If eCommerce was easy, everybody would be doing it. Jokes aside, the sales from e-retail are projected to exceed $6.3 trillion by the end of 2024 across the globe, making it a worthwhile investment for those entrepreneurs who want to leave their mark in the digital landscape.
However, there are also a lot of pitfalls that can lead to an abandoned virtual storefront and money down the drain. To get a head start, partnering up with the leading eCommerce development agencies to set up your shop is essential. Once this is finished, your next task should be tracking the most important eCommerce KPIs.
Table of Contents
- What Are KPIs for eCommerce?
- Top 15 KPIs for eCommerce
- Overall Sales
- Average Order Value (AOV)
- Net Profit
- Number of Orders
- Traffic Volume
- Time Spent on Site
- Organic Search Rankings
- Customer Lifetime Value
- Conversion Rate
- Customer Retention Rate
- Add to Cart Rate
- Cart Abandonment Rate
- ROAS
- CAC or Customer Acquisition Cost
- Customer Satisfaction
- Conclusion
- ECommerce KPIs FAQs
What Are KPIs for eCommerce?
ECommerce KPIs stand for key performance indicators in e-retail. Experts such as Bernard Marr define KPIs as metrics of how well projects, companies, and people are performing when compared to particular business objectives/goals. In this sense, they provide essential information that enable businesses/people/stakeholders to see whether they are heading toward their predefined objectives.
There are several KPIs in eCommerce that retailers need to monitor to ensure long-term success. In the process, they can identify their business’ strengths, possible weak points, and above all, their buyers.
Generally, almost every online store wants to generate more revenue and make more sales. Still, not every retailer will track the same performance indicators, but there are a few that are common, including customer retention rate, average wage order, and net profit.
In this article, we take a closer look at the top eCommerce KPIs you should track to help you grow your traffic, increase your sales, and keep your customers happy.
Top 15 KPIs for eCommerce
Note that you don’t need to track all of the indicators mentioned below. This list should serve as guidance to help you identify the KPIs that matter the most to your business and start from there. On the other hand, you can always reach out to experienced eCommerce consultants to determine which indicators you should track.
1. Overall Sales
Overall eCommerce sales in the US reached $1,118.7 billion in 2023, accounting for 15.4% of the total sales made. These figures shouldn’t be underestimated, and retailers should be tracking their own sales figures regularly, preferably daily, weekly, every month, quarterly, and every year.
For small retailers with only a handful of products, tracking the number of units sold is preferable. Alternatively, sites with massive offerings should focus on gross revenue instead, which refers to total revenue from sales within a specific period.
If you have a well-developed platform, this eCommerce KPI will already be baked into your dashboard, but Google Analytics may also help you track your figures.
2. Average Order Value (AOV)
This KPI refers to the average amount your customers spend on one order, and you can calculate it by dividing your total revenue by the total order numbers. Your AOV should be calculated yearly, quarterly, or even monthly. If your platform doesn’t track this KPI, you can track it in Google Analytics.
This is one of the first indicators retailers seek to increase as a higher AOV means increased revenue from the same or higher sales figures.
3. Net Profit
The average eCommerce net profit margin hovers around 10%. This KPI measures the store’s overall profitability, representing the revenue you are left with once you clear all your expenses.
Net profit is an excellent indicator of overall store health. Turning a profit means that you can scale your operations, invest in marketing, and reach even more people. It also indicates whether the strategies you use to boost your sales are working or need adjustment. Typically, experts track net profit monthly quarterly, or even yearly.
4. Number of Orders
The number of orders represents the total orders received in a given period. On average, buyers purchase 4.41 products per order.
By tracking this number monthly, yearly, or quarterly, you will understand your storage requirements better so you can streamline your inventory management. You can also see how the number of orders was affected by other factors such as product price and quality changes.
5. Traffic Volume
This KPI measures the volume of traffic your site gets. This is also an important SEO metric that you can easily track with Google Analytics. Apart from good SEO practices like keywords, meta, and product description optimization, you may also want to look at other eCommerce trends to increase your traffic.
6. Time Spent on Site
This eCommerce KPI measures the average time visitors spend on your site, and is also trackable with Google Analytics, under Average Session Duration. Like traffic volume, keep track of this indicator weekly, monthly, quarterly, or annually.
This metric is the best indicator of how engaging your online store is, and how interesting your products or content are. The more time people spend on your site, the more likely they will purchase something. Typically, people stay on an eCommerce sites for 44 to 82 seconds on average.
7. Organic Search Rankings
In e-commerce, attracting traffic without incurring any costs is crucial for reducing customer acquisition expenses. Organic search, accounting for 33 percent of e-commerce website traffic, clearly highlights the significance of SEO.
