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Measuring key performance indicators (KPIs) is vital to the health of your business. They enable you to have a deep understanding of your business’s performance so you can make critical adjustments in your execution to achieve specific strategic goals.
Tracking the right ecommerce KPIs will help you make better-informed decisions regarding your ecommerce brand, from revenue and conversions to marketing and customer service. When thinking about KPIs, important ones may come to mind like conversion rate, site traffic, net promoter score, and shopping cart abandonment rate.
However, there is a wide range of metrics that you should be tracking to help your online store grow.
In this article, gain a deeper understanding of the ecommerce KPIs that every online store needs to track to achieve specific strategic goals.
What are ecommerce KPIs?
Ecommerce KPIs, or key performance indicators, are the outcomes that evaluate the progress your ecommerce brand is making toward its vision of success. They are quantifiable measurements or data points that help gauge performance of your specific goals.
An example of an ecommerce key performance indicator is having a goal of generating 1,000 new customers by the end of 2021. This is a good KPI because it:
- Has a quantifiable target of 1,000 new customers and
- Gives a timeframe for the accomplishment
Why are ecommerce performance metrics important to your online store?
If you own an online store, chances are you want to increase your conversion rate and revenue and give your customers an overall positive shopping experience. It can be hard to achieve this if you don’t have specific goals in place for sales, marketing, customer service, shipping, and other parts of your business. KPIs are so crucial for your online store because they:
1. Help you gauge growth
KPIs provide an immediate snapshot of the overall performance of your company. When you hold yourself accountable by measuring goals and targets through KPIs, you have a deeper understanding of your business.
Therefore, you can gauge growth and make adjustments before you’re too far behind your goals (e.g., ramp up ad spend if you don’t have enough new customers), or readjust plans if you’re ahead of projections (e.g., reorder more inventory sooner if you’re selling through it quicker than your inventory forecasts estimated).
2. Give you data-driven insights
Data is always at the forefront of every decision you make as a business owner.
Data-driven insights will help you make informed decisions based on real-time data that clearly visualizes the next steps you need to take to improve your online store.
3. Increase online sales
When you are setting KPIs, many will tie back to tracking and growing sales. Choosing KPIs that monitor whether you are increasing online sales — like conversion rate, customer retention rate, average order value and customer lifetime value — can help you take action to influence visitors and customer behavior.
4. Improve employee and customer relationships
A good KPI system will help motivate and reward employees, while also giving them an understanding of the goals the company is working towards. Once employees have a better understanding of this, they can work towards customer service KPIs and better assist customers.
5. Ensure you make adjustments when necessary to stay on track
Using a combination of KPIs gives you the right information at your fingertips to solve problems and tackle opportunities. If you are in a sales slump, identify a handful of KPIs that can help you turn the tide.
KPIs are one of the most valuable tools you have for keeping your team focused, accountable, and aligned.
32 ecommerce KPIs to track for your online store
Having a solid understanding of the different KPIs that cater to each primary function of an ecommerce business will ensure you make an educated decision on which key performance metrics make the most sense for your business. Every key performance indicator should be:
- Well-defined and quantifiable
- Crucial to achieving your goals
- Communicated throughout your organization
- Applicable to your line of business (LOB)
Sales KPIs give a clear idea of how your business is performing in terms of conversions and revenue. Here are some important KPIs to measure:
1. Conversion rate
A conversion rate is the percentage of users that convert, or in other terms, do what you want them to do. Depending on your business goals, a “conversion” can be almost anything, but in most cases, for ecommerce businesses, it is when someone converts from being just a website visitor or email subscriber to becoming a customer by making a purchase.
Conversion rate = (Conversions ÷ Total visitors) X 100%
Check out this ROI Conversion Rate Calculator from our friends over at The Good.
2. Costs of goods sold (COGS)
Costs of goods sold is how much it costs to produce your products or services. COGS includes direct labor and direct material expenses that go into producing each good or service that your company sells. When calculating the cost of goods sold, it’s important not to include:
- The cost of creating goods or services that you don’t sell
- Indirect expenses, like certain overhead costs
- Marketing expenses
- Shipping fees
When finding the COGS on a product, add the cost of raw materials and direct labor needed to create it.
COGS = Beginning inventory + Purchases during the period – Ending inventory
Note: COGS is just as much an inventory KPI as a sales KPI, but it’s important to keep a pulse on revenue and the costs you’re incurring.
