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Key indicators for running an online shop

In order to fully manage your business and keep it on track, you need to monitor a number of indicators. With their help you will be able to see the situation clearly, take measures to adjust the work and set clear goals. Today we're going to talk about important indicators for online shops. Step Link's experts have given a brief characterisation of each indicator.


Visibility

This is the most universal criterion for evaluating the effectiveness of an online shop. The more users visit the shop, the higher the number of orders can be. Traffic is not directly related to the volume of sales, but a lack of traffic or its growth indicates problems. You should use special services, such as Google Analytics, to keep track of your shop's traffic.


Number of orders

The number of orders placed through the site in a given period is a basic metric. It is used to calculate other metrics. Obviously, the more orders, the better. The most effective way to track this indicator is in dynamics. You can do this through analytics systems or with the help of a CRM system.


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Online shop conversion rate

This is the ratio of the number of buyers to the total number of visitors to the online shop. It allows you to understand how effectively the shop is working. If people are visiting the site, looking at product cards, but not buying anything, it means that changes need to be made. For example, revise the unique selling proposition, work on calls to action, change the home page, check the quality of descriptions and photos in the product cards.


A similar indicator is calculated for each product category. After analysing this, you can identify the most popular products and scale in that direction or, on the contrary, cut out those that are not in demand.


Cost per order

CPO (cost per order) is the ratio of advertising costs to the number of paid orders. CPO is one of the most important indicators because it allows you to understand the effectiveness of your marketing channels. The higher the ratio, the higher the profitability.


Revenue

Revenue is the amount of money received over a period of time. It is one of the basic indicators used to calculate the others. If the income is growing, it is a good signal. If the indicator is stagnant or declining, it is necessary to understand the reasons for this.


Profit

Profit is the difference between income and expenses. It is one of the keys to assessing the performance of an online shop or any other business. It can be positive (profit) or negative (loss).


Average order value

The average order value (AOV) is the amount of revenue from all purchases divided by the number of purchases. By understanding how much money each order brings in, you can adjust your strategy and forecast sales. You can increase your average check by using up-sells, free shipping, personal recommendations and other methods.


Average revenue per user

ARPU (average revenue per user) is the ratio of total revenue to the number of visitors. You can use this metric to understand how much money a visitor brings in over a chosen period of time, and calculate how much traffic you need to plan for to achieve a certain level of revenue. It's generally accepted that it's more profitable to improve average revenue through pre-sales.


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Customer Value

The LTV or lifetime value of a customer is a measure of the profit a company makes over the entire time it interacts with a particular customer. In other words, it is the total amount the customer has already spent on purchases. To increase LTV, it is necessary to use loyalty programmes and motivate customers to buy more, more often and more consistently. Knowing this metric allows you to adjust your advertising strategy by reallocating your budget to more profitable promotions.


Abandoned basket rate

An abandoned basket is an e-commerce term that refers to an incomplete purchase. It is calculated using a simple formula: divide the number of abandoned baskets by the number of completed transactions and multiply the result by 100. In order to improve this indicator, it is necessary to improve the site, in particular the usability of the shopping basket, adding product recommendations to the newsletter, etc.


Redemption rate

This is the ratio of the number of items redeemed to the total number of orders. It shows how often your customers make returns. The higher the ratio, the better. This is because every return is a direct loss, as the shop incurs the cost of preparing the goods for dispatch, shipping and return postage. A low return rate may indicate poor quality packaging, defects, etc.

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