What Are E-Commerce KPIs? Best Practices for Your Online Store

If scaling your e-commerce brand is your goal, then stop focusing on vanity metrics.

While it’s good to measure brand awareness with the average amount of clicks and impressions you receive, it has no bearing on your e-commerce conversions and revenue growth.

Running your e-commerce store shouldn’t be a guessing game, where you implement systems and make decisions based on your gut feelings, personal preferences, or popular opinions.

To get better insights to level up your online store and leave your competitors in the dust, you need to start tracking your e-commerce KPIs.

Keep reading to learn about:

E-Commerce KPI

Factors That Make Effective E-Commerce KPIs

10 E-Commerce KPIs To Measure

Final Thoughts: E-Commerce KPIs: What You Need To Know

E-Commerce KPI

Just as key performance indicators (KPIs) are essential for measuring overall performance, KPIs for e-commerce are vital to track your sales metrics and overall achievements.

E-commerce KPIs are performance factors you can analyze to determine how many strategic objectives you achieve with your online store.

Tracking your e-commerce KPIs is crucial to determine your business’s financial and operational growth.

When you evaluate the right KPIs, you’re able to gain clarity about your e-commerce business. This, in turn, will help you develop strategies and make beneficial adjustments and better-informed decisions on how to improve your e-commerce store’s growth and revenue.

Factors That Make Effective E-Commerce KPIs

While there is a long e-commerce KPIs list you can evaluate, not all of them are vital to the success of your online store.

Here are the factors to consider when choosing e-commerce KPIs for your business:

1.   Business Goals and Stage

Your strategic goals and the stage of your e-commerce business will determine the e-commerce KPIs you choose.

Select KPIs that align with your bottom line and the current growth stage of your online store.

Business plan highlighting goals and strategies to choose the best e-commerce KPIs
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1.   Measurability

The most effective e-commerce KPIs are easy to identify, quantify, and calculate.

Measure data accurately, so you don’t make the wrong choices for your e-commerce store. Choose KPIs that you can clearly define and track for high-quality insights to grow your business.

2.   Timely and Actionable

When you choose your e-commerce KPIs, go for those that are timely. Timely KPIs are helpful to see what you’re doing right and make relevant adjustments to your online store.

While past data records are still useful, they take effect when used with real-time e-commerce KPI data. You can use combined results to track trends like customer behavior and purchase patterns.

Overall, your e-commerce KPIs should let you know which business decisions to take.

10 E-Commerce KPIs To Measure

  1. Email signup conversion rate
  2. Customer lifetime value (CLV)
  3. Gross profit margin (GPM)
  4. Shopping cart abandonment rate
  5. Add-to-cart rate
  6. Customer acquisition cost (CAC)
  7. Average order value (AOV)
  8. Return on ad spend (ROAS)
  9. Bounce rate
  10. Order fulfillment time

There are several e-commerce KPIs available, and analyzing every single one might lead to analysis paralysis.

Here are the ten best e-commerce KPIs to track to optimize your e-commerce business:

1. Email Signup Conversion Rate

This e-commerce KPI represents the rate at which website visitors opt-in to your email list.

With the average opt-in rate being 1.95%, email marketing is more effective than social media to increase your online store’s revenue.

Here’s the formula for e-mail signup conversion rate:

E-mail signup rate =            Number of opt-ins                               x          100 Number of people who visited your signup page                     1

2. Customer Lifetime Value (CLV)

Customer lifetime value (CLV) refers to the amount of revenue a customer brings to your business throughout their relationship with your store.

This e-commerce KPI is an important metric to track, considering repeat customers spend 67% more than your new customers will. Find out your CLV to determine your customer retention rate and how to keep it high.

To analyze this e-commerce KPI:

CLV = (Average value of purchases x Average purchase frequency rate) x Average customer lifetime

Person measuring an important e-commerce KPI, their customer lifetime value
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According to Harvard Business Review, acquiring new customers costs about five to 25 times more than keeping them, so you should work to improve your CLV.

3. Gross Profit Margin (GPM)

The end goal of every business is to make a profit. Knowing this e-commerce KPI lets you know if you’re achieving that.

Your gross profit margin differentiates how much profit you make from the total revenue you earn. This e-commerce financial KPI is usually measured in the form of percentages.

To measure your GPM:

GPM = Total revenue – Cost of goods sold (COGS)             x          100

                          Total revenue                                                              1

For example, John bought a selfie stick for $10 and sold it on Amazon for $25. This means his GPM is 60% (that is, $15).

Oberlo has a free gross profit margin calculator to help you accurately track this e-commerce KPI.

4. Shopping Cart Abandonment Rate

This e-commerce KPI measures the number of people who abandon their cart just before payment.

