Generating more revenue via a seamless, unified e-commerce strategy is the current focus of many traditional retailers, and rightly so. Statistics show that consumer online spending continues its upward trend despite the fact that COVID restrictions are ending in many countries and retail stores have staged a comeback. This additional focus on top eCommerce KPIs comes as the result of the continued shift to online buying spawned by the retail Goliaths of the online world (Amazon, Ali Baba, eBay, etc.).
The shift was further fueled by the COVID pandemic which added $219 billion extra to retailers’ e-commerce sales over the past two years. This leads us to a 2022 forecast by the National Retail Federation for total online sales to top $1 trillion for the first time.
As retailers zoom out from traditional brick and mortar stores to include gaining traction, the eCommerce key performance indicators (KPIs) they need to optimize change. Sales per square foot and store foot traffic remain important, but new e-commerce KPIs like cart abandonment rates and revenue per site visitor now sit in full view atop C-level KPI dashboards.
Based on our experience in the retail e-commerce space, which spans decades in enterprise e-commerce application infrastructure and design for major brand names and now as a provider of a headless e-commerce platform designed specifically for retailers, the following are the top 10 e-commerce KPIs we believe retailers should focus on and constantly seek to improve.
This eCommerce KPI is simple enough to calculate: sales conversion rate equals website traffic divided by number of total sales. Optimize this KPI by delivering a seamless, unified customer experience across your digital channels including website, mobile app, and social.
2. Average order value (AOV)
This e-commerce KPI is near the top of the list for good reason. It’s one of the most straight-forward paths to improving your online revenue growth. AOV also shows how well (or not) you are upselling and cross-selling on your website.
3. Add to cart rate
The add to cart rate KPI is important for many reasons related to future pricing, merchandising, and future purchase intent.
For example, a buyer puts an item into their cart, then later removes it. With an intelligent recommendation engine, you can capitalize on this data when the buyer visits your site in the future.
4. Cart abandonment rate
This KPI is the bane of retailers across the internet. Consumers are hard to figure sometimes, and leaving items in their cart to never return is a tough pill to swallow and often hard to decipher a reason for the abandonment.
Was the price too high? Was shipping too much? Was the experience flawed or delayed by some technical issue? Will they ever come back?
The reason to maximize this KPI is the obvious one. If users are leaving items in the cart without an actual purchase, it could mean there are problems with checkout system’s user experience.
Seek to triage the cart abandonment rate KPI by sending reminder emails to those who left items in the carts before checking out. Maximize this KPI by ensuring that your checkout process is speedy, intuitive and error-free.
5. Revenue per site visitor
This is an obvious KPI in which a “good” range cannot be standardized as it depends on if the retailer is focused on big ticket luxury goods or smaller, less expensive, more general items. Your mileage may vary but this KPI is another that can be improved by delivering better, more tailored customer experiences.
6. New versus returning customer rate
The ultimate brand loyalty KPI for retailers, new versus returning customers is a good indicator that is dictated by a number of factors. These include:
- Marketing program effectiveness
- Word of mouth / referral marketing effectiveness
- Site recommendation functionality (or lack thereof)
- Brand recognition
- Product quality / value
7. Average time on site
This KPI sort of an everyday, ho-hum metric that can actually make all huge difference in sales conversions for the retailer. Consider the affect of a customer spending more time in your brick and mortar stores. Also consider the research, effort, and time that goes into arranging and presenting merchandise on a retail sales floor. More time spent browsing equals more opportunities for shoppers to be moved to buy. Same thing goes for your e-commerce store. Time spent on your website equals more opportunities to buy which ultimately results in more purchases.
8. Customer acquisition cost
How much in online advertising spend (PPC, re-marketing, etc.) did it cost to obtain this customer, nurture it through the sales funnel, and then convert it to a sale? Now how much is it to bring the same customer back for repeat business. These are your customer acquisition cost. If you don’t have an accurate number for this KPI, you could be wasting advertising dollars. Even worse, you could missing out on opportunities to exponentially grow without the relative marketing spend.
9. Organic search conversion rate
Do you know what percentage of your retail website sales conversions come from organic searches on Google, Bing or other search engines? This eCommerce KPI can give you insights into how well you are performing from an SEO perspective. If this eCommerce KPI is subpar, look to improve the following:
- Website structure
- Metadata structure
- Organic keyword rankings
- Content that is not product related
- Content that is product related
Understanding and optimizing organic search conversion rates on your retail website will also give you actionable insight into our final e-commerce KPI:
10. Paid search conversion rate
If you are spending money for PPC advertising with Google, this one is tracked, along with other important e-commerce metrics in the Google Ads tool. Other platforms offer similar services and reporting dashboards.
Paid search conversions can be improved upon by optimizing your textual and product PPC ads across all digital channels, i.e. website, social, mobile.
In conclusion, maximizing the e-commerce KPIs mentioned here will be challenging for retailers. This, however, can be achieved using the right mix of products and leveraging the right technologies to drive customer experience in a unified way across digital channels.
Learn more about tracking and optimizing e-commerce KPIs at RETISIO Analytics.
Learn about how search capabilities affect sales conversions: Can Shoppers Find Specific Items on Your Retail Website?
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