3. Customer lifetime value (CLV) or Lifetime value (LTV)
Customer lifetime value, also known as LTV, gives you the average profit by customer, or how much they spend with your business over time, minus their acquisition and servicing costs. This shows the value of a customer’s repeat purchase rate, not just on a purchase-by-purchase basis.
Knowing the customer lifetime value can help you develop strategies to not just acquire new customers but retain existing ones while getting them to spend more with you over time (e.g., through up-sells, subscriptions, and more).
You know the saying, ”Existing customers cost less than acquiring new customers.” The CLV allows you to increase the value of your existing customers to help drive growth.
CLV = (Customer revenue per year X Duration of the relationship in years) – Total costs of acquiring and serving the customer
4. Revenue per visitor (RPV)
Revenue per visitor is a measurement of the average amount of money generated each time someone visits your ecommerce website.
RPV = Total revenue earned during a given period ÷ Number of visitors during the same period
5. Customer acquisition cost (CAC)
Customer acquisition cost determines the resources that are needed for a company to attract new customers. This can vary greatly depending on your marketing channels (e.g., if you’re paying to get in front of prospective customers on Facebook or Instagram vs. getting a lot of organic press coverage or customers find you via search).
Businesses will use CAC to determine profitability since it compares the amount of money spent to attract customers against the number of customers they actually gained. For reference, the average customer acquisition cost for consumer goods is $22.
CAC = Total cost of sales and marketing ÷ The number of new customers acquired
6. Churn rate
Churn rate calculates how quickly customers are leaving your brand. Learning your business’s churn rate is vital in understanding the stickiness and health of it. If your typical customer doesn’t stick around long enough for you to recoup your average customer acquisition cost, you may be in trouble.
Churn rate = (Lost customers ÷ Acquired customers) X 100%
Now that you know your churn rate, you’re probably wondering how to decrease that number. Here are 5 strategies to help increase your customer satisfaction.
7. Average order value (AOV)
Average order value tracks the average dollar amount spent each time a customer places an order on a website. AOV helps you evaluate your ecommerce pricing strategy and online marketing efforts by providing the metrics needed to measure individual customers’ long-term value.
If you can increase your average order value, then you can pad your margin to offer free shipping and/or offset your shipping and handling costs. A few great ways to do this include offering minimum spend thresholds, upsells, memberships, and bundles.
AOV = Revenue ÷ Number of orders
Ensure your online store is performing in relation to marketing and advertising goals with these marketing KPIs:
8. Site traffic
Website traffic refers to the number of visits you receive on your online site. This is a common way to measure an online business’s effectiveness at attracting an audience.
Website traffic may come from organic searches, clicks from social media, affiliates, direct traffic, and other channels.
Google Analytics is the best free tool in measuring website traffic, and you can calculate your site traffic growth by comparing year-over-year data.
Note: You can slice and dice your site traffic to view individual pages, traffic on your blog posts, and more.
9. Return on ad spend (ROAS)
Return on ad spend refers to the amount of revenue your business earns for each dollar it spends on advertising. The more effective your ad campaign is, the more revenue you’ll earn from each dollar spent on the campaign.
ROAS = Campaign revenue ÷ Cost of campaign
ROAS is often expressed as a ratio. For example, if you generated $800 in revenue from a Facebook Ads campaign that cost you $100 to run, then your ROAS would be 8:1, representing $8 made for every $1 spent.
10. Bounce rate
Bounce rate is defined as the percentage of visitors that leave a webpage without taking an action, such as clicking on a link, filling out a form, or making a purchase.
The average bounce rate is between 41-51%. Someone that “bounces” on your website ultimately didn’t convert. If you have a high bounce rate, your site, or specific pages on your site, may have issues with content, form fields, user experience, page layout, or copywriting.
Bounce rate = Total one-page visits ÷ Total entrance visits
Lower your bounce rate with some of these proven ecommerce website tips.
11. New visitors vs. returning visitors
New visitors are people who are coming to your site for the first time on a device. Returning visitors have been to your site before. The ratio (and volume) of new visitors to returning visitors can be very telling, showing the effectiveness of your inbound digital marketing techniques across the web.
Google Analytics is the best free tool in measuring new vs. returning visitors.
12. Newsletter subscribers
Tracking newsletter subscribers, or the number of people who subscribe to your newsletter via email (whether through a form on your site or by having a friend forward your emails) demonstrates your ability to build an audience. Growing your email list is a great way to effectively and efficiently connect with your customers and nurture them at scale by offering new releases first, coupon codes, and more.
