What are Ecommerce Key Performance Indicators (KPIs)?
An ecommerce KPI is a measurable value that assesses the effectiveness of an ecommerce store in achieving its business objectives. Tracking KPIs enable ecommerce business owners to measure their progress towards hitting sales, marketing, customer support, and inventory goals.
As an ecommerce business owner, you can track over a hundred KPIs for your online store. However, tracking such an exhaustive list can be both time-consuming and tiresome.
To help you choose the most relevant KPIs for your business, this article provides an overview of the top 11 ecommerce KPIs you shouldn't miss tracking. These KPIs will help provide a bigger picture of your customers, products, promotional campaigns, website traffic, orders, and financials.
Relevance of Ecommerce Metrics
There is a subtle difference between a metric and a KPI for an ecommerce store. A metric measures the performance of different parts of your organization, whereas a KPI measures the progress towards reaching your business goals. Metrics are highly relevant for ecommerce businesses because they help measure performance across all departments such as marketing, customer support, and inventory.
For example, email open rate is a metric that helps you measure how many subscribers have opened your email. You can compare this with last month’s results to assess if there was an improvement in the performance of your email marketing campaign.
Most successful ecommerce companies use both metrics and KPIs in tandem to measure the performance of their online store, the efficiency of their sales and marketing teams, conversion rate, bounce rates, and inventory performance.
11 Ecommerce KPIs You Should Be Tracking
- Average order value
- Conversion rate
- Shopping cart abandonment rate
- Customer lifetime value
- Customer acquisition cost
- Bounce rate
- Repeat purchase rate
- Channel profitability
- Refunded orders/amount
- Return on investment
- Revenue/Gross profit
Let’s take an in-depth view into these important KPIs below:
1. Average order value (AOV)
AOV is the amount a user spends to purchase a product or service from your store. AOV is a relevant and important metric because it identifies whether your store is attracting larger or smaller customers. As an ecommerce business, you should always find ways to optimize your AOV through upsells, cross-sells, shipping discounts, and more. Setting goals around increasing AOV is one of the easiest ways to generate more revenue from your existing audience.
Online stores should track AOV to:
- Gauge the size of customer accounts.
- Calculate the total lifetime value of a customer.
- Determine an appropriate pricing strategy for a product or service.
- Understand customer purchasing patterns.
A higher AOV generates increased profits for your store because of the smaller transaction costs involved with each order.
2. Conversion rate
Conversion rate is the percentage of visitors who purchase a product or service after visiting your online store. This is a relevant metric because it measures the efficiency of your ecommerce business and it's supporting channels.
Online stores should track conversion rate to:
- Test different versions of a landing page to find out which one converts the best.
- Measure the performance of your marketing channels.
- Evaluate how well your website is optimized to encourage consumers to make a purchase.
- Assess the quality of your site's content (or traffic) relative to the audience you're trying to target.
- Analyze the user experience of your website.
Ecommerce business owners should focus on creating compelling content, streamlining their checkout process, and clearly communicating the perceived value of any offerings to increase overall conversion rate.
3. Shopping cart abandonment rate (SCAR)
According to a recent research report by Baymard Institute, the average SCAR in 2021 was 69.82%. SCAR is the percentage of visitors who add products to their online shopping cart but leave the website without purchasing them. Simply put, it identifies the total number of visitors that add a product to the cart but postpone the purchase or never make a purchase. This is a relevant metric for ecommerce businesses because it provides a clear picture of the usability of your product pages and user checkout experience.
Online stores should track SCAR when they want to:
- Evaluate the shopping behaviors of their users.
- Assess the trustworthiness and user-friendliness of their online checkout processes.
- Identify any obstacles in the process of converting website visitors into customers.
It is advisable to use SCAR in combination with other metrics such as gross profit, page load time, conversion rate, and average order value to gain a better understanding of your store’s performance.
4. Customer lifetime value (CLTV)
Customer Lifetime Value (CLTV) is the total revenue a customer generates throughout his or her period of association with an organization. It is a relevant metric because it helps ecommerce business owners know whether their customers are becoming more or less valuable.
Online stores should track CLTV when they want to:
- Identify the digital marketing channels that acquire valuable customers and nurture them into becoming long-term, loyal customers.
- Assess the potential for long-term business growth.
Ecommerce businesses have two main levers when it comes to increasing their CLTV: 1. Increase your AOV and/or 2. Increase the purchase frequency of each customer, i.e. keep them as active customers longer.
5. Customer acquisition cost (CAC)
Customer acquisition cost is the total amount of money a business spends to acquire a customer. Several expenses, including advertising costs and cost of goods sold (COGS) factor into CAC. This KPI is relevant for ecommerce stores because it helps to determine the costs of acquiring a customer through various channels. Paired with the CLTV, you can determine if channels have a positive or negative ROI.
Online stores should track CAC when they want to:
- Assess the scalability of their business. If customer acquisition costs are too high, you may find it difficult to scale your business.
- Assess the efficiency of your marketing channels. For instance, you can track the CAC of a Facebook ad campaign to assess its efficiency and optimize it for better results.
It is advisable to combine CAC with other KPIs such as CLTV, cost per acquisition, ad spend by channel, number of new customers, and customer retention rate for a better understanding of how costs of acquisition can pose a threat to profitability.
6. Bounce rate
Bounce rate is the percentage of visitors who leave a landing page before clicking the call-to-action button. This KPI is relevant to ecommerce businesses because it helps identify if there are any issues with the design and/or content on your website.
