How much my e-commerce shop will earn?

In this article you’ll learn the most critical metrics that companies in the E-Commerce Industry should track.The article does not include metrics such as Profits and Sales that are critical to companies in all industries; rather the focus is on metrics more specific to the E-Commerce Industry.

By tracking your metrics, you will dramatically improve your business results.

Why? Because not only is the old saying “If you can’t measure it, you can’t improve it” true, but visibility into your metrics allows you to identify WHERE you can make the easiest and most impactful improvements.

For each metric, we will answer the following questions:

– What is the metric?

– What is this metric on average?

– Why is this metric important?

Let’s get started…

1. Website Traffic

What is this metric?
This metric helps to ecommerce companies understand the popularity of a website, landing page, or separate sections within a site.
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Average Website Traffic: This varies depending on the age and size of the site, as well as the product mix. For example, Compete.comshows that ecommerce giant Amazon averages 120 million unique visitors every month, but niche ecommerce sites like Combatflipflops.com see far less traffic, which varies dramatically by season.

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Why is this metric important?
Increasing website traffic is often a goal for ecommerce websites. Traffic not only leads to purchases, but also a general awareness of your brand. The more people who visit, the more likely they are to remember your name, mention you to friends, or come back when they want to purchase something that you offer.

2. Conversion Rate

What is this metric?
The conversion rate is the percentage of users who take a desired action. For e-commerce, one of the most important conversion rates is the percentage of website visitors who buy something on the site.
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Average Conversion Rate
According to Monetate Ecommerce Quarterly, the average retail conversion rate stood at 2.53% in Q1 2015. However, these rates vary by the devices used. Conversion rates are highest for “Traditional” (desktop) and lowest for mobile.

monetate

Why is this metric important?
The conversion rate measures what happens once people are at your website. This metric is greatly impacted by the site’s design and user-friendliness. No other metric so holistically captures as many critical aspects of a web site – user design, usability, performance, convenience, ad effectiveness, net promoter score, customer satisfaction – all in a single measurement.

3. Time To Purchase

What is this metric?
This metric tells you approximately how long it took for visitors to your site to change into actual customers. While some people may visit your site and immediately make a purchase, others may visit two, three, or even more than ten times before they decide to buy from you.
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Average Time to Purchase
According to Nielsen Norman Group, half of all online purchases occur within 28 minutes of the initial click. 75% occur within 24 hours, 90% by day 12, and the remainder occur more than 4 weeks after the initial click.

Why is this metric important?
Knowing your average time to purchase can help you make really smart decisions about your marketing. For example, you may want to set up a special email marketing campaign for a computer equipment store that sends detailed information to shoppers based on what they were looking at. On the other hands, general sale or new product emails will work well for stores with lots of impulse shoppers.

Do you currently know how you’re performing on each of these key metrics?
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4. Average Transaction Value

What is this metric?
The Average Transaction Value (ATV) is the average dollar amount that a consumer spends with you, within a single transaction.
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Average Transaction Value
According to RJMetrics, top performing e-commerce companies have an average transaction value of $102. For all other e-commerce companies, this value is $75.

Why is this metric important?
The ATV is very important when evaluating the total success of a business. Attracting customers is no easy feat, and it costs money to secure each customer’s business. If you can increase your ATV with each customer, you will end up with a higher return on investment (ROI) on your sales and marketing costs.

5. Cost Per Conversion

What is this metric?
Cost Per Conversion (CPC) is the amount you essentially pay to turn a visitor into a buyer.
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Average Cost per Conversion
A recent study published by MarketingSherpa shows that overall the cost of ecommerce customer acquisition is rising. The same study found that ecommerce companies fall into three main categories of acquisition cost, each with a different average cost.

  • Rising: Median $25
  • Steady: Median $12
  • Falling: Median $14

Why is this metric important?
Knowing what your CPC averages is extremely important. It helps you determine the true return on investment. In the end, if a campaign brings you only clicks but no orders, it’s not successful. It can help you make smarter decisions about how much your products should be sold for, what you should pay for advertising, and even how you should market your business online.

6. Traffic Sources

What is this metric?
The Traffic Sources Metric provides an indication of who a site’s visitors are, and where they’re visiting from. Traffic sources metrics consists of the following data:

  • Direct Traffic: all those people showing up to your Web site by typing in the URL of your Web site or from a bookmark. Some people also call this “default traffic” or “ambient traffic.”
  • Referring URLs: other Web sites sending traffic to you. These could be as a result of your banner ads or campaigns. These could be all those blogs or affiliates who link to you.
  • Search Engines: Google, Yahoo, MSN, Ask, others. This bucket will include both your organic as well as your paid (PPC/SEM) traffic, so be aware of that.
  • Other: These include campaigns you have run, e-mail, direct marketing and so on.

