How often do you measure the performance of your ecommerce store?
Oftentimes, small businesses push this task under the rug because they don't know how to do it. Well, if this is you, we're glad you found this article because we’ll talk about ecommerce metrics that help you measure and, ultimately, improve your webshop performance.
What are ecommerce success metrics and why should you care?
Ecommerce metrics are measurements that give you insights on the performance of your online shopping business. These ecommerce measurements help provide data to set accurate and achievable goals, and they give you answers to questions, such as:
- Is there an improvement in sales?
- What are the most or least purchased items?
- What opportunities are available to increase sales?
- How is your online store performing on KPIs?
You should care about ecommerce metrics because when you don’t track and measure your performance, it becomes tricky to determine which strategies are working and how you can improve the ones that aren’t. Following your gut and intuition might work in certain situations, but it’s not a data-driven approach that informs you on how effective your efforts are.
A survey by McKinsey reveals that companies that use ecommerce performance analytics frequently are more likely to outperform their competitors who don’t on metrics such as profit, sales, sales growth, or return on investment (ROI). It's no surprise that all ecommerce companies are after this success, including your competition right now.
To get ahead, you have to balance your desire to succeed with maximizing key ecommerce metrics to improve your business performance.
How to measure ecommerce success
Are you ready to take your ecommerce business to the next level? By measuring your success, you can enjoy the progress you're making and feel inspired to keep achieving more. And, don’t worry, you don’t need to spend hours researching what ecommerce metrics to track—we took care of that for you!
Here’s a list of the top 15 ecommerce performance metrics you need to track your success.
1. Sessions by traffic source
This metric tells you how many visitors accessed your webshop and how they landed there. The traffic sources that give visitors access to your online store include organic, paid, direct, social, and email marketing.
- Organic: when a visitor finds your link on the results page of a search engine (like Google).
- Paid: when a visitor clicks on a paid advertisement to land on your website.
- Direct: when a visitor types your website URL directly into the search bar.
- Social: when a visitor clicks on a link posted on social media.
- Email: when a visitor clicks on a link sent via email, for example, from a newsletter.
Sessions by traffic source also help you identify which source brings you customers that drive revenue. This is information you can use to make decisions about where you’d like to invest your efforts to maximize growth.
2. Sessions by device
Sessions by device tell you the type of device visitors used to access your store. Typically visitors will use a desktop, a tablet, or a smartphone to visit online shopping stores. This metric helps you identify which devices are used the most so you can prioritize the user experience associated with the specific device.
3. Sessions by location
This metric shows you the number of sessions based on where they geographically come from. So, you’ll get information about which country, region, or city the sessions came from. When you know where your customers are visiting your webstore, you gain a better understanding of how to communicate with them.
4. Click-through rate
Click-through rate (CTR) is a metric that measures the percentage of users who click on a specific link, against the number of users who saw the link (impressions). An organic CTR looks at the percentage of users who clicked on your webstore link from search results out of all users who saw the link. On the other hand, a paid CTR is campaign based and looks at the percentage of users who clicked on the ad out of the users who saw the ad.
How to calculate: the total number of clicks ÷ impressions = CTR
Note: Remember to look up what the average CTR is for the platform you’re measuring on to help determine what CTR you should aim for.
5. Bounce rate
Bounce rate is a metric that measures the percentage of visitors who views one webpage and exists without any further interaction. For example, they don’t click on any links or CTAs on the page they landed on.
According to SEMrush, the average bounce rate for ecommerce websites is between 20% to 45%. If your website has a higher-than-average bounce rate, it can indicate a bigger problem on your website because it means customers are not engaging with your store, and ultimately, they’re not buying anything. It indicates a problem with your website, and it could be a few different things:
- User experience (UX)—maybe the categorization and navigation are making it hard for them to know what to do next.
- Search—they’re struggling to find the information they were looking for.
- Product information—maybe it’s difficult to understand your product information, it has errors, or it’s inaccurate.
These are just some of the reasons why customers drop an ecommerce website. You’ll need to do some digging to figure out what the real source of the issue is. From there, you can optimize your website and your product information for better engagement.
6. Sales conversion rate
Sales conversion rate helps you identify how many of the people who visited your ecommerce store actually bought products. It helps you understand whether your ecommerce site and products appeal to your targeted customers. The average conversion rate for ecommerce is 2.5-3%, but this also depends on the specific products and niche retail industry you’re in.
How to calculate: the number of sales ÷ by the number of visitors × 100 = SCR
7. Top products by units sold
This metric shows you which of your products are selling the most. This gives you an idea of what’s popular so you can plan your inventory better. It won’t serve you any good to have out-of-stock for the most popular products as it means you’re unable to meet the demand.
8. Shopping cart abandonment rate
Shopping cart abandonment rate is a metric that looks at how much your customers load up products on carts and leave without finalizing the transaction. This can hurt a little because one of your business objectives is to make sales. But you’re not the only online shop owner to experience cart abandonment. This study suggests that the average cart abandonment rate is 69.80%, which indicates that it is a very common problem in the ecommerce world.
