Trending Articles

Techies In

Improve Your Sales with This Guide to eCommerce KPIs

One of the key drivers behind the success of any business is a better awareness of the company’s performance in all areas. Staying on top will require you to closely monitor those areas that are doing better and those that are not. Respond immediately to poorly performing sectors; likewise, capitalize on those sectors or initiatives showing positive results.

Attaining this level of insight into the performance of a business requires that you have a proper organization of the reporting processes. What you should monitor, measure, and how often you do it. However, such an organizational process can get messy without an automated system; eCommerce KPIs simplify your online business with many functionalities and make it an entirely data-driven approach.

The decision about the crucial metrics and setting up a process and a dashboard to track them is where KPIs come in; below is an ultimate guide to eCommerce KPIs for the essential metrics of your business.

What Is an Ecommerce KPI and What Are They Used For

KPIs are key performance indicators used to monitor the success or retreat of specific sectors of a business. Now, eCommerce KPIs are those indicators tha measure the performance of an online business. It can be online business growth, customer support targets, or sales. You select metrics depending on the objectives of the company.

A Guide To Ecommerce KPIs Attributes

Ecommerce businesses utilize several tools to keep track of various eCommerce KPIs. However, when selecting any analytical instruments, you must ensure you are keeping track of the correct KPI and, therefore, making the right choice of an analytical tool is inevitable.

Ecommerce KPIs that are supposed to provide helpful bits of information about the business’s performance have the following significant attributes; their utility must impact the company, measure the organization’s performance with exceptional accuracy, and deliver data or reports in real-time.

A good eCommerce KPI must be actionable to give room for improvement. Entrepreneurs can utilize numerous eCommerce KPIs to make decisions about their businesses. But the most important thing that entrepreneurs should ensure is that the selected eCommerce KPIs are not only quantitative but also qualitative.

A guide to eCommerce KPIs should also train you with better illustrations of KPIs that can forecast the business’s performance and indicate past events that had a positive or negative impact on the company. Generally, eCommerce KPIs fall into five main categories; customer service, sales, marketing, manufacturing, and store performance management.

Reasons Why Ecommerce Metrics Are Very Essential

The choice of essential eCommerce metrics and KPIs are equally necessary for business owners as they help them gain insights into the sectors that matter most. Tracking the daily routine of a business’s critical operations helps entrepreneurs attain the organization’s goals. Ecommerce metrics form a foundation in which companies can analyze data and gain more insights into the functions of the business.

Ecommerce KPIs, on the other hand, help the management analyze data and understand what the company is doing wrong or the strongholds of the business. The analysis results will also help an eCommerce to change its strategy and make the necessary adjustments to keep things on track. If the analysis report is positive, it tells the business management not to abandon those things that have delivered progress.

A Guide To Ecommerce KPIs And Metrics That Are Most Important

The Ecommerce Metrics to Measure Sales

There are several KPIs for sales that you can use to improve sales in your eCommerce business. Below is a detailed guide to eCommerce KPIs that are associated with sales.

The Average Order Value (AOV) KPI

average order market refers to an average market basket. The (AOV) purpose is to tell you how much your customers typically spend on a single order. The KPI gives you a better understanding of how much revenue each customer generates. You get the value by dividing the total income by the number of customers who checks out your products and complete orders.

The Gross Profit KPI

The gross profit KPI is essential as it helps eCommerce businesses to plan. Gross profit is the amount you remain with after subtracting the distribution and production costs and enables an entrepreneur to make strategic adjustments to increase sales and boost profit.

The Conversion Rates KPI

The conversion rate measures the rate at which people purchase your products. A lower conversion rate means fewer people are buying your products in a given time. And it is an indication that you need to make adjustments such as website optimization so that people can easily navigate your eCommerce site.

The Shopping Cart Abandonment Rate KPI

The KPI measures the number of visitors who add products to a shopping cart but do not complete the order. Reducing friction in the checkout process is advisable to reduce the shopping cart abandonment rate. On the other hand, the shopping cart conversion rate shows the number of people who check out your products, add them to the cart and pay for them.

The Cost of Goods Sold KPI

The cost of goods sold  KPI shows the price you incur to sell your products. It indicates the costs associated with producing and distributing goods, such as employees’ wages, and other overhead expenses, such as delivery to customer premises. Using a guide to eCommerce KPIs, you can improve sales by making necessary adjustments to lower the cost of selling goods.

The Customer Lifetime Value KPI

It indicates the total profit each customer has generated for a business. The indications are essential in strengthening customer relationships based on customer loyalty and adjusting the cost of customer acquisition.

Churn Rate KPI

The KPI indicates the rate at which customers are canceling subscriptions or leaving your brand. You arrive at the measure by subtracting the number of customers remaining at the end of the month from the number that you had at the start and dividing by the number you had initially. You can express the value as a percentage to give a monthly churn rate and multiply by 12 to get the annual rate.

The Customer Acquisition Cost KPI

Customer acquisition cost usually indicates the amount you use to get each new customer into your business. You get the value by dividing your marketing spending by the number of new customers you acquire. Depending on the report, you can opt to increase or decrease the marketing cost.

The Repeat Purchase Rate KPI

It indicates the number of customers that return to your website and make another purchase. The value demonstrates the customer’s loyalty and helps you make sales strategy plans.

Average Profit Margin

The average profit margin is a ratio representing your profit margin in a given period. You arrive at this value by dividing gross profit by the revenue you generate in a certain period. Businesses strive to keep this high ratio, meaning production and sales must keep increasing.

The Revenue per Click

Revenue per click KPI shows the amount of revenue generated by each click. In calculation, you take the total revenue collected from all pay-per-click campaigns by the number of clicks. The guide to eCommerce KPIs helps you in choosing an eCommerce advertisement option.

The Purchase Frequency KPI

It is the measure of the average number of purchases that your customers make in a certain period. The KPI can categorize these products such that you can identify the products that are performing better and those that are underperforming. The indication can lead to adjustments such as enhancing the products or adjusting prices to boost sales. It is also a vital measure of customer loyalty.

Times between Purchases KPI

It shows how long a customer takes before making another purchase. The indications enable you to tailor your marketing campaigns by observing the behavior of each product.

An Inventory Turnover KPI

Inventory turnover is a crucial financial ratio as it shows how many times a year you sell all products in your inventory system. Inventory KPI indicates whether you have excess inventory or you are stocking less. You calculate an inventory turnover by dividing net sales by average inventory at the selling price.

The Holding Inventory Ratio KPI

The ratio indicates the cost of holding the products before selling them. Such expenses may include security, labor, or equipment use.  It is essential to measure the Holding inventory ratio because, at times, it may take up to 30% of the total value of an inventory.

The Revenue per Visitor

It shows the average revenue generated by every visitor to your website; it divides the total revenue generated by the number of visitors. Revenue per visitor KPI is important as it shows the impact of driving traffic to your eCommerce website.


It’s evident that even after setting your business goals, it is vital to monitor the performance of each metric to achieve them. Integrating KPIs is crucial for improving your overall business performance, including improving sales, efficient management, better customer service, and choosing effective eCommerce marketing options. More importantly, KPIs enable you to have a completely data-driven eCommerce store.

Related posts