Customers at physical stores rarely abandon their carts. But with your online store, you need to act strategically to improve your checkout process and reduce cart abandonment.

The higher the rate of cart abandonment, the lower your conversions and total revenue. The average cart abandonment rate (of 44 research studies) is about 70%. You’ll increase your online store’s revenue if you can decrease this e-commerce metric.

Evaluating your store’s churn rate enables you to figure out why interested buyers don’t complete their purchases. You can then employ re-targeting strategies to encourage them to buy what’s in their carts.

5. Add-to-Cart Rate

Did you know the average add-to-cart rate is 3-4%?

This e-commerce KPI tells you the percentage of visitors that added a product from your online store to their shopping cart.

Tracking this metric is necessary to know whether you’re getting the right traffic to your online store and how interested they are in your products.

Cart filled with items to symbolize the add-to-cart rate e-commerce KPI
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To track your add-to-cart rate:

Number of sessions where someone adds an item to cart   x  100

Total number of sessions                                     1

You can use your add-to-cart rate to evaluate the relevance and performance of your products, user experience, and digital marketing strategy.

6. Customer Acquisition Cost (CAC)

Customer acquisition cost is an e-commerce KPI that tracks the amount you spend to acquire a customer. Note that a high CAC could lead to a decrease in profits.

When you know your CAC, you’ll be able to plan your budget and price your products accordingly. Otherwise, you sell products and think you’re making a lot of money when, in reality, you’re only earning a small profit.

To calculate your CAC:

CAC = Amount of money spent to acquire customers

Total number of customers acquired

For instance, if you spend $500 on ads and get 12 people to buy your products, that means your CAC is $41.70.

7. Average Order Value (AOV)

This e-commerce KPI is the average value of all orders on your e-commerce website. The higher your AOV, the more revenue you receive.

AOV gives you insight into your consumer behavior, buying patterns, and product pricing. It empowers you to identify your most popular product and leverage it for more online sales.

To calculate your AOV:

AOV = Total revenue earned

Number of orders

Measuring your online store’s AOV can boost your advertising performance. Promoting the product that attracts the most sales is a great way to increase your conversion rate.

8. Return on Ad Spend (ROAS)

Running paid ads can be tricky, with lots of e-commerce metrics to track.

While impressions, click-through rate (CTR), and cost per click (CPC) are important to improve your marketing, there’s one e-commerce KPI that needs hyper-focusing. This is your return on ad spend (ROAS) — your revenue from advertising.

Computer screen showing paid advertising and plans to track ROAS e-commerce KPI
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With the ROAS metric, you can track your revenue. If your ROAS value is very low, then adjust your campaign, copy, and customer experience.

To evaluate your ROAS:

ROAS = Amount earned from running paid ads

Cost of advertising

For instance, If you spend $1,500 on Google ads and your ad campaign generates $7,500, this means you earned $5 in revenue per dollar spent on ads.

9. Bounce Rate

As common as bounce rate is, it’s an effective e-commerce KPI to determine whether people are engaging with your online store or if your website traffic isn’t interested in what you have to offer.

Bounce rate means the percentage of visitors that land on your website and leave immediately after viewing one page.

A high bounce rate is bad for business, and this could mean that your website is the problem or that those visitors weren’t your target audience.

To calculate bounce rate:

Bounce rate = Single-page sessions x 100

                         All website sessions       1

However, Google Analytics automatically displays your e-commerce site’s bounce rate, so you don’t have to calculate it yourself.

Strive to keep customers on your website longer for more potential sales.

10. Order Fulfillment Time

The total time it takes to fulfill an order can be a vital determining factor in making more sales.

Order fulfillment time (OFT) is another crucial e-commerce KPI. It means the period of time it takes from when a customer makes an order to the time they receive their purchase.

To calculate your OFT:

OFT = Time of material sourcing + Time of production process + Time of delivery

It can be daunting to try to manage orders, processing, and delivery. Streamline your workflow to reduce your order fulfillment time to increase customer satisfaction and build credibility.

Final Thoughts: E-Commerce KPIs: What You Need To Know

E-commerce KPIs are endless. While it can be overwhelming to track every available KPI for e-commerce businesses, our list above comprises measurable and actionable metrics that will help you scale your business quickly.

Tracking your e-commerce KPIs is an effective way to gain insights about your business, build working strategies, and make better-informed decisions that will help you achieve your strategic goals.

Looking to provide an e-commerce experience that will improve customer retention and revenue? Check out Bluehost’s WooCommerce Hosting.

Machielle Thomas
Machielle Thomas | Content Manager
Machielle Thomas writes and curates web and email content for marketing professionals, small business owners, bloggers, and more.

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