• Exequiel

7 eCommerce KPIs you need to know!

Knowledge is power 💪🏻 but many e-commerce companies aren't leveraging the knowledge from their data the way they could. With access to digital analytics so easy today, this is a missed opportunity. An actual big one.


That's why we are going to show you exactly what e-commerce metrics you need to keep in mind when selling products online.



Instead of listing all the KPIs that exist, we are going to focus on the ones that we think matter the most 😉


After reading this, you will learn:

  • What is the difference between a metric and a KPI?

  • Why do you need to track e-commerce metrics?

  • Which metrics are the most important?

Let's get to it! 👇


What is the Difference Between a Metric and a KPI?

Both terms are often used to talk about the same thing. However, there is an important difference between them that you should know.


🔹A metric is a quantifiable measure used to track and evaluate a business process. An example of an e-commerce metric is the daily number of visitors to your online shop.


🔹A key performance indicator (KPI) is a measurable value that shows you how effectively you are achieving your business goals. It is always linked to a target value and tracks progress over time. An example of an e-commerce KPI is the conversion rate of your online store.


The difference between a metric and a KPI is that a metric simply tracks the status of a business process. A KPI, on the other hand, provides information about whether you have achieved a predefined business goal.


To sum up, every KPI is a metric, but not every metric is a KPI.



Why do you need to track e-commerce metrics?

So why should you track e-commerce metrics at all? The simple answer is: Because it allows you to quickly understand how well your business is doing.


Are your sales increasing? Is your inventory running low?

All these questions can only be answered if you track your e-commerce metrics regularly.


The sooner you notice that sales of one of your products are declining, the sooner you can explore and fix the cause.


Tracking different types of e-commerce metrics will also help you identify performance changes over time.



Which KPIs are most important?

Choosing the right KPIs for eCommerce isn't easy. Your choice will depend on your individual strategies and goals. There's no one-size-fits-all solution, but there are some top metrics and eCommerce KPI benchmarks that prove useful for most online businesses.


Here are our favorite 7, which have proven to be very helpful in our experience.

  1. Conversion Rate (CR)

  2. Average order value (AOV)

  3. Customer lifetime value (CLV)

  4. Repeat Customer Rate

  5. Availability (Out of Stock Rate)

  6. Product Revenue

  7. Profit Margins

You now may be wondering: are there other important KPIs? Yes, of course! Many others. We could talk about abandoned carts or cost per acquisition, just to name a few.


But today we wanted to give you a preview of the most important ones, so you can start diving into the world of data and measuring metrics. These metrics will give you key insights into your business to make better decisions.



1. Conversion Rate

The first thing you need to know is how well your online store converts visitors into paying customers 💰


Conversion rate is the number of visitors that take action on your website, divided by the total number of visitors. That action might refer to a signup, inquiry, account creation, sale, etc.


Conversion Rate % = (Total Number of Conversions ÷ Total Number of Visitors) x 100


This metric is critical to understanding how much traffic you need to reach your sales goal.

You can then use this metric and compare it to the average for your industry. If you're below this benchmark, you need to improve your conversion funnel.



2. Average Order Value

It's nice to know how many of your visitors become customers. But how much do they spend? 🤔


To find out, we calculate the average order value (AOV). This metric captures the amount your customers spend each time they place an order on your website.


It’s a key KPI because it helps measure how well you capitalize on cross-selling and upselling opportunities.


AOV is calculated by dividing your revenue by the total number of orders.


Average Order Value $ = Revenue ÷ Total Number of Orders


To see if your upselling strategies are working, you need to track AOV over time.



3. Customer Lifetime Value

The CLV helps you discover and select your profitable customers. It shows you the dollar value of your customer relationships over time 📈.


Kurt Elster of The Unofficial Shopify Podcast agrees: “No metric captures the overall health of an ecommerce business quite like customer lifetime value. Conversion rate, average order value, and return customer rate are all reflected in CLV.”


Once you know the CLV, you can easily determine the break-even point of your customer acquisition campaigns. This is the money you can spend on Facebook ads and other marketing campaigns.


Many e-commerce experts advise you to calculate CLV based on sales figures.


But here is the problem: your sales do not reflect your profits. And since CLV is used to figure out how much you should spend on customer acquisition, you need to calculate your CLV based on your average profit:


CLV = (Annual Gross Profit per Customer * Customer Relationship in Years) – Customer Acquisition Cost




4. Repeat Customer Rate

Studies have shown that loyal customers spend on average 30% more per order than new customers. This is not just because they buy more items per order. They also tend to stay loyal to the brands they have grown fond of.


So it's very important that you measure how many customers make repeat purchases from you.


The easiest way to do this is with the following formula:


Repeat Customer Rate = ( Number of Customers Who Have Shopped More Than Once ÷ Number of Total Customers ) x 100


If most of your customers only buy from you once, you need to work on your customer loyalty and after-sales programs 🙃



5. Availability (Out of Stock Rate)

According to a study by GMA, products that are not available for customers when they want to buy them lead to losses in online sales of up to $17 billion a year worldwide 😯


Nothing damages trust in your brand like unavailability. So you need to keep an eye on your availability rates:


Out Of Stock % = (Total Page Views With an Out of Stock Message ÷ Total Page Views) x 100



6. Product Revenue

Keeping track of your income may be a piece of cake for you. But listen to us for a moment.


Because the trick is in how you track how much money is flowing into your business 😉


Instead of just measuring total revenue, break your revenue into different streams based on the sources they come from. You can do this in a number of ways. Either by product or by country.


This way you can easily understand how well individual revenue streams contribute to the overall success of your business.



7. Profit Margins

Perhaps the most important e-commerce metric to track is your profit margin 💹.


Gross margin is the difference between the price of a product and the cost of goods sold (COGS). COGS describes all costs directly associated with producing a product, such as raw materials or labor costs.


By tracking the gross profit of a product, you become aware of unprofitable pricing and sourcing strategies.


You can use this profit margin calculator.



Once you have established your business goals and KPIs, it's important to monitor and update those KPIs regularly. In order to run a data-driven e-commerce business, it is extremely important that you combine data from all relevant e-commerce KPIs into a single spreadsheet.


As a business owner, it's important to look at your overall business performance under one umbrella and be able to identify exactly which areas need more attention. Your performance should impact your decisions, and you should use the above KPIs to take action.


But wait, we have a final tip here: The common thread running through all these e-commerce KPIs is user experience. Improving the shopping experience of current and potential customers will improve all of the key metrics.


Now is your turn. Which of the above e-commerce metrics will you be looking up in your sales analytics today? Or perhaps you'd like to share a metric we haven't covered here.


Either way, feel free to let us know in the comments below! 👇




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