Data and its precise interpretation are the lifeblood of your online shop business, sustaining and enhancing it.
The majority of e-commerce platforms are equipped with the means to generate data. However, only a few people can interpret the data and use it to give them an edge in their business.
Key Performance Indicators (KPI) are the prime means of giving measurable value to indicate how effective and efficient a business strategy is.
eCommerce KPIs are used to measure business success in achieving its objectives. Without them, an entrepreneur or a business entity will be taking a shot in the dark and will primarily base their next move on mere conjectures.
What Are Ecommerce KPIs?
eCommerce KPIs provide a clear indication of the success or failure of your online store. They deliver measurable statistics that will prevent an online business owner from overestimating or underestimating the worth or success of their business.
KPIs can help a business owner strategize or make necessary revisions to determine if the online store business will sink or swim. Measurable data provides a clear path that keeps you on track and keeps you from diverting from your desired goal.
Top eCommerce KPIs You Should Care About
Ecommerce KPI # 1 – WebSite Traffic
It’s crucial to know the number of people or potential customers visiting your online store. Your eCommerce website traffic is one of the essential KPIs for marketing.
It gives you a gauge of whether your online business is getting the exposure it requires. It’s a no-brainer that you can expect lower sales output if your online store is not visited.
Knowing the number of visitors is pivotal. However, it’s of equal importance as to where the traffic comes from because it will expose your marketing strategy’s strong and weak points.
Questions such as “Is my site traffic generated from my linked Instagram profile?” “Are my online visitors from Facebook or Twitter?” Now you can know what to improve based on what kind of visitors you get. You can use this information as leverage to further your marketing efforts.
Ecommerce KPI # 2 – Gross Sales and Net Profit
Top eCommerce website builders such as Shopify and Shoplazza agree that gross sales and net profit are one of the leading eCommerce KPIs that business owners should care about.
Business owners must track their sales and profits and can easily do this with the built-in systems on eCommerce websites. They can track their hourly, weekly, monthly, and quarterly sales in a flash.
Knowing your sales and profit in detail can create a short-term and long-term sales and marketing strategy. For example, you will learn what products generate more value for the company. You may also look into the best timing to run your marketing campaigns.
When you have a good profit margin, you can plan and create a strategy for sustainable business growth.
Ecommerce KPI # 3 – Conversion Rate (CR)
Conversion rate (CR) is one of the most critical eCommerce KPIs. It is calculated by dividing the number of visitors who purchased an eCommerce site by the total number of visitors to that site during a given period.
By looking at your CR value, you’d be able to implement changes to your eCommerce website and optimize it to generate more profit. Consider looking at your product placement, user interface (UI), user experience (UX), and adding flexible payment options to improve your CR value.
Ecommerce KPI # 4 – Cart Abandonment Rate (CAR)
The shopping cart abandonment rate is a measure that indicates how many users add items to their shopping cart but do not complete their purchases.
eCommerce businesses need to reduce the number of abandoned carts to increase the conversion rate and generate more profit. It can be used to measure the effectiveness of an online store and identify areas for improvement.
The abandonment rate is typically calculated by dividing the number of items in an abandoned shopping cart by the number of customers who added an item to their shopping cart during that session and multiplying by 100%.
To improve CAR, eCommerce website owners can improve the check-out process, identify and eliminate friction points, and reduce shipment costs.
Other Ecommerce KPIs
Dozens of eCommerce KPIs are worth considering. However, remember that KPIs must be customized to your business goals.
Study each KPI and focus on the ones that will generate a higher ROI for your business and help you achieve long-term growth.
(Contributed by Renz Moralde & Hermes Fang)