Sales are now more observable, repeatable, and measurable than ever; all credit goes to the E-Commerce market. Every Visitor to your website can be tracked, allowing you to gain valuable insights. This will enable you to increase your earnings and target customers. Choosing the E-Commerce KPIs that best support your business decisions might be challenging. As marketers and business owners strive to make their way through the data minefield created by E-Commerce, new trends start to emerge.
Finding the most crucial KPIs for E-Commerce business is vital. But once you get all the data, you can skyrocket your conversions. You will be aware of your client’s needs and be able to identify opportunities for improvement. And finally, you can make the perfect judgments and steer your E-Commerce business in the right direction with the correct data.
Let’s dive deeper and know E-Commerce KPIs and how you can grow your sales using these KPIs and metrics.
What Are E-Commerce KPIs?
The success of your online business can be determined using E-Commerce KPIs as key performance indicators. These KPIs can be used to monitor the company’s progress, sales, goals for the level of customer services, and other crucial measures required for online business. The E-Commerce KPIs and metrics may be chosen based on company objectives.
By monitoring the appropriate E-Commerce KPIs, online business owners can make more informed decisions about conversions, revenue, marketing, and operations.
How to Select the Most Effective E-Commerce KPIs For Your Business?
You can track numerous KPIs, but not all of them will be essential for the success of your E-Commerce firm. Below I have given some suggestions; these should be your primary concerns when it comes to E-Commerce KPIs:
1. KPIs Should be Measurable
Pick KPIs that are simple to track and offer your team and you a unique perspective on the development and results of your company.
2. Can Align with your Business Goals
Select KPIs that assist your business strategy and overall performance and directly impact your business’s net income or net Profit.
3. Based on your Business Phase
Depending on the stage of your business, you can select KPIs. Some KPIs will be more crucial than others depending on the growth stage in which your E-Commerce firm is now operating. They should be different, depending upon the business age or location. Like KPIs should be other for startups than for the growth stage or at the declining point of the business.
4. KPIs that apply to your business
KPIs can differ among E-Commerce businesses. Because of this, it’s critical to pick metrics based on what your organization needs right now rather than what is popular in your market or other industries.
5. Simple and Straightforward
Many pointless and insignificant KPIs are not worth tracking. You will feel overburdened by this. Your team and you will receive insightful information from the most crucial KPIs for your company.
List of The Most Important E-Commerce KPIs to Grow Sales
1. Average Order Value (AOV)
How much clients spend on a single order can be determined using the Average Order Value or AOV. It is also called the Average Market Basket. You will be able to learn more about how much revenue each client generates.
| AOV = Total revenue / Orders |
2. Conversion Rate (CR)
The conversion rate (CR) shows the number of people purchasing your products. If your website’s conversion rate is low, optimize it or create better E-Commerce marketing strategies.
| Conversion rate = (Total number of visitors to the website / Total number of conversions) x 100 |
3. Gross Profit
This is a crucial KPI for e-commerce since it enables business owners to make plans. You can view the Profit after deducting the costs of production and distribution.
| Gross Profit = Total Cost of Goods sold – Total sales |
4. Conversion Rate for Shopping Carts (CCR)
This KPI for e-commerce tracks how many visitors finish the checkout process and make a purchase.
| CCR = Total Conversions / Total Visitors x 101 |
5. Shopping Cart Abandonment rate (CAR)
This E-Commerce KPI reveals the number of shoppers who add items to their carts but do not finish checking out or making a purchase. Enhance the customer experience at the checkout to lower your shopping cart abandonment rate.
| CAR =1 – (Total number of completed transactions / Total number of shopping carts) x 100 |
6. Cost of Goods Sold (COGS)
It is a cost associated with selling your goods. This comprises all expenses related to distribution and production, as well as all manufacturing, staff wages, and overhead expenditures.
| COGS = Beginning Inventory Costs (of the year) + Additional Inventory Costs (purchased during the year) – Ending Inventory (at the end of the year) |
7. Customer Lifetime Value (CLV)
This figure reveals the value of each customer to your company. Strengthen your relationships by putting a greater emphasis on client loyalty to raise this number. You’ll be able to calculate your cost per acquisition using this.
| CLV = Customer’s Annual Profit Contribution x Average Year As Customer – Initial Cost of Customer Acquisition |
8. Customer Acquisition Cost (CAC)
You may find out how much money you spend on gaining new customers with this KPI in e-commerce. Analyzing your marketing expenditure and the demographics of each customer will help you quantify it. Less expensive acquisitions are preferable.
| CAC = Costs incurred in Acquiring Customers/Number of Customers |
9. Average Profit Margin
It represents your profit margin as a percentage over a specific time frame. Your average profit margin should rise as production and sales increase.
| Average Margin = Gross Profit / Revenue |
10. Buying Frequency
This calculates the typical order volume of your clients over a specified time frame. This is a great KPI to gauge customer loyalty and highlight underperforming products or categories.
| Purchase Frequency = Total Orders / Total Customers |
11. Revenue per Click (RPC)
It is the sum of your pay-per-click campaigns’ average click revenues. A value is given to every paid click.
| RPC = Revenue / Total number of clicks |
12. Inventory Turnover
Inventory turnover is a crucial key performance indicator (KPI) or financial ratio that e-commerce company owners can use to track how frequently their stock is sold during the year. These figures enable you to assess if your company’s inventory levels are excessive given its total sales.
| Stock turnover =Net sales / Average Inventory at a selling price |
13. Revenue per Visitor
This is a crucial KPI if your E-Commerce store is expanding quickly or your customer base has changed due to new branding, marketing, or product launches.
You can see the worth of each Visitor, rather than simply one customer, by calculating the revenue per Visitor (like the repurchase rate).
| Revenue per Visitor =Total Income / Number of visitors during a specific period |
14. The ratio of Inventory Holding
Finding the average cost to retain goods until selling it can be done using this ratio, or E-Commerce KPI. Storage, labor, security, and equipment expenditures are all associated with the Inventory you keep in storage. 30% of the value of your goods will generally be your holding costs.
| Holding Inventory ratio = Holding costs/ Average Inventory Value |
15. Net Profit Margin
The profitability of your store can be calculated using this KPI. This is the profit margin following all deductions, which includes taxes and operating costs. The amount of money you make is your net profit margin following all deductions.
| Net profit margin = (Revenue – cost)/revenue |
Conclusion
That’s all..!!
These most important E-Commerce KPIs to grow sales may also lead to the discovery of new metrics. If you can deeply monitor all these E-Commerce KPIs, you can find the potential strengths and opportunities to expand your E-Commerce business. The data regarding sales you receive after reviewing these KPIs will power up your ability to find new ideas and strategies to mark the success of your E-Commerce business.
If you are still in the midway of making profits, you can contact us; our digital marketing professionals will help to take your business from midway to new heights.
