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25 Essential eCommerce KPIs You Should Know

Vibha N
April 4, 2021 |
eCommerce-KPIs-and-Metrics

Businesses can’t operate without strategy. Strategy can’t be crafted without facts. Problem is, different facts paint different parts of the picture. Measuring all can get tedious while measuring the wrong ones would have you chasing after the wrong challenges. This means, loss in effort, time, resources, and of course business opportunities.

Safe to say: the facts matter. They’re impartial; devoid of personal feelings, emotions, or aspirations. They provide insight into the various mechanisms at play and offer means of understanding current threats and future opportunities. Especially in eCommerce, there are many means to measure the success of various aspects of the business. We’ll be delving into these options to help you decipher the best eCommerce KPIs (Key Performance Indicators) and metrics for your organization.

What are eCommerce KPIs?

Collin’s Dictionary defines a performance indicator as: “a quantitative or qualitative measurement, or any other criterion, by which the performance, efficiency, achievement, etc of a person or organization can be assessed, often by comparison with an agreed standard or target”.

A key performance indicator is essentially a selected metric to measure the success of your online business. In practice, this could mean a process or department within the organization or reflective of the overall performance of the brand itself. This also means that there are various kinds of KPIs that offer different kinds of insights: picking the right one can make all the difference when understanding business performance across levels.

eCommerce KPIs checklist

With each area of business, comes its own share of industry-recognized metrics. This is especially true in the case of eCommerce KPIs. However, not all of these may be suitable for your business goals. There are a few factors one needs to consider while selecting one’s online business metrics and KPIs.

  • Factor the goal(s)
    Choosing the KPI based on your business goals will help ensure they align. Low-level KPIs help understand the performance of individuals, departments, or processes, while high-level KPIs help measure the achievement of organizational goals for both the short and long term.
  • Determine what is being measured
    KPIs can be used to measure qualitative or quantitative data. They can also be used to determine past performance or predict future trends and behavior. Knowing what you are measuring will help determine the KPI you need at what stage. Objectivity is key here.
  • Ensure the KPIs are attainable
    Ensure that the selected KPI is attainable and that they consider the stage of business growth your eCommerce venture is at. It also helps to ensure a degree of consistency in the selected KPIs. This will allow data gathered over time to be comparable both now and in the future. Keep your KPI goals S.M.A.R.T.
  • …and Future Looking
    The selected eCommerce KPIs must be subject to some upgrades as your online business and its industry evolve. Through regular analysis of the KPIs, you would also be able to measure their effectiveness and optimize them accordingly. The reviews will also help spot any KPIs that are just becoming one more measure to check off instead of actually contributing to the strategy for your eCommerce platform.

25 eCommerce KPIs and Metrics

The KPIs that you will opt for will help measure specific aspects of your online business. Broadly speaking KPIs for eCommerce can measure performance in sales, marketing, customer service and experience, manufacturing & inventory, and project management. Here are the essential eCommerce KPIs you need to know:

Average Order Value (AOV)

The average order value is determined by dividing the total revenue earned via sales by the number of orders that have been placed. It gives a broad understanding of the amount the average customer is spending while ordering from your eCommerce store.

Average Position

This marketing KPI helps determine the effectiveness of your SEO (Search Engine Optimization) efforts. It indicates the average position your eCommerce website organically features on popular search engines like Google.

Average Time Spent on Site

This KPI sheds light on how long your visitors are spending on your website. This may be during the research phase, or while filling their cart, and the aim is to avoid shorter session times. You can find out the average time spent on the site in general and/or specific pages by dividing the total duration of the visit by the total number of visits to the same.

Bounce Rate

Wondering how many customers leave after just browsing through one page? That’s what the bounce rate tells you. It’s a positive sign for your eCommerce site if this KPI is on the lower side. Find out this by dividing the number of one-page visits by the total number of visits to the website.

Cart Abandonment rate (CAR)

CAR is a KPI an eCommerce brand would want to ensure is minimized. It measures the rate at which products are selected for purchase, but the transactions for the same are never completed. This may be due to customer hesitancy, price considerations, or even factors such as unfriendly interfaces, bad product descriptions, or lack of suitable payment options. Calculate it by dividing the number of completed transactions by the number of shopping carts.

Did you know an efficient Product Information Management tool can help reduce shopping cart abandonment rates?

Churn rate

This KPI notes how many customers are leaving your business or opting out of subscriptions from you during a specific period. It is key to understanding the value your brand offers to its target audience and measuring customer retention. It is measured by dividing the number of ‘churned’ or lost customers by the total number of customers.

Click-Through Rate (CTR)

For businesses running email and/or pay-per-click campaigns, this KPI highlights how many people are clicking on links leading to the intended destination, typically your website. Higher CTRs points towards more efficient campaigns.

