you'll need to attract at least 272 buyers.
Here are a few strategies for improving your AOV:
To establish how your AOV evolves, you can and should measure it over time.
It's an essential measurement to understand because it relates to marketing effectiveness.
Your average order value (AOV) can increase if you sell add-ons, offer loyalty programs, or take care of other, more basic business model issues like pricing, product quality, etc.
Customer lifetime value (CLV or CLTV) is the total income you can anticipate from a single customer throughout their relationship with your business.
This number will differ depending on the business and the product.
For example, suppose the typical customer stays for three years. In that case, the customer lifetime value of a $25/month SaaS product could be as low as $900.
CLV = Average Purchase Value x Number of Purchases Per Year x Average Duration of Customer Relationship (in Years).
Understanding how much a customer is worth to your company allows you to determine how much you can spend on customer acquisition while still making a profit.
It can also assist you in determining which products are most valuable to your bottom line—for example, which products with a higher price point are popular and how you can change your strategy to get more people to purchase them.
You can increase your online store's CLV by increasing your average order value and nurturing loyalty among your current customers, so they become regular customers.
Also, the CLV metric depicts the company's long-term financial sustainability.
A high CLV shows a good fit between the product and the market, brand loyalty, and recurring revenue from returning consumers.
If you want your business to expand steadily, this is a good ecommerce metric to track and optimize customer lifetime value.
Among the most important ecommerce metrics to track is the customer acquisition cost.
Identifying your CAC will give you a good idea of how much it typically costs to bring in a new client.
CAC = Marketing Expenses / Number of New Customers
Remember that everything from advertising and sales to employee salaries and website maintenance is factored into your CAC, which you should track for every customer individually.
For example, if your monthly advertising budget is $2,000, and you spend that money to acquire 200 new clients, your CAC is $20.
You should keep an eye on this metric to ensure it stays within your CLV.
In addition, if your CLV is $1,000 and your average order value is $950, your CAC is eating away at your profits. As a result, you should examine your customer acquisition plan to optimize efficiency.
To lower your CAC, you can try the following tactics:
Many online stores, for example, offer "first month free" subscriptions or special deals to attract new customers.
Even though this cuts margins in the short term, the long-term increase in customer value can lead to a very high ROI.
When a person starts an online purchase but doesn't finish it, it results in "abandoned shopping carts."
The reality is that some customers will choose to refrain from buying from you even if your conversion rate is extremely high and your goods are in great demand.
While this situation is not favorable, it's also reasonably expected.
Remember that the rate at which customers abandon their shopping carts is a crucial ecommerce metric to track and an indicator of checkout efficacy that you should monitor closely.
Shopping Cart Abandonment Rate = (# of Completed Purchases / # of Shopping Carts Created) x 100
Depending on the access device used by the customer, the average conversion rate is between 69.75% and 85.65%.
That means that about 7 out of 10 shoppers will leave the website without making a purchase.
Additionally, checkout abandonment is another similar important metric that shows how many visitors leave your site without completing a transaction after starting it.
Even though shopping cart abandonment and checkout abandonment are similar, you should track them separately to determine if the checkout process is why shoppers are unhappy.
Even if you are satisfied with your CAR numbers, you should do everything possible to improve them. For example:
Even in the age of social media, email marketing is still one of the most important tools for ecommerce. It is beneficial for remarketing and getting people to buy from you again.
Similar to website traffic, the goal is to increase the number of your email subscribers, even if they don't make an immediate purchase.
Visitors to your website may be interested in your products and services, but people who sign up for your newsletter care about your business and its future.
They are, therefore, more likely to convert into paying customers in the immediate future.
Offering something of value in exchange for your audience's email addresses and contact information is one way to encourage them to subscribe to your emails.
On the other hand, the rate of unsubscribes is just as crucial as the rate of new subscribers.
If many people are dropping off your email list, it's time to rethink your strategy.
Remember that unsubscribers will always exist, but keeping them to a minimum is essential. Aiming for less than 0.5% is ideal.
