Managing an eCommerce store on digital platforms can be challenging in today’s digital age since every store is competing for the same audience. By tracking eCommerce KPIs, you can track conversion rates, average order values, lifecycle values, cart abandonment rates, and overall supply chain management, ensuring your system is running round-the-clock.
In this article, we will be discussing all of what eCommerce KPIs are capable of and learn about the most valuable KPIs in 2023. Whether you’re seasoned or just starting in the eCommerce business, it is critical to understand the eCommerce KPIs. So, let’s dive into it.
What are eCommerce KPIs and Why Do They Matter?
eCommerce KPIs or Key Performance Indicators are important metrics that help measure how well an online business is performing. They benchmark the success and achievements of eCommerce businesses as they provide insightful data regarding the effectiveness of a digital store.
These KPIs can include a wide range of metrics, such as website traffic, conversion rates, average order value, customer acquisition costs, and more.
They help businesses in optimizing day-to-day operations and improving customer satisfaction, while ultimately driving revenue generation and growth.
Some specific reasons why eCommerce KPIs are important for businesses to include:
- They help businesses to set targets and measure their progress towards achieving them by identifying specific KPIs to track.
- They provide insights into customer’s behavior and preferences by analyzing KPIs such as conversion rate and average order value.
- eCommerce KPIs can be used to provide stakeholders such as investors and shareholders with a clear view of how the business is performing.
- They help optimize processes and improve overall efficiency by identifying key areas of their operations that are underperforming.
- They provide businesses with concrete data that can be used to make informed decisions about marketing, product development, and other areas of their operations.
- By tracking and analyzing eCommerce KPIs over time, businesses can identify trends and patterns that can help them make continuous improvements to their operations.
- They can be used to compare a business’s performance against that of its competitors, providing valuable insights into areas where the business may be falling behind or where it is excelling.
- By understanding which areas of their eCommerce operations are performing well and which are not, businesses can allocate resources more effectively to drive better results.
Types of eCommerce KPIs to Know About for Your Online Businesses
Various kinds of KPIs exist in the world of eCommerce. Let’s discover them one by one here:
Sales-oriented eCommerce KPIs
Sales-oriented KPIs are more focused on measuring the performance of sales and revenue for eCommerce and website key performance indicators. eCommerce KPI examples include the total sales, conversion rates, average order values, and customer lifetime values.
Marketing-oriented eCommerce KPIs
The key performance indicators dealing with marketing usually measure the effectiveness of the marketing efforts. The top eCommerce KPI examples are website traffic, click-through rates, return on advertising spend, and cost per acquisition.
Customer-oriented eCommerce KPIs
These key metrics for eCommerce measure the level of customer satisfaction and loyalty rates. It includes net promoter score, customer retention rate, stockout rate, feedback, and inventory carrying costs.
Inventory-oriented eCommerce KPIs
Inventory-oriented KPIs are used for measuring the efficiency of an eCommerce business’s inventory and management processes. It includes the inventory carrying costs, inventory turnover rates, and stockout rates primarily.
Website-oriented eCommerce KPIs
Website key performance indicators measure the website performance rates like bounce rate, time spent on site, website load time, and page views per session.
Fulfillment-oriented eCommerce KPIs
eCommerce performance metrics related to fulfillment-oriented KPIs measure the efficacy and efficiency of your order fulfillment process and management. It includes the order processing time, shipping time, and order accuracy rate.
Financial-oriented eCommerce KPIs
Financial-related KPIs measure the financial health and well-being of your eCommerce business. The prime examples of financial-oriented KPIs include the gross profit margin, return on investment, and net profit margin.
It is important to clarify that the eCommerce KPIs you choose for your business completely depend on the specifications, goals, and objectives. Selecting and tracking the right key performance indicators can help you to gain valuable insights regarding your business’s performance and make a data-driven decision to improve its current scenario.
Now, we are at the most important segment, where we will discuss the top eCommerce KPIs for your online business and the eCommerce industry overall.
25 Top eCommerce KPIs to Track in 2023
Keeping track of all the significant business KPIs can streamline the expanding task list.
Being updated regarding which eCommerce KPI metrics need to be tracked and are profitable for your business is now more easily accessible. Here’s a list of the top 25 eCommerce KPIs you can look out for to ensure your storefront’s optimum success.
1 Conversion Rate
Conversion rate as a priority in eCommerce KPIs measures the percentage of the website visitors making a purchase or involved in actionable processes like signing up for your store or subscribing to your newsletters. This determines the healthy effort of marketing you have implemented that is converting your audience and customers to potential buyers.
(Total Visitors on Website / Total of Conversions) x 100
2 Average Order Value (AOV)
Average order value, commonly referred to as AOV is a KPI for eCommerce business allowing you to identify and determine whether customers are purchasing in greater or lesser numbers compared to their previous orders. This eCommerce KPI benchmark helps to measure and authenticate the success of your cross-selling and upselling efforts. It also helps to observe if the price point, promotions, and structures are aligning with your customers.
