Your e-commerce and marketing strategy is in place. It’s now time to see whether your efforts are bearing fruit and to present them to your boss. The stakes are simple: to demonstrate that your actions are profitable and potentially invest in tools that allow you to automate your processes and generate more growth.
To do this, nothing could be simpler, just analyse your KPIs!
But where should you start?
This is where things get complicated… there is no shortage of ecommerce KPIs, especially in the context of an omnichannel strategy…
Let’s be clear, following up all the indicators at your disposal is a bad idea. Not only do you increase your workload, you risk wasting your boss’ time by presenting him with a stream of data that is difficult to digest.
So, to impress him with relevant interpretations and open the door to new growth tools, choose the “right” KPIs. Those that demonstrate the profitability of your actions.
SUMMARY
1. What is an ecommerce KPI?
A KPI, or Key Performance Indicator, is a measurable, numbered indicator, comparable over time, which enables you to carry out a follow-up and take strategic decisions.
Whether it’s your online shop, marketplaces, “Products Ads” like Google Shopping, or any other acquisition channel, KPIs serve to evaluate the performance of your actions over time and shed light on the progress being made towards your targets.
They are your best allies for effectively managing your e-commerce actions action plan and adjusting your strategy to be profitable.
That’s not all… They are vital to show your boss numerical results, justifying your decisions.
Here is a selection of vital KPIs to be integrated in your dashboard 👇
2. The main ecommerce KPIs to be followed up on your dashboard
TRANSACTION
Profitability! Here is a word that your boss will like the sound of.
So, what could be better than indicators that provide you with an overview of the profitability of your e-commerce.
1. Turnover
Turnover is THE number one indicator to have on your dashboard. Indeed, it indicates the evolution of the sales made over a given period.
Turnover is a specific KPI that enables you to gauge the profitability of your products, sales channels, campaigns, or promotions. It can also be calculated provisionally and per sales channel.
This will make your boss’s eyes light up🤩.
2. The number of orders
This indicator completes the turnover, as it indicates the number of orders placed by your customers.
Furthermore, by dividing your turnover by the number of orders, you will be able to calculate the amount of your average cart.
Example
During Black Friday, my sales on marketplaces generated €3000 of turnover for a total of 300 orders.
€3000 of turnover / 300 orders = €100 of average cart on marketplaces
Apart from the calculation of the average cart, why is important to know the number of orders?
From an organisational point of view, you can:
- Anticipate the replenishment of your stock.
- Detect a problem or error. For example, a poorly entered price may lead to an unusual increase or decrease in the number of orders.
From a strategic point of view, you can:
- Evaluate the result of a commercial operation, a change on your website, etc.
- Draw up an action plan: set up a suggestion in your shop of articles to be added to the cart to increase the amount of the average cart.
Offer your purchasers discounts for their next purchases to raise the number of orders and the purchasing frequency* at the same time.
In order to go into greater detail in the analysis, the number of products sold provides you with the number of products purchased per order placed.
3. Cost price
The cost price, this is another KPI that will impress your boss! This corresponds to the sum of the direct and indirect charges linked to your products: manufacturing, dispatch, storage, marketing, and delivery, related to the quantity produced.
The cost price is variable, as it depends on a number of external factors. It guides your price strategy as it influences your trade margin.
Cost price = (direct charges + indirect charges) / quantities produced
4. Sales margin
There are two types of sales margin: the unitary sales margin to evaluate the profitability per product and the overall sales margin to measure the profitability of your activity.
The first is the difference between your sale price and the cost price. As for the second, it is obtained by deducting the cost of purchasing the goods sold from the turnover.
In general, a margin of at least 30% is considered necessary and is considered good as of 50%. To make it simple, the higher it is, the better it is! NB, this obviously depends on the category of products sold and the sales channels concerned. Your profit margin will not be the same on your online shop, in your physical shop, and on a marketplace.
This indicator is vital for assessing your profitability depending on your sales channels.
TRAFFIC ACQUISITION
Now you have presented your transaction KPIs, it’s time to move on to the acquisition KPIs. They are generally less easy to interpret, so be specific and forceful.
This is the time to show that you are generating traffic on your different sales and acquisitions platforms. Your boss must understand that without traffic, there is no sale!
5. Number of new users
The number of users and new users are the first indicators that appear on your Google Analytics dashboard. These KPIs enable us to see at a glance if our acquisition strategy is bearing fruit and to detect any anomalies.
The number of new users is the number of people who have interacted with your e-commerce site or launched your application for the first time.
This indicator is useful to monitor both for your acquisition strategy and your retention strategy. Indeed, it enables you to distinguish your new users from the recurrent users.
Retargeting enables you to retarget recurrent users and make them come back. 😉
However, the analysis doesn’t stop there! To provide your boss with a relevant analysis, you must correlate these indicators with other data.
This is especially true in the context of an omnichannel strategy. Is it your Google Ads campaigns or the price comparison websites that attract more traffic to your site? If it is the price comparison websites, which are they? By analysing the number of new users by medium and/or traffic source, you can focus your efforts on the channels that bring you the most traffic.