It's essential to ensure that people know that your online store or website exists, even though this isn't a guarantee, to increase your chances of making more sales.
Session data for your online store can be broken down by referral source, which gives you information about the number of visitors and how they use your site.
Some of the most prevalent ways in which people find their way to your website are:
By analyzing these numbers, you can determine which promotional channels bring in the most revenue for your business and which could use some work.
Depending on which channel needs a bit more work, you can:
Net profit is frequently overlooked when discussing ecommerce performance metrics. Still, it is a crucial indicator of the general health of your ecommerce store.
Knowing how much money is coming in will inform you how much you can invest in advertising, customer service, and expansion.
Net profit = Total revenue – Total expenses
Similarly, having a healthy net profit margin is a key ecommerce KPI for large ecommerce businesses.
Even though it may not directly affect the business's survival, it is an essential metric for your marketing and sales performance checks.
Don't forget how shipping, special deals, discounts, low-margin product lines, and advertising bids affect this number.
All of these tactics have the potential to increase conversion rates.
Still, they may also harm your bottom line, so keep an eye on your net profit and profit margin if you decide to implement any of them.
Setting prices can be challenging even for the savviest and most educated online merchants. When running a business, how do you ensure that your rates are high enough to generate a profit while remaining competitive enough to encourage repeat business from your current customers?
When deciding on a price, it's essential to consider hidden variables, such as those associated with competition, customer expectations, perceived value, and product demand.
But your cost of goods sold (COGS) is the most important thing to consider when setting prices for your products or services.
It estimates the direct expenses of producing your products, also known as the "cost of sales."
It's important to remember that the results of calculating COGS will depend on the accounting system you use.
Here's a quick rundown of what's frequently included — and not included — in the cost of goods for a clothing manufacturer and retailer:
✅Fabric, labels, buttons, thread, machinery and equipment, and personnel for creation and manufacturing are all included.
❌Marketing costs, overhead costs, and indirect labor costs (for employees who don't work directly on making your clothes) are not included.
Accurate COGS data can assist you in carefully pricing your products and understanding their top-line profitability.
Simply put, you need to know how much you spend on the products you sell to understand what to price them at and how much money you bring in.
Understanding the cost of goods sold can also guide you in determining how to promote the best products based on profit margins.
For example, a t-shirt with a 15% margin might be a good candidate for a scalable email marketing campaign.
In comparison, a high-end bag with a 70% margin might be a good candidate for more expensive forms of marketing, like paid search or social media advertising.
To run a successful online store, you must pay attention to many different things, like designing your store, building your brand, making your products, and giving excellent customer service. Then, you can improve your store's performance and bottom line by getting to know the ecommerce metrics mentioned above.
These will show you how well you're doing and where to improve your strategies and tactics.
But, no matter how well your business is going, sometimes unexpected situations can interfere with your cash flow.
Or, on the other hand, everything is going so well that you need to grow your team or order more products to satisfy the high customer demand.
Myos is an asset-based financial provider that helps ecommerce businesses grow.
With Myos, you can get access to:
1. Purchase financing – Fund your inventory with a flexible, no-personal guarantee loan.
Ensure you are never out of stock with additional working capital.
2. Stock financing - Myos evaluates your goods based on their popularity in marketplaces, rather than simply checking your credit history.
Myos only uses a part of your inventory as security, so no personal guarantees are required.
Use your capital for any of your needs, without boring paperwork.
Repay as your turnover allows, all without fixed rates or extra costs.
Get between €10.000 and €2.500.000 for your ecommerce store, whether you need to finance a large order, grow your business, invest in marketing, or cover ongoing costs.
This will differ based on the size of your company, but the most important ecommerce metrics to track are: average order value (AVO), sales conversion rate, and website traffic.
You can measure a KPI weekly, monthly, quarterly, and yearly.
Try not to have too many KPIs: the ideal amount for most business areas is between 4 and 10.