Total Generation of Revenue / Number of Orders Placed
3 Repeat Customer Rate (RCR)
Retail KPIs are well acquainted with this metric due to its ability to ensure eCommerce subscription management services. This can help in providing insights regarding customer loyalty and your marketing strategy effectiveness. Having a higher rate of repeat purchasers is better for your business.
Repeat Purchases from Customers / Total Purchase made over Given Time
4 Customer Acquisition Cost (CAC)
The eCommerce KPI dashboard for customer acquisition cost is based on the amount of money spent on acquiring new customers via different mediums or channels (paid advertising, form of digital marketing, discounts, sign-up offer, etc). When your cost of acquisition is lower, it shows more tenacity for your business.
The Cost of Acquiring New Customers / Number of Acquired Customers
5 Customer Lifetime Value (CLV)
Benchmarking eCommerce KPIs for customer lifetime value provides you with the worth of every customer bringing to your business. By maintaining and strengthening your customer relationships and loyalties, CLV can help churn out the most profit and implement ROI-yielding strategies for retaining and attracting customers for business growth.
(Annual Profit Contribution of Customers x Average Number of Years as a Customer) – Initial Customer Acquisition Cost
6 Gross Profit
Gross profit has been known to be one of the most crucial eCommerce KPIs that has helped entrepreneurs and business heads to plan and strategize for their businesses ahead. Gross profit shows the total profit once the costs of production and distribution have been subtracted.
7 Shopping Cart Abandonment Rate (CAR)
This eCommerce conversion measurement enables you to know how many visitors are adding products to their cart but not completing their checkout process, thus abandoning the shopping cart completely. It is necessary to reduce the friction when the checkout process rolls in and to ensure a holistic improvement in the cart abandonment rate.
1 – (Total of Transactions Completed / Total Shopping Carts) x 100
8 Shopping Cart Conversion Rate (CCR)
This key performance indicator in retail measures the number of visitors on your platform that goes through the checkout process and completes their purchase with the products they like. The right marketing strategies can convert CAR to CCR quickly and efficiently.
(Total Number of Conversions / Total Visitors on Platform) x 100
9 Cost of Goods Sold (COGS)
COGS is based on eCommerce KPIs that focus on the amount you spend as a business in selling your product. The prime eCommerce KPI examples for this one include overhead expenses, employee wages, cost of manufacturing, and costs related directly to the distribution and production of goods.
10 Churn Rate
Businesses that have taken the digital space need to have churn rates to know the pace with which customers are canceling their subscriptions or leaving your brand for better offers. You can calculate your churn rate as follows
(Total Number of Lost Customers / Total Number of Customers at the Beginning of the Year) x 100
11 Repeat Purchase Rate (RPR)
RPR as one of the eCommerce KPIs gives you the total number of customers that return to your business to make more purchases. It can help in measuring the loyalty of your customers and provide you with the next stage of strategizing your sales. A higher RPR is better for the visibility of your business.
Repeat Purchases from Customers / Total Amount of Purchases
12 Average Margin of Profit
eCommerce performance metrics like average profit margin represents and determines your total profit margin over a specific period. It helps you to ideally up your production sales when you implement the average profit margin.
13 Revenue Per Click (RPC)
RPC is simply understood as the average revenue generated per click on all your pay-per-click marketing campaigns and strategies. It allocates a specific value to every paid advertisement and click.
14 Frequency of Purchases
Website key performance indicators like purchase frequency help to measure the average total of orders placed by customers made over a specific period. This is an excellent KPI for eCommerce businesses to track customer loyalty and highlight the products or categories that are underperforming in your business.
15 Time Spent between Purchases
This product performance metric shows the amount of time customers take before they make another purchase from your digital stores. This eCommerce KPI is a good way to follow and know when to tailor your marketing strategies and campaigns as expected through customer purchasing behaviors.
16 Inventory Turnover Rate
Inventory turnover rate is a crucial and significant part of eCommerce KPIs and also the financial ratio that can be verified and used by eCommerce owners to determine the number of times their inventory was sold throughout the year. Inventory turnover is a key metric for eCommerce to check whether your business has stocked excess inventory compared to holistic sales.
17 Holding Inventory Ratio
This eCommerce KPI ratio can be utilized to determine the average cost of inventory holdings before you plan to sell them. The cost of holding usually consists of labor, storage, security, and equipment required to store the inventory for your business. Most of the time the holding costs are at least 25% – 30% based on the value of your inventory.