You can track your new subscribers through your Customer Relationship Management (CRM) system.
13. Chat sessions started
Chat sessions started are the number of visitors who use the live chat support button to get more information on-site. Through services like on-site chatbots and messengers, as well as third-party chat apps like Whatsapp, WeChat, and Facebook Messenger, conversational commerce can help consumers find the best product options for their unique needs, all in real-time.
Messenger chatbots allow you to generate new customers, re-engage dormant customers, remind customers of abandoned carts, keep purchasers apprised of ecommerce shipping information and overall promotes positive customer satisfaction.
14. Social media engagement
Social media engagement is the number of people who are interacting with your brand online. There are many benefits to using social media for your online store and using social proof as a lever for your brand. You are also able to dive deeper into social media metrics and track your increase in followers, impressions and reach.
There is some native reporting built-in to social platforms but you can use other social media management tools to help with scheduling content and analyzing metrics.
15. Partner and affiliate rates
Do you know what the conversion numbers are from partner or affiliate pages? Ensure you have eyes on every aspect of your business and drive those rates down if needed. It’s also important to acknowledge that affiliates can even be influencers.
You need the right tracking in place and some metrics you can look at can be sales per affiliate, number of new affiliate partners, and affiliate engagement.
16. Shopping cart abandonment rate
Shopping cart abandonment rate is an ecommerce term used to describe visitors adding items to an online shopping cart but exiting the website without completing the purchase. Shoppers abandon carts for a variety of reasons, including hidden fees, complicated checkout processes, and high shipping costs.
Shopping cart abandonment rate = 1 – (Total number of shoppers who complete transactions ÷ Total number of shoppers who add items to cart)
Customer service KPIs
When it comes to customer service, it’s important to have the right KPIs in place to be able to meet customer expectations.
17. Customer satisfaction score (CSAT)
The customer satisfaction score can be measured by asking customers how satisfied they were with an online purchase. CSAT is normally calculated to measure short-term consumer loyalty. As an example, you might ask “How would you rate your experience with us?” followed by a couple of choices such as good, okay, and bad.
CSAT = Number of positive responses ÷ Number of total responses X 100
According to the American Customer Satisfaction Index, below are industry-standard benchmarks for CSAT score:
- Apparel: 79
- Consumer Shipping 78
- Internet Retail: 80
- Specialty Retail Stores: 78
18. Net promoter score (NPS)
The net promoter score is an index ranging from -100 to 100 that measures the willingness of customers to recommend a company’s products or services to others. Internally, this provides insight into your customer behaviors and relationship.
Calculating NPS is started by emailing or asking customers one simple question: “On a scale of 0-10, how likely is it that you would recommend [your company name] to your friends, family, or business associates? (0 being not likely at all, and 10 being extremely likely)”
How your customer rates you puts them into buckets:
- Customers that give you a 6 or below are known as Detractors.
- A score of 7 or 8 are called Passives.
- A 9 or 10 are Promoters.
NPS is determined by subtracting the percentage of customers who are detractors from the percentage who are promoters. What is generated is a score between -100 and 100 called the net promoter score.
This also allows you to remedy your customers’ issues before they make any reviews on public platforms. However, receiving reviews or customer feedback is a great way to ensure that your customers are happy or your product is working as intended, and that you can make any changes to your product and processes based on actual experiences.
19. First response time (FRT)
First response time measures the number of minutes, hours, or days that elapse between when a customer submits a case or opens a ticket and when customer service responds. It is sometimes measured in business hours and sometimes in total hours. Many businesses include a baseline FRT in their service level agreements (SLA), which means they must respond to customers within a specified timeframe.
FRT = Sum of first response times ÷ Number of tickets
20. Customer resolution time (CRT)
Customer resolution time is a metric that tells you on average how long it takes your ecommerce support team to resolve issues.
CRT = Total resolution time ÷ Total number of resolved requests
21. Active issues
Active issues tell the number of active queries at one single time. This can include unresolved issues, even if you’re waiting on the customer to respond or to provide more information.
You can pull this data from your customer service desk platform.
Backlogs are the number of issues that are waiting to be addressed. Backlogs can be greater during busy seasons, the holidays, when you’re running a major promotion, and any other time orders may be higher.
You can pull this data from your customer service desk platform.
