5 KPIs To Track When You’re Running Your E-Shop and Marketplace Stores
Every business owner knows that numbers don’t deceive. But how can you make sure that those numbers translate to more revenue and profits for your brand?
The first step is to track, measure, and analyze the right KPIs. Trusting your gut will only take you so far. If you want to meet your goals and perform spectacularly, you need to back up your marketing efforts with data and hard facts.
Without this information, you won’t be able to tell what’s failing, how to define success, or which activities are producing value.
In this guide, you’ll learn about the cornerstone KPIs you need to keep an eye on to generate actionable insights that you can use to improve your eCommerce business.
What are Ecommerce Seller KPIs?
Ecommerce KPIs enable you to determine the effectiveness of your retail store and marketing strategies in meeting your business goals. They’re like signposts that show you where you are, how far you’ve come, how much further you have to go, and the best route to reach your destination.
As an online seller, eCommerce metrics will help you understand how well you’re performing and the steps you can take to boost your store’s visibility, better satisfy your customers, foster growth, and increase your bottom line.
Without them, you’ll be forced to rely on guesswork and luck, which can easily fail you. When something goes wrong, you’ll have no idea why. And when you find success, you’ll be unable to replicate it. KPIs provide accuracy, objectivity, and factual information that can be studied and acted on.
Keep in mind that these KPIs aren’t specific to one platform; they can be applied across all online retail platforms such as Amazon, Walmart, eBay, Etsy, etc.
KPIs You Should be Tracking
While there are dozens of KPIs out there, measuring all of them is not feasible, advisable, or even necessary.
To keep you focused, here are five crucial eCommerce KPIs that we recommend tracking. Regardless of the niche, they’re sure to help you scale your eCommerce business effectively.
1. Inventory and Aging Inventory
Knowing how much stock you have available at any point in time and how many products you sell during a specific timeframe can help you structure your business better. This is why tracking your stock inventory and aging inventory makes good sense.
Depending on the type of products you’re selling, your store may experience a dramatic rise or drop in orders around certain seasons.
By having a sound inventory management system, you’ll know when exactly sales spike or drop, whether to increase or reduce your order from the supplier and what to do to drive more traffic to your store.
When you’re selling on Amazon, the company will make money off you whether your business is profitable or not. You either pay commissions on the items you sell or pay long-term storage fees (LTSF) for the items you’ve not sold but have had in storage for over six months.
The longer your inventory sits in storage, the more fees you’ll incur. This is where tracking your aging inventory comes in handy.
All you have to do is obtain your seller Amazon Standard Identification Numbers (ASINs) from your seller central reports to see the number of items you have in stock during a given period.
Armed with this information, you can make better sales predictions that’ll prevent your inventory from sitting in Amazon’s warehouse longer than necessary.
2. Order Fulfillment and Shipping
Amazon requires FBA (Fulfillment by Amazon) sellers to use its shipping materials when fulfilling orders. This, of course, means that you’ll have to pay certain fees. Tracking these costs will allow you to include them in your pricing strategy, as they’ll affect how much money you take home at the end of the day.
But that’s not all you should be paying attention to. When you’re working with a third-party logistics provider like Amazon, they’ll help you track relevant KPIs and provide detailed reports to help you manage operations.
However, it’s your job to go through the reports and use the data to figure out how you can reduce inbound and outbound delivery time, increase customer satisfaction, boost efficiency, and grow your retail business.
Tracking order fulfillment and shipping metrics such as perfect order rate, inventory accuracy, the average cost per order, and delivery time will help you determine how you can maximize your supply chain’s efficiency.
Maybe there’s a place where you’re losing money or an area you need to dedicate extra resources to. These things won’t magically reveal themselves to you; you have to measure them and observe results.
3. Customer Satisfaction Metrics
Customers are the foundation of your business. If you can’t form a long-lasting relationship with them and keep them satisfied, you can’t hope to be profitable or stay afloat for very long.
When you’re constantly working on increasing your customer satisfaction, you’ll prevent existing customers from abandoning you and keep them returning to patronize your store.
This will, in turn, lead to less money being spent on acquiring new customers because the current ones will happily spread the good word about your business. It can also create bigger opportunities for upselling.
Although there’s no one way to conclusively measure customer satisfaction, here are some of the most critical metrics that can shine a light on how well your e-shop performs in this regard.
- Shopping cart abandonment rates — How many visitors land on your page and add your products to their cart only to exit without completing the transaction? Knowing this will allow you to pinpoint the frictions preventing buyers from checking out, then you can devise a strategy to reduce shopping cart abandonment. The formula for calculating SCAR = total number of completed transactions / total number of shopping carts × 100.
- Reviews and ratings — 91% of people aged 18 – 34 value customer reviews more than a brand’s product descriptions. Monitor what people are saying about your products and pay special attention to poor reviews. If your ratings are between 4.6 – 5, you’re doing amazing. 4 – 4.5 means there’s room for improvement, and less than 4 means something is wrong, and you need to rectify the issue(s) urgently.
- Product returns — Amazon will kick you off its platform if your return rate exceeds a certain amount. By tracking product returns, you can learn why customers are unsatisfied with your offerings from the reports they file or by reaching out to them. You can then fix the issue to reduce returns and save the reputation of your online store.