Online stores should track bounce rates when they want to:
- Assess the quality of content on their website. If the content is not informative and persuasive, visitors may leave the website without taking any action.
- Assess if the website has user-friendly navigation, menus, and graphics. Poor navigation and unappealing graphics may lead visitors to navigating away from your website or landing page.
- Assess if they're attracting the right audience. Even the best-designed experience might fall short if the wrong audience is being drawn to it!
7. Repeat purchase rate (RPR)
RPR is the percentage of customers who make repeat purchases from your store. It is a relevant metric because it helps determine the customer loyalty and efficiency of customer retention efforts by your marketing team. Though RPR benchmarks vary from company to company and industry to industry, you should aim to attract at least 30% of your customers to come back and make repeat purchases from your online store.
Online stores should track RPR when they want to:
- Track the number of customers who made repeat purchases within a specific timeframe such as last week, month, or quarter.
- Identify which products are driving customers to come back multiple times.
- Evaluate the level of customer satisfaction and customer experience with your products.
8. Channel profitability
Online stores promote products through different channels, including social media, paid, referrals, email, affiliates, and more. Channel profitability is a KPI that helps measure the return on investment for various marketing channels. You should target the channels that generate higher profitability and drive business growth. For example, the marketing team of an apparel store should double down on their email marketing efforts if the conversion rate of an email campaign is better than expected.
Channel profitability is a highly relevant KPI for online stores because it enables marketing teams to optimize their best performing channels and revamp poorly performing channels.
Online stores should track channel profitability when they want to:
- Identify where their potential customers hang out and what their intent is when they visit the website.
- Assess the ability of a marketing channel to attract repeat customers.
- Asses channels for ROI.
9. Refunded orders/amount
A refunded amount is money that a business has refunded during a particular period of time. Refund rate is the percentage of the total number of orders for which a refund has been issued. This KPI is relevant for online stores because it helps determine the quality of their products and customer satisfaction rate.
Online stores should track refunded amounts or refunded rate when they want to:
- Determine the efficiency of their fulfillment department since most refunds occur when there has been a delay in the delivery of the product.
- Determine the efficiency of their customer support team, as customers often ask for refunds when they don’t receive responses from customer support for concerns such as “defective item shipped” or “wrong item shipped.”
- Identify problem products with high return rates.
10. Return on investment (ROI)
ROI is a relevant metric for ecommerce businesses, as it helps determine whether campaign efforts and certain customer segments have returned a profit.
Online stores should track ROI across:
- Customers to determine if there are lower quality segments who only buy on discounts, or higher quality segments who always pay full price.
- Campaigns to determine if ad spend outweighs the return - also known as return on ad spend (ROAS).
- Other channels like support, reviews, and affiliates to identify high/low return profit centers.
- Assess the long-term sustainability of an online store.
11. Gross profit
Gross profit is the profit a business makes after subtracting the cost of goods sold (COGS) from their revenue or sales. COGS refers to the costs associated with the process of manufacturing a product. Gross profit is a relevant metric that helps measure the efficiency of an ecommerce business.
Online stores should track gross profit when they want to:
- Assess high/low return products.
- Evaluate the efficiencies of their discount campaigns.
How to Measure Ecommerce Success
There are two prominent ways to measure ecommerce success: KPIs and benchmarks:
Use the most relevant ecommerce KPIs for your business
Not all businesses measure success with the same KPIs. They may need to use different types of KPIs that are relevant to their business.
- A subscription business can measure its success with the help of KPIs such as active subscriptions, average MRR per subscriber, MRR churn rate, one-time subscriptions, and subscriber churn rate.
- An apparel store can measure its success with the help of KPIs such as the cost per acquisition, AOV, repeat purchase rate, most reordered products, and most refunded products.
Tracking irrelevant KPIs for your online store may result in gathering unnecessary information and making poor decisions that negatively affect your ecommerce business.
Track success with realistic benchmarks
A benchmark is a standard for which the quality of a product or efficiency of a process is measured. Benchmarking enables ecommerce stores to measure by comparison, identify areas of improvement, track their success, and implement process improvements systematically.
Here is a list of examples for realistic benchmarks in ecommerce:
- Average refund rate: Ecommerce stores should aim to benchmark this figure relative to their specific industry. Certain industries, like fashion and apparel, consistently have higher return rates. This should be taken into account when evaluating the health of your business.
- ROAS: Different channels have different expectations when it comes to ROAS. Understanding the industry benchmarks for each is key to understanding whether or not your ads performance are considered good or bad. Ultimately, you should gravitate towards those channels that generate the highest ROAS, regardless of benchmark performance, while optimizing those that fall short.
Simplify the Tracking of Your Ecommerce KPIs with Glew
Ecommerce metrics track the performance of your online store and identify issues that may need immediate attention. Tracking every single KPI and metric can be a daunting task for online retailers. To avoid wasting time on unnecessary data gathering, ecommerce business owners should focus on picking a handful of relevant KPIs based on their business goals. The 11 ecommerce KPIs mentioned in this guide are commonly used across all online businesses, irrespective of their size of operations.
Glew’s ecommerce analytics software and multifunctional ecommerce dashboards make it easier for you to track all the relevant KPIs you need to assess your online store performance. Whether you have technical experience or not, you can easily access the data you need with Glew’s pre-built ecommerce dashboards for KPIs such as conversion rate, AOV, CLTV, channel performance, bounce rates, ROI, and more.
Book a demo to learn more about how Glew’s ecommerce analytics software and intuitive dashboards can help simplify the tracking of your ecommerce KPIs.