Shipping & logistics KPIs
For any online store, shipping and warehouse KPIs are the essence of how your customer relationship will develop from when an order is placed to when it’s delivered.
23. Inventory turnover rate
Inventory turnover rate measures how many times inventory is sold and then replaced in a specific time period. Understanding your average inventory turnover by SKU is a critical measure of product performance, as it relates to warehousing costs and sales, and can be benchmarked against other companies in a given industry or the rest of your products, comparing fast-sellers to slow-movers.
Inventory turnover = Cost of goods sold ÷ Average inventory value
24. Inventory levels
Inventory levels is the amount of stock currently at hand and how quickly a particular product is selling. Since inventory is constantly moving and orders are continuously processed, real-time inventory tracking helps to ensure you have an accurate sense of how much inventory you have on hand and whether or not you’ll have enough to fulfill orders.
You can manually count these, but that’s a very time-consuming process. Inventory management systems provide this as well as fulfillment providers like ShipBob. Learn more about tracking your inventory here.
25. Order accuracy rate
Order accuracy is the percentage of all ecommerce orders that are fulfilled and shipped to their final destination without error, such as a mis-pick of an item or incorrect unit quantity. Order accuracy is an important metric to track because it highly impacts customer satisfaction.
Order accuracy rate = (Total orders fulfilled accurately ÷ Total orders fulfilled) X 100
26. Time to ship
This is the amount of time it takes to ship an order once it’s placed. For example, ShipBob’s fulfillment SLA is same-day shipping for all orders placed by noon local time and next day for all orders placed after noon local.
Time to ship = Ship date – Date order was placed
Note: For most brands, this distribution metric will be calculated in business days and can be based on when the carriers pick up. This metric is also different from the time it takes an order to ship (from when it leaves a fulfillment center) to when it is delivered to the end customer.
27. Order volume
This is your total order volume for a given timeframe. A month or 30 days is a typical timeframe, but this can be calculated daily, quarterly, annually, etc.
Total number of orders = The sum of all orders placed for a specific timeframe
Note: Seasonality will affect this volume and you should track other distribution metrics like AOV and average units per order in conjunction. You should also track this distribution metric separately for each channel so you can view growth per channel.
28. Return rate
This is the number of returns resulting from customers purchases. You can reduce your return rate by having clear product descriptions, a defined return window, conducting regular product testing, and identifying trends in commonly returned items. If you find certain products are returned more than others, you may consider investigating why (e.g., damages in transit due to poor product packaging) so you can make improvements, or even discounting them.
Return rate = The number of items returned ÷ the number that has been sold
29. Average delivery days
Also known as average transit time, this is the average number of days it takes shipping carriers to deliver orders. Drive revenue by offering customers what they want: fast delivery. You can speed up average delivery days by offering 2-day shipping to your customers by distributing inventory to be closer to your end customers.
Average delivery days = Total days to deliver all orders ÷ Total number of orders delivered
30. Percentage of on-time shipments
This is the total percentage of shipments that are delivered without delay or within their expected timeframe. Sometimes this percentage will be outside of your control when it’s in the carriers’ hands. Carriers may experience high demands, weather issues, etc. See what the average transit time is amongst all carriers here.
On-time shipments ratio = (Number of shipments delivered on-time ÷ Total shipments) X 100
31. Percentage of sales lost to out-of-stock products
This is the total dollar value of sales lost or refunded due out-of-stock supply issues divided by the total dollar value of customer sales over the same period of time, expressed as a percentage.
If you have poor inventory management, you may over-sell products when you don’t actually have them in stock. After a customer places an order with out-of-stock items, you’ll have to let them know, cancel and refund their order, and lose that sale.
To avoid stockouts, focus on optimizing your supply chain so you can better manage inventory and prepare for future demand. By partnering with a tech-enabled 3PL like ShipBob, you’re given the retail fulfillment expertise, technology, and inbound and outbound logistics support you need to get products to your customers’ doors quickly.
Sales lost = (Value of sales lost ÷ Total value of sales) X 100
32. Order picking accuracy
Similar to order accuracy rate which takes packing and not just warehouse picking into consideration, this is the percentage of orders picked without error. Warehouse picking is an integral part of the ecommerce fulfillment process, and order accuracy is greatly dependent on the efficiency of warehouse picking, which in turn impacts your brand’s reputation and relationship with your customers.