🚀 Our advice to increase your traffic
- Work on the search engine optimisation (SEO) of your e-commerce site: responsive site, optimised content, properly filled-in product sheets, blog…
- Develop your search engine advertising (SEA): Products Ads, Products sponsored on social networks, Google Shopping campaigns…
- Distribute your products on the price comparison websites, affiliation and retargeting platforms…
- Set up a customer newsletter
- Develop your reputation by moderating a community on the social networks
6. Customer acquisition cost
As the name suggests, the acquisition cost is the amount spent to get a new customer. You are also advised to calculate the acquisition cost per channel to determine which ones give you the best return on investment (ROI).
To do this, you must monitor other KPIs specific to each of your acquisition levers, but also to your objectives. For example, you will need to have the cost per click (CPC) for the price comparison websites or for your “Product Ads” advertising campaigns.
CAC = (total sales and marketing cost) / (number of acquired customers)
CONVERSION
To keep your boss listening, you have to show him that the traffic generated is qualified! Show him the figures that count for him, like the number of visitors converted into customers!
7. Conversion rate
The conversion rate is an essential indicator for measuring the performance of your marketing and promotional campaigns, and of your e-commerce site.
Within the context of a presentation of the e-commerce results to your boss, the conversion rate is the percentage of users that have made a purchase in your shop.
The average conversion rate in e-commerce, all sectors together, is 3%*.
* Semji
🚀 Our advice to increase your conversion rate
- Optimise your catalogue: complete and structured product sheets, suggestion of similar or complementary products at the bottom of your sheets, highlighting of your best-sellers…
- Reassure your customers: product or seller reviews, several payment options available, reactive customer service, flexible return policy…
- Focus on the customer experience: user-friendly site, possibility of purchasing without creating an account, offering a gift after a certain amount of purchase, etc.
- Use marketplace sponsoring tools as smart reduction vouchers on Cdiscount
8. Average cart
The average cart is a conversion KPI, enabling you to estimate your profitability when it is correlated to your conversion rate. Furthermore, the average cart represents the average sum spent per order placed.
🚀 Our advice for increasing your average cart, whether this is in your online shop or on the marketplaces
- Offer delivery after a minimum purchase amount
- Implementing a reward system
- Offering kits with additional products
- Display the amount remaining to be purchased to benefit from free dispatch
- Use the promotional levers offered by marketplaces such as Rakuten coupon and Rakuten Points
9. Cart abandonment rate
As the name suggests, this KPI indicates the percentage of users who have added at least one item to their cart without completing their order.
This indicator is very important because a high abandonment rate can indicate different problems:
- Technical: your payment page has a bug, doesn’t load fast enough, or a promo code doesn’t work
- Financial: your products aren’t well positioned in price terms compared to the competitors, the delivery price is too high
- Marketing: the product sheets aren’t clear enough, the payment page doesn’t urge action
- Logistics: the delivery options aren’t aligned with your customers’ expectations
Once again, the user experience is your closest ally for reducing your cart abandonment rate. This applies both to your website and to the various sales and acquisition channels on which your products are distributed.
For example, emailing a discount on an abandoned shopping cart or facilitating the shopping process by offering the chance to pay without creating an account are two methods that work very well.
CUSTOMER LOYALTY
You have succeeded in converting your users into customers, well done! While you are aware of all the effort and the resources this has required, the same does not necessarily apply to your boss.
Here are the KPIs that will show him that customer loyalty costs less than going and looking for one again. Furthermore, a loyal customer is less sensitive to your competitors’ solicitations and promotional offers.
10. Customer retention rate
This is a strategic KPI that allows you to evaluate the number of customers you have managed to retain over a given period.
To obtain this rate, deduct the number of new customers from the number of final customers and divide this figure by the number of initial customers.
11. Percentage of turnover generated by the old/new customers
With this indicator, you can measure the distribution of your turnover between your new and your current customers.
This is the right way to take the pulse of your current customers: do they tend to increase their average cart, or is it the other way round? This will allow you to adjust your loyalty strategy and preview your future product lines.
12. Purchase frequency
The purchase frequency determines the number of times your customer returns to your site to make a purchase.
Here again, the marketplace sponsoring tools can help you increase the purchase frequency, like the loyalty programmes.
13. Product return rate
The product return rate corresponds to the percentage of purchased products that are returned for various reasons.
A high return rate requires an analysis to identify the problem or problems encountered by your customers. To refine your study, it is useful to correlate this data with the refund rate and the customer satisfaction index.
💡 To be more effective, consider integrating a satisfaction survey in your process to gather the reason for the return.
If you are sellers on marketplaces, you will find the incident rate and returns management, the dissatisfaction rate for returns and the refund rate that are part of the monitoring KPIs to keep your seller account at the highest level.
14. Product return rate
The Customer Lifetime Value is the value generated by your customer throughout their “lifetime” with your brand.
You now have all the trumps you need to impress your boss!
Of course, there are other ecommerce KPIs to be added to your dashboard… But not all of them are adapted to your contact person and to the context of the company. So, you need to adapt your indicators and your speech. As far as your boss is concerned, think target figures, results, and profitability.
Note that the follow-up of your key indicators must be regular (monthly, quarterly, half-yearly, yearly) in order to evaluate the result of your actions and take effective strategic decisions.
If you want to know more about the KPIs to follow to measure your sales strategy on marketplaces, we recommend our specific article.
Annabelle Granulant
Content Manager at BeezUP