Significant Metrics for E- Commerce

All businesses are constantly changing, evolving and needs various levels of decisions by multiple people involved in them. The only constant is CHANGE. This means that as you grow or with time, the metrics that you track will not be the same.

Instead of giving another set of metrics that can be found in various answers & articles – I want to provide a single basic framework to follow to decide your metrics and Key Performance Indices as your business grows.

Because of low margin and highly competitive nature of the business,  e-commerce players keep track of various metrics so that they can optimize the website, as well as marketing, spends and at the same time improve the customer journey. Here I have listed a few metrics for an e-commerce business which helps them to keep track of the visitors, their behavior and site revenue. Basis the scale of the business, these metrics can be tracked monthly, weekly, daily or even hourly.

  1. Visitor & Site Statistics
  • Total Traffic
  • Bounce Rate
  • New Visitors Percentage
  • Time on site
  • % Visits with conversion
  • Abandoned Cart Rate
  1. User Actions
  • No of searches on site
  • No of Product pages visited
  • No of Add to Cart
  • Searches with zero results
  • Frequency of visits
  • Average time to buy (Add to cart to purchase)
  1. Revenue
  • No of Orders
  • No of Products sold
  • Gross Revenue
  • Gross Merchandising Value
  • Profit
  • Average Order Value
  • Source (in percentage value) – Desktop Website, Mobile site, Mobile App
  1. Traffic Sources – Ideally more traffic from direct and Organic Search is preferred
  • Direct
  • Search (Organic + Inorganic)
  • Email
  • Affiliates
  • Social Media
  1. Marketing
  • Customer Acquisition Cost
  • Customer Lifetime Value
  • Cost of Sale (Ad spend / Revenue)
  • Churn rate
  • Email open rate
  • Email click rate
  • Coupon Redemption Rate
  • Revenue from White label products (if any)
  1. Operational Efficiency
  • The payment Gateway success rate for different Payment Gateways (Tech Process, ICICI, AXIS etc)
  • Payment Mode (Percentage) – Credit Card, Debit Card, Netbanking, Cash on Delivery, Loyalty Points / Gift Voucher, Draft / Cheque
  • Average Delivery time – PIN code wise
  • Shipping cost as a percentage of total revenue
  • Inventory Value as a multiple of average daily revenue
  • Product Return Rate

Metrics can be slightly different for different players basis the site type. Horizontal e-commerce (like Amazon, Flipkart) players will evaluate these metrics for each of their categories, while vertical players (like Firstcry, Lenskart) may do the same for different subcategories and Brands.

Further segmentation is possible basis devices, browser, time of the day, landing page etc. The nature of traffic from a marketing landing page during a heavily discounted sale is totally different from returning visitors who are coming to buy predetermined products. That’s why these metrics are best evaluated holistically rather than in isolation.

First, segment your data by at least a few different dimensions:

  • Traffic Source / Channel / Campaign: how users came (links, email, SEO, and PPC) will influence their behavior. Also, metrics will differ by why users came in (offer-based vs sale vs competitive vs unqualified).
  • Product Category: the more products you sell, the more variation you’ll see.
  • Time: to track seasonality and trend initiatives. I generally pick weeks. Day of the week tends to have too much volatility. Month tends to be too long a period, and the start/end dates are arbitrary.
  • Device: computer / tablet / phone. Metrics will vary dramatically by what device consumers are using

Second, keep your eye on some key metrics (segmented by channel):

Average Order Value: what does an order mean to you?

Average Order Profit: what does an order really mean to you?

Cost Per Acquisition: how much can you afford to pay for that sale?

Conversion Rate: how efficient is your website at closing the deal (adding to cart, registration, checkout, payment, subscription, upsell)

Return on Investment (ROI): typically cost per sale/sale amount. Also tracked as the inverse: Cost of Sales (COS)

Customer Lifetime Value: can you afford to pay a lot for an acquisition, knowing you can make up the money over the next x months?

Repeat Purchase Rate: related to CLV, and allows more bites at the apple

Revenue Per Visit: are you making the most of every visitor?

Customer Satisfaction Rate or Net Promoter Score: are you getting orders or are you getting customers?

Demographics: even at a high level, it provides some customer context.

Third, ask the right questions, because metrics are meaningless without actionable insight.

Identify your most important channels for revenue/acquisition; find opportunities

Identify your best selling and most profitable products; prioritize them but also figure out why your other products aren’t doing better

Identify which products are purchased together to uncover merchandising and bundling opportunities

Test offers to determine what drives your goals: shipping, guarantees, freemium / samples, upsell, discounts, BOGO (buy one, get one), etc.

Isolate conversion barriers and tune them all down

What’s the best way to increase revenue by 10% for your business: increase traffic by 10%, increase conversion by 10%, or raise prices by 10%?

What are the 50%, 80%, and 95% scenarios? Means, edge cases, and subjective priorities can mislead you from the bigger picture.

Unless you completely missed something, you’re more likely find a bunch of 1% improvements rather than one 50% improvement, so granular, ongoing understanding of your data is key. Also, unless you’re already processing a lot of orders, you probably won’t have enough clean data to make decisions quickly, so be methodical and patient.