4. Conversion Rates
What percentage of people who visit your store actually buy something before leaving? That’s your conversion rate. This is one of the most essential eCommerce metrics you can track because it directly feeds your bottom line. Without conversions, your store won’t produce revenue, and without revenue, what is the point of running a business?
Conversion rates tell you how effective your messaging, product design, imagery, positioning, and other elements are at generating sales. A low conversion rate signifies that your store is failing to entice and satisfy customers.
Maybe you lack reviews, your ratings are low, product pictures are low-quality, or the copy isn’t compelling enough. Tracking this KPI can help you identify areas for improvement and which strategies are yielding positive results.
So you can optimize performance and incentivize Amazon and other eCommerce marketplaces to keep rewarding your store with good rankings and screen real estate. Even a slight increase in conversion rate can have a significant effect on your revenue and profits.
The formula for determining conversion rate = the number of individual purchases / number of visitors x 100.
Let’s say 1,000 people land on your store page in a day, and 50 of them purchase an item, your conversion rate would be 5%.
According to a recent study published on Growcode.com, here are the standard eCommerce conversion rate by industry:
- 1.41% conversion rate for Agricultural supplies
- 4% conversion rate for Arts and crafts
- 0.71% for Baby and Child
- 1.36% conversion rate for Cars and motorcycling
- 2.70% conversion rate for Electrical & Commercial Equipment
- 1.41% conversion rate for Fashion and Clothing
- 0.90% conversion rate for Foods and drinks
- 2% conversion rate for Health and wellbeing
- 1.46% conversion rate for Home accessories and giftware
- 1.61% conversion rate for Kitchen and home appliances
- 2.51% conversion rate for Pet Care
5. Competitor Pricing
The retail industry is highly competitive, especially when you’re not in an emerging niche selling a particular product with no direct competition. You can’t just set prices willy-nilly. You have to pay attention to how other Amazon sellers in your niche are pricing their goods so you can try to match them as closely as possible.
If a competitor brings down their prices and they’re offering the same quality as you, they might end up stealing your customers. When there is no significant differentiator between two brands or products, people will opt for the one with the lower price.
It’s important to monitor and analyze competitor prices daily or at least a few times a week so you’re not left in the dust. Tracking this KPI will also enable you to optimize your business to claim more market share and detect opportunities to gain an edge over your rivals.
Best Practices for Selling Online
The key drivers of eCommerce success are price and visibility. They’re what separates the sellers who only sell a few units every other week from those who sell dozens of units weekly.
Whether you already have a store or you’re thinking of how to start selling on
Etsy, eBay, Amazon, and other eCommerce marketplaces, applying these tactics can help you set your store apart from all the others, boost your performance, and send your sales through the roof.
1. Optimize Product Details
There are millions of products available online. Consumers cannot be expected to go through them all to find what they’re looking for.
For this reason, these companies have built algorithms that allow buyers to easily search for the products they want by categories, attributes, and product information. Then they return results for products that match the description or keywords used in searches.
To make sure you turn at the top of those results, you need to optimize your product details for search. Provide an accurate product title using core keywords. Write a strong description, add product identifiers such as color, size, and specifications to help people find what you’re selling.
2. Use Professional Product Images
The way you present your products matter. With digital shopping, people don’t have the luxury of examining the items up close, so they’re going to judge based on the product pictures.
Always use fresh, high-quality photos taken with a decent camera to show off your goods. This will help build trust in your product’s quality and make people more likely to patronize you.
Don’t forget to check the image guidelines for the eCommerce platform you’re using to ensure your product photos meet the requirements.
3. Take Advantage of the Buy Box
If you’ve been using Amazon for a while, you’ll probably have noticed a box in the corner of the product details page that allows customers to add things directly to their cart and kick off the buying process.
This box features a brand selling the product being looked at, and any seller who lands the spot is pretty much guaranteed an increase in conversions.
Although it’s not entirely clear how Amazon decides who to award the buy box to, seller ratings, low prices, positive reviews, fulfillment options, and inventory availability factor into the decision.
If you want to win the buy box and raise your sales numbers, optimizing these factors for your store can go a long way.
Like Amazon, the exact process for winning eBay’s buy box is a top-secret recipe. However, only products listed in eBay’s Product-Based Shopping Experience (PBSE) with competitive prices stand a chance of securing that coveted spot.
4. Ace Your Inventory Management
Ecommerce marketplaces hate it when you advertise products you don’t have in stock. If you’re planning to sell on Amazon, don’t do this, or you’ll risk getting suspended from the platform.
You need to manage your inventory properly. Ensure the products you’re selling are available and ready to be shipped out when an order is placed. Take note of how long it takes for an item to sell out so you can plan your stocking frequency.
Choosing a good database software will make the task of keeping track of inventory a lot easier to manage and help augment your earning potential.
Be Data and Information Rich
Making five, six, or seven figures from online retail is possible as long as you’re willing to put in the time and effort to understand the building blocks of your business a little better.
Looking beyond the outward appearance of your online store and looking at its internal health is the best way to get an accurate picture of where your business stands.
But it’s not enough to just collect this data; you need to put it into action and take steps that’ll bring you closer to eCommerce success.
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About the author
Mark Quadros is a SaaS content marketer that helps brands create and distribute rad content. On a similar note, Mark loves content and contributes to several authoritative blogs like HubSpot, CoSchedule, Foundr, etc. Connect with him via LinkedIN or Twitter.