There are a number of reasons why customers abandon their carts, and these include;
- Consideration stage or looking at the total cost of items
- Poor checkout experience
- Payment security concerns
- High shipping costs
- Unexpected extra costs (such as taxes and fees)
- Signing up for an account to complete the checkout process
How to calculate:
Step 1: number of completed purchases ÷ by number of shopping carts created × 100 = completed carts
Step 2: 100 − completed carts = abandonment rate
9. Product return rate
Product return rate measures how many times your products are returned after purchase. They’re painful to every online shop owner. But they’re common in the general ecommerce space, in fact, the average return rate hovers around 20 to 30% across all industries.
Tracking this metric shows you how many items were returned within a specific period. Learning about this number will encourage you to find out the ‘why’ if you have a high return rate.
Typically, customers return purchased items because:
- They changed their minds after receiving the item
- The item does not match what’s described on the product page
- The product arrived damaged or defective
- They bought or received the wrong item
- They bought the wrong size or color
So, check your return policies to find out what they look like.
If you offer frictionless returns, it may be the reason why your customers return items. But this isn’t bad because, according to this report, 92% of customers say they will buy again if the product return process is easy. But if you realize that the returns have more to do with incorrect sizing or color issues, it indicates a serious problem with your product information.
How to calculate: the total number of items returned ÷ by the total number of items sold × 100
10. Customer retention rate (CRR)
Customer retention rate is a metric that tells you the number of existing customers that you’ve managed to retain over a period of time. These are returning customers who keep coming back to buy from you. This may be because you offer quality products they love, value-added loyalty programs and campaigns, 24-hour customer service, and an overall good customer experience.
If you have a high rate, it indicates that you’re able to support customer satisfaction. If it’s low, you can improve your retention efforts.
How to calculate: no matter which time frame you’re looking to measure, you have to follow this formula:
E − N ÷ by the S × 100 = CRR
- E- total customers at the end of the period
- N - new customers gained within a time frame period
- S - existing customers at the beginning of time period
11. Cost per acquisition (CPA)
CPA is a metric that shows you how much you’re paying to get a first-time customer, through paid campaigns. In an ideal world, you’d prefer to gain customers organically. But in the real world, the ecommerce space is a maze with intense competition so to get prospects’ attention, you have to spend money on various marketing and advertising campaigns that run over a period of time.
Tracking this spend for each prospect shows you just how many customers you manage to bring in through your campaigns. It also shows you whether you’re spending more than you should.
How to calculate: total marketing expenses ÷ by the number of customers acquired = CPA
12. Average order value (AOV)
Average order value tracks the average total price your customers pay for a single order at check out. It’s an important metric to track because it shows you how much revenue you generate per transaction. It also gives you insights into customer behavior, for example, the details on what type of shoppers they are, what they shop for, and how much they’re likely to spend with you.
This will help you determine opportunities to encourage your customers to go out of their typical habits to buy the items they usually browse without ever buying.
How to calculate: total sales ÷ by total orders = AOV
13. Customer lifetime value (CLV)
This ecommerce metric allows you to learn how much total revenue an average returning customer generates for you over a certain period of time. Whether they’ve been with you for six months or six years, you’ll get an idea of the average amount they spend on your online store.
How to calculate: AOV × by average purchases per year × by the average period a customer is retained for = CLV
14. Stock-to-sales ratio
This metric tracks how much stock you have compared to the number of sales orders you’re fulfilling over a specific period. The average ratio is between 0.167 and 0.25. So, if yours is hovering around this ratio, it means you have just enough stock to meet the demand. If it’s lower, it’s an indication that your stock is selling faster, so you might need to restock products quicker than previously planned.
On the other hand, if it’s a higher ratio, it tells you that your stock is not selling fast enough. This is a problem that could lead to you paying more for storage to keep the stock. You need to try to keep a balance between the stock you have and the sales you’re making.
How to calculate: average stock ÷ net sales = stocks-to-sales ratio
15. Average stock sold per day
This is one of the ecommerce performance metrics that shows you the average number of products sold in a day. It helps you evaluate how your inventory is moving each day, which gives you an opportunity to boost your marketing efforts for products that sell in low volumes. This is information you can collect on your CMS analytics dashboard. For example, if you’re selling through Shopify, you’ll find this information on your Shopify analytics dashboard.
Mastering the important metrics for ecommerce success
By unlocking these 15 key metrics for online retailers, you will come to a better understanding of how your online store performs. They’ll give you an idea of what’s working, what isn’t, and where to make changes to boost your ecommerce performance.
For more information, download this free Ultimate Guide to Ecommerce Metrics and Optimization ebook.
Editor's Note: This article was originally published in August 2021 and has been updated for accuracy and comprehensiveness.