Competitive Pricing

Keeping the competition in mind is key when strategizing for your online business. Monitoring their pricing strategy and performance and measuring it against yours will help ensure the brand stays ahead of the curve.

Conversion Rate (CR)

At the heart of your eCommerce would be to understand how many people visiting your store actually leave having made a purchase. This would be your conversion rate, i.e., the percentage derived after dividing the number of visitors by the number of conversions made. The conversation rate can be calculated for the entire website, a particular page, or a particular category.

Cost of Goods Sold

This high-level KPI measures the expenditure incurred by a brand for the sale of the product. It includes the manufacturing and inventory expenses, to those incurred to pay employees and overhead costs as well.

Customer Acquisition Cost (CAC)

Getting your customers to visit your website can cost money, the idea with this metric is to understand whether the costs you incurred were worth it. It is derived by dividing the investment that went into customer acquisition by the number of those acquired.

Customer Lifetime Value (CLV)

This eCommerce KPI helps determine the value that each customer holds to your online business. This can be boosted by improving customer service and relations. First, multiply a customer’s yearly expenditure and the number of years they have purchased from your business. Thereafter, subtract the cost of acquiring them as your client to derive their CLV.

Customer Satisfaction Score

Derived from feedback forms filled by customers themselves, this qualitative KPI helps determine customer satisfaction and sentiment during the course of making a purchase. The score is based on the rating that the customer awards their experience with the eCommerce business.

Cycle Time

A KPI for manufacturing, this metric measures the time taken for the production of an individual good. It helps determine the speed at which the product moves from order placement until delivery and can provide key insights into potential areas of improving output.

Gross Margin Return On Investment (GMROI)

This mouthful of a KPI basically helps understand how effectively the inventory is being exchanged for cash. This factors in the expenditure incurred into maintaining said inventory. It is calculated by dividing the gross margin by the average inventory cost.

Inventory level

Tracking the amount of stock available is key to ensuring that an optimal amount of products is at hand. It prevents incurring losses that come with overstocking, risks to reputation and order fulfillment that come with under-stocking, and more.

Related reads: 11 Software That Will Up Your Inventory Management Game

Net Profit

This high-level KPI is one metric to understand the overall success of your business. A quick peek into the brand’s financial status, it is calculated by subtracting your total business expenses from the total revenue earned.

Non-Compliance Events or Incidents

The number of these incidents i.e., where regulations or policies are not being met should ideally be minimized, as they bear significant risk to the organization and its people. These regulations may be enforced by the business itself or by external regulatory authorities and monitoring this KPI can help prevent future incidents as well.

Overall Labor Effectiveness (OLE) and Overall Equipment Effectiveness (OEE)

These metrics help determine how well two key components of production are performing: the equipment being deployed during production and the people using them.

Purchase Frequency

This KPI highlights the number of times a product has been purchased over a given period of time. It helps identify popular products and those that can perform better. Purchase frequency can be calculated by dividing the total number of purchases by the total number of unique customers in a fixed period.

Repeat Purchase Rate (RPR)

Learn how many customers can’t get enough of your products, and figure what kinds of new incentives you can plan to reward them (and have more join the lot). Measure it by dividing purchases by repeated customers by the total number of sales for the same period.

Repeat visits

This eCommerce KPI notes how many of your visitors come back to your website. More repeated visits indicate an interest in the brand and its offerings as well as a higher likelihood of conversion as compared to new visitors.

Return Rate

One key metric for measuring customer satisfaction is the rate at which they are returning the product. While there may be plenty of reasons both within and outside your control leading to the request to return the product, a high return rate would imply a need to take a relook at the product and/or its marketing to trace the root of the dissatisfaction.

Subscriber Growth Rate

While it is good to know how many people have subscribed to your blog, emailers, and other marketing properties, studying the growth rate helps understand the speed at which your audience is growing. Factoring in social media following also helps understand the success of your digital marketing efforts.

Website Traffic

The website is the backbone of your eCommerce business. Thus, measuring the number of visitors at a given period in time is a high-level KPI indicating the success of your business. Various factors impact traffic, including but not limited to, marketing efforts, user experience, and the product at hand. In addition to this KPI, understand where this traffic is coming from and where on your site are they visiting most to optimize your site and improve traction.

Vibha N

Vibha is a Content Strategy Manager at DCKAP. She has over six years of experience in content creation and social media, with two of those dedicated to the field of ecommerce, integration, and technology. She has previous experience working with various other sectors including sustainability, education, filmmaking, F&B, and more. When not knee-deep in content and conversations, she can be found geeking out on pop-culture or making her next cup of strong filter coffee.

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