To enhance organic search rankings, it's essential to track the rankings diligently and implement the necessary strategies and SEO best practices that can help you improve your stats. Understanding your site's current organic rankings is the first step toward future effective improvements.
8. Customer Lifetime Value
Shortened to LTV, CLTV, or CLV is a metric that measures the average amount of money a typical customer will spend at your site during their interaction with your store.
Knowing how much each customer is worth to your store is pivotal as it shows all the returns you get from customer acquisition and it’s also a solid measurement of customer retention. Essentially, the higher the CLV to your AOV is, the more frequently customers purchase at your shop.
9. Conversion Rate
Out of your traffic volume, how many visitors are actually becoming customers or interacting with your site? Conversion rate represents the percentage or number of people who take action on your site. A conversion can be a subscription signup, but for retailers, purchase conversion rates are the most important.
10. Customer Retention Rate
This KPI represents the percentage of buyers who continuously purchase at your shop over a given period, usually measured quarterly, annually, or even longer. To calculate it, subtract the number of new customers acquired from the total customers at the end of the period, divide it by the number of customers at the start, and then multiply by 100.
Unfortunately, eCommerce has generally low CCR rates, hovering at 38%, meaning that out of ten people, only three will be loyal to one brand longer than a year.
11. Add to Cart Rate
This represents the percentage of buyers who place products in their basket while browsing your site. On average, this KPI for eCommerce sites was 6.95% in January 2024.
To calculate this KPI, you need to divide those sessions where they add a product by the total number of sessions. This metric can help you see how good your product selections and descriptions are and assist you in perceiving your site’s usability.
12. Cart Abandonment Rate
Cart abandonment is when visitors put products in their virtual basket but leave your page without buying anything. Sometimes, they aren’t ready to buy, but more often, they quit because of complex checkout processes or the lack of preferred payment options. Fortunately, eCommerce automation and other strategies may help you decrease abandonment rates.
Data suggests that this rate is at around 70.19% in 2024, but varies depending on industry, location, and device. It’s advised to track this KPI monthly, every quarter-year or annually.
13. ROAS
Return on Ad Spend (ROAS) measures the effectiveness of your marketing initiatives by showing you how much you managed to earn on every advertising-spent dollar. You get the number by dividing the campaign-generated revenue by the total costs. Usually, it’s represented as a ratio. For example, if you’ve spent $1000 on a campaign and the revenue is $4000, your ROAS ratio is 4:1.
A high ROAS ratio will indicate that you are creating effective marketing campaigns that attract high-paying buyers, while a weak ratio may suggest you should reduce your spending or tweak it to increase conversions.
14. CAC or Customer Acquisition Cost
Usually tied to your ad campaigns, this KPI shows how much it costs you on average to get a new customer. For example, if you spent $1000 on a campaign and gained 100 new buyers, your CAC would be $10 per customer. This would be considerably better than typical because the average CAC in eCommerce is $70.
Tracking this metric is essential for effective marketing strategies, but it can also indicate overall store profitability as well. Lastly, knowing your CAC also helps with easier campaign planning, as you can somewhat forecast costs, allowing you for smooth budget allocation.
15. Customer Satisfaction
This indicator shows how satisfied your clients are with their shopping experience. The score is measured on a scale from one to 100, and in the US, the average score was 77.8 in 2023’s final quarter.
The best way to gain more insight into this is by surveying your buyers, right after they make a purchase. Give them the opportunity to rate their experiences on a scale from one to five. Then, count all those who rated you 4 or 5, divide that number by number of total respondents, and multiply it by 100 – that’s how you calculate your customer satisfaction score.
Conclusion
Tracking the right indicators can make a real difference between successful online stores and unprofitable ones. Relying on the wrong metrics can leave you clueless but when you are optimizing for the right indicators with the right data, customers are bound to come.
Identifying the right eCommerce KPIs can be overwhelming and confusing. To avoid shooting in the dark, it makes sense to reach out to top-tier consultants and get a head start on your online initiatives.
ECommerce KPIs FAQs
What are the most commonly tracked KPIs in eCommerce?
Customer lifetime value, average order value, and site traffic are the KPIs that eCommerce sites most often track. Besides these, net profit and overall sales are also commonly tracked metrics.
How often should eCommerce KPIs be measured?
The answer depends on the type of metrics you use. Total sales may be tracked daily, but others make more sense if you check the weekly, monthly, or even quarterly. Cart abandonment and conversion rates may make more sense if you measure them monthly or weekly.
What is the best tool for KPI tracking?
Google Analytics is a pretty comprehensive eCommerce platform that can suffice to track most metrics, but you may also use SEO tools for checking out conversion rates, bounce rates, time spent on site, and other optimization-related metrics.
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