Cost of Holding / Average Value of Inventory
18 Revenue Generate per Visitor
The eCommerce KPIs related to this one are important product performance metrics that can be used to determine the average revenue generated by each visitor. It can identify the income from your last quarter based on the number of visitors to your online store, so the calculated costs per visitor can be identified with this KPI for the eCommerce business.
19 Net Profit Margin
Net profit margin is an important key performance indicator for retail that assists in measuring the profitability of your business. It is the profit margin your business generated after calculating and making the necessary deductions like operational costs, taxes, and more. Your net profit margin will usually indicate the amount of revenue you generate once the deductions are made.
20 First Contact Resolution Rate (FCR)
FCR is one of the popular customer KPIs used for measuring the percentage of interactions for customer services that have been resolved at first contact. Having a higher rate of FCR determines that customers are having their issues and problems solved more efficiently and effectively leading to higher rates of customer satisfaction.
21 Customer Satisfaction Score (CSAT)
Having a CSAT score can help your business measure the rate of customer satisfaction with the services they receive. A high indication of CSAT score reveals that customers are satisfied because your eCommerce business meets their expectations and you can keep improving on their feedback to provide a holistic shopping experience.
22 Pageviews per Session Rate
One of the common business KPIs refers to the average number of visitors to your website pages during every visit. When it takes too long to find the right product page for visitors, redesigning your website is mandatory, if not necessary. Having a higher rate of pageviews per session does not sit well with eCommerce businesses in 2023.
23 Average Handling Time (AHT)
AHT, a common eCommerce KPI practice, refers to the average time taken by the customer service department in handling customer requests from beginning to end. Having a low AHT showcases quicker and more efficient customer service, while a higher one reaps the opposite and requires overall improvement, staff training, and more.
24 Bounce Rate
This is the percentage of visitors who have exited your eCommerce website without going through actionable inputs after only visiting the page once. The bounce rate provides you with the capability of understanding people’s perceptions regarding your website and their competitive experience.
25 Net Promoter Score (NPS)
NPS is one eCommerce KPi that dives into determining customer loyalty and how likely they are to recommend your business to others. Having a high NPS score shows you have satisfied customers and they are happy with the services you provide. The NPS is an integral part of turning your customers to repeat buyers and make them brand advocated when necessary.
How to Choose the Right eCommerce KPIs for Your Business
Choosing the right KPIs for eCommerce businesses is crucial for achieving business goals and objectives. Prioritizing and selecting the right KPIs involves understanding the specific needs of the business, the industry, and the target audience. Here are some possibilities and considerations when selecting the right KPIs:
#1 Have a Clear Idea of Your Business Objectives
Establish a clear vision of what your business aims to achieve, such as increasing revenue, improving customer experience, or expanding your customer base. Based on your goals, you can select the type of eCommerce KPIs and select the KPIs that are the most relevant to your business.
#2 Define Your Target Audience & their Needs
Understanding the needs and expectations of the target audience is critical in selecting the right KPIs. Different audiences may have different needs and behaviors. Hence, selecting KPIs that are relevant to your target audience will help you to measure the effectiveness of your eCommerce efforts.
#3 Consider Industry Trends & Best Practices
Keeping track of industry trends, standards, and best practices is important when selecting the right KPIs for eCommerce businesses. They indicate changes in consumer behavior or the adoption of emerging technologies that can impact business operations.
#4 Focus on Actionable Metrics
Selecting eCommerce KPIs that are actionable is important in making data-driven decisions. Actionable metrics are those that can be influenced and improved through specific actions. Make sure that the KPIs you select are measurable and can be tracked accurately. This will enable you to monitor your progress and make data-driven decisions.
#5 Consider Operational Efficiency
KPIs that measure operational efficiency are important in identifying areas where the business can improve. For example, monitoring fulfillment time and shipping time can help eCommerce businesses identify areas where they can optimize their supply chain and improve delivery times.
#6 Continuously Review and Adjust
eCommerce businesses should continuously review and adjust their KPIs to ensure they remain aligned with business goals and objectives. You should regularly review your eCommerce KPIs and adjust them as needed to reflect changes in your business objectives or market conditions.
eCommerce KPIs are essential for any business that wants to succeed in the increasingly competitive world of eCommerce. By selecting the right KPIs, businesses can gain valuable insights into their performance and identify areas where they can make improvements.
These KPIs enable businesses to make data-driven decisions, optimize their operations, and achieve their goals. As the eCommerce landscape continues to evolve, tracking and analyzing KPIs will become even more critical for businesses looking to stay ahead of the competition and achieve long-term success. With our assistance, you can grow your circle to higher grounds, while maintaining a competitive edge in the market. So what are you waiting for, get started today!
Nitin Lahoti is the Co-Founder and Director at Mobisoft Infotech. He has 15 years of experience in Design, Business Development and Startups. His expertise is in Product Ideation, UX/UI design, Startup consulting and mentoring. He prefers business readings and loves traveling.