Opening picking accuracy rate = (Total orders picked without error ÷ Total orders) X 100
Ecommerce KPI examples
Finding the right ecommerce KPIs to track for your business can seem overwhelming at first. Ask yourself these 4 critical questions to help you work backwards and better understand the KPIs that are best to help your online business grow:
- What is your desired outcome?
- How does this outcome help achieve your vision of success?
- How will you know you’ve achieved your outcome?
- Is this a leading indicator of performance or a lagging indicator of performance?
Here are a few examples of goals you can set for your business and the KPIs that go with them.
Goal: Boost customer satisfaction
- KPIs to track:
- Order accuracy rate
- Delivery time
- Net promoter score (NPS)
Goal: Increase online conversion by x%
- KPIs to track:
- Cart abandonment rate
- Conversion rates
- New visitors vs. returning visitors
Goal: Grow email subscribers
- KPIs to track:
- Blog traffic
- Social media engagement
- Bounce rate
How ShipBob helps retailers track and achieve ecommerce KPIs
Here at ShipBob, we know data can be a competitive advantage for direct-to-consumer brands. That’s why we launched a free analytics tool for ecommerce brands that outsource fulfillment to us that’s packed with charts and deeper insights to help you with everything from year-end reporting, to better supply chain optimization and decision-making.
As a leading fulfillment provider, we’ve aggregated many data sets to provide the information you need at a glance, the ability to download files to get more granular, and empower you to ultimately provide a better customer experience.
1. Monitors inventory turnover rate
Calculating inventory turnover ratio is a great way to determine if you need to increase or decrease your inventory supply while also helping you understand your company’s inventory for future financial decisions. Gone are the days of using spreadsheets and inventory sheets. You need the right technology to manage it.
2. Improve order accuracy rates
Partnering with a professional fulfillment provider like ShipBob can help you fulfill and ship orders accurately. By outsourcing fulfillment to the experts, you get access to the following strategies ShipBob uses to ensure high order accuracy rates for our merchants:
3. Faster shipment times
When you outsource fulfillment to ShipBob, it’s not just your typical pick-pack warehouse — It’s an Amazon-like shipping experience that lets brands use delivery to beat customer expectations, optimize for time and cost, and own more of the customer relationship.
ShipBob’s guaranteed 2-Day Express Shipping Program enables you to offer 2-day shipping to all of your customers in the continental US across all of your platforms. By leveraging ground shipping services along with UPS 2-day air, you can offer 2-day shipping at prices lower than expedited shipping to all zip codes in the continental US.
Hear from ShipBob BAKblade on how offering 2-Day Express Shipping has helped them:
4. Handles return management
Although it’s worth investing time and money, improving your returns management process can be a huge undertaking. That’s why many ecommerce brands partner with a third-party logistics (3PL) partner like ShipBob to better manage returns.
ShipBob’s fulfillment solution can handle returns for you or lets you manage returns on your own and even easily integrates with leading ecommerce returns platforms such as Happy Returns and Returnly to better streamline the returns process.
Ecommerce KPIs are useful and help set the bar on what an organization wants to achieve. A well-designed and regularly monitored set of KPIs can provide you with a knowledge of how your business is performing and target the areas where remedial action ought to be applied. The metrics most useful as key performance indicators will depend on the company, and taking time to develop specific goals for your online store is crucial.
To learn how ShipBob can help with ecommerce fulfillment and managing ecommerce inventory while providing data on important key performance metrics, click the button below to learn more.
Ecommerce KPI FAQs
Here are answers to some of the top questions people have about ecommerce KPIs for an online store.
What KPIs are most important in retail?
While all KPIs are important to consider for your online store, these are some of the most important ones to start tracking:
- Conversion rates
- Inventory turnover rate
- Cart abandonment rate
- Average order value
- Cost per order
- Customer lifetime value
What are good examples of KPIs?
The most impactful key performance indicators can be separated into different categories: sales, marketing, customer service, and shipping. Finding KPIs that fit your business is important for your online store’s success. Let’s go back to one of the KPI examples above:
- Goal: Boost customer satisfaction in 2021
- KPIs to track:
- Order accuracy rate: Have an order accuracy rate of 97%
- Delivery time: 91% of delivery time is in 2 days or less
- Net promoter score (NPS): Increase NPS from 45 to 49
- KPIs to track:
How can you track KPIs?
There are various methods to track KPIs. Some companies will manually track data into spreadsheet software such as Excel or Google Sheets. There are many KPI tracking softwares that your business can use as you grow your goals. Staying organized in the process is key, so find what works best for you and your company.