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Average Traffic Sources
Wolfgang Digital found that 69.5% of all e-commerce traffic comes from Google (both paid and organic). Visitors coming directly to the site accounts for the second-largest traffic source, at 18.3%.

Traffic Source % of Traffic
Google Organic 40.1
Google Paid 29.4
Direct 18.3
Email 3.9
Facebook Referral 1.3
Bing Organic 1.2
Yahoo Organic 0.9
Others 4.8

Why is this metric important?
Knowing where a site’s traffic comes from can help ecommerce companies understand how well marketing campaigns are working and how better to invest in site content, advertising, or other forms of engagement.

7. Average Number of Pages Visited

What is this metric?
Pages per visit is a measure of how many pieces of content (Web pages) a particular user or group of users views on a single website. Pages per visit is usually displayed as an average, which is calculated by dividing the total number of page views by the total number of visitors. It can be further broken down by country, region and even demographic in complex Web analytics programs.
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Average Number of Pages Visited
Over the span of a year, Wolfgang Digital found that an average of 5.4 pages are visited per session.

Why is this metric important?
Pages per visit is a broad measure of how compelling users find the content on a website and how well it is arranged for navigation. It will tell you if your shop’s content is engaging and if your traffic is targeted. If these stats are low, you might want to reconsider the focus keywords and ad campaigns that may be bringing in unqualified traffic.

Want to discuss the specific metrics you’re tracking (or want to track) for your company?
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8. Average Time Spent on Site

What is this metric?
This metric measures the number of work related injuries within a specific period of time.
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Average Time Spent on Site
Wolfgang Digital studied average session lengths for a full year. The company found that the average session lasts 3.49 minutes.Wolfgang Digital studied average session lengths for a full year. The company found that the average session lasts 3.49 minutes.

Why is this metric important?
Looking at the average time users spend on the entire website will give you a holistic view of how your website is performing..

9. Shopping Cart Abandonment

What is this metric?
This metric shows the percentage of people who start the checkout process but do not complete it.
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Average Shopping Cart Abandonment Rate
BI Intelligence reports the average rate for ecommerce shopping cart abandonment across the globe is 71.2%.

Why is this metric important?
The rate at which visitors abandon is an important statistic to track for online retailers as it can mean the difference between a profitable eCommerce store and unsuccessful one. Any changes to influence the abandonment rate will have a direct, measurable impact on the bottom line.

10. Average Bounce Rate

What is this metric?
The Bounce rate is the rate at which new visitors visit a site and immediately click away without doing anything (very low time spent and no interactions).
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Average Bounce Rate
Monetate reports the desktop shopper bounce rate at 35.25% in Q1 2015. For tablet shoppers, the rate was 29.6%, and for mobile shoppers 39.3%.

Why is this metric important?
A high bounce rate can mean several things, including weak or irrelevant sources of traffic and landing pages that aren’t optimized for conversion (have a poor design, low usability or high load times). Bounce rates for e-commerce sites are often called abandonment rates, i.e., the rate at which people abandon their shopping cart without making a purchase. This is usually a result of an overly complicated checkout process, expired deals, forced cart additions (e.g. to see the actual price of the product, add to your cart), and so on.

11. Repeat Visitor Ratio / Customer Retention Rate / Visitor Loyalty

What is this metric?
Repeat Visitor Ratio (RVR) measures the percentage of visitors who return to your site after an initial visit during some specific time period.
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Average Repeat Visitor Ratio
According to Sweet Tooth, the average ecommerce store generates 43% of its revenue from repeat purchases. At best-in-class companies, that number nears 80%.

Why is this metric important?
Acquiring new customers is increasingly expensive. Getting existing customers to purchase again is cheap — costing between ⅓ and ⅛ as much. Companies that excel at turning one-time buyers into repeat purchasers have more profitable, sustainable businesses, with higher lifetime values.

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12. Exit Page / Exit Rate

What is this metric?
This metric shows which page is the last to be viewed by visitors before they leave the site.
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Average Exit Page / Exit Rate
According to digital marketing author Avinash Kaushik, approximately 98% of ecommerce site traffic will exit at places you don’t want them to exit (examples of good places to exit: checkout page or lead submission page or a support faq page).

Why is this metric important?
Your exit rate lets you know the last page that users view before they move on. A very high exit rate on a specific page can be a red flag.

When are your customers leaving your site? Is it when they realize that they need to create an account to complete a purchase? Maybe it’s when they see the shipping costs. Analyze when exactly your customers are exiting and try to optimize those pages to engage customers to keep shopping.