Retail Dogma

Ecommerce KPIs: The Most Important Ones to Track

Ecommerce KPIs are measurable indicators, that are used to track the performance of an online store in key areas of the business.

In this article, we will list the most important ecommerce KPIs to track for an online retail business, and how to measure and manage them.

You can also check out and download our cheat sheet for formulas of the most common retail KPIs

Areas of Performance

The key areas to track performance for in an ecommerce business are:

  1. Sales
  2. Delivery/fulfillment
  3. Inventory
  4. Customer Experience

The performance of the business in those key areas can be measured and tracked through a set of KPIs.

Ecommerce KPIs

Top 10 Ecommerce KPIs to Track

1. Gross Merchandise Value (GMV)

Gross merchandise value is the total value of sold merchandise during a certain period of time. It can be measured on a month to date (MTD), quarter to date (QTD) or year to date (YTD) basis.

2. Gross Margin

Gross margin (aka gross profit margin) is the difference between the gross merchandise value (or sales) and the cost of goods sold (COGS), divided by 100.

It measures how much the business keeps, after paying suppliers the cost of merchandise.

Gross margin can differ from business to business, based on the type of merchandise that is sold. You can check out the benchmark for gross margin for different retail segments on our retail benchmarks page.

Read Also: Types of gross margin

3. Conversion Rate

Conversion rate measures how many customers bought, out of the total visitors of the website.

Tracking conversion rate helps in measuring how relevant the website visitors are to the business and whether the marketing efforts are bringing the right target audience. It can also help spotting issues in the website experience that push customers away on the spot (read also: bounce rate) or does not move them through the buying journey.

Read Also: Conversion Rate

Retail Math Course

4. Average Order Value (AOV)

Average order value (aka Average basket size (ABS) or average transaction value (ATV)) is calculated by dividing total sales over the number of transactions for a given period.

It helps in finding out if there are missing opportunities for upselling or cross-selling customers to increase total revenue.

5. LFL Growth

LFL (or Like for Like) growth measures the growth in sales over the same period of time from last year. It shows the real growth by taking out the factor of seasonality. It is also known as comp sales in retail.

6. Order to Delivery (O2D)

O2D is a delivery ecommerce KPI that measures the number of days from the time of placing the order to the time it is delivered to the customer.

The O2D should align with the delivery promise given to the customers on the website.

If O2D is too high, it can indicate problems with order fulfillment at the warehouse or order delivery with shipping providers.

7. Sell Through Rate

Sell through rate is an inventory management KPI that measures how much of the merchandise is sold out of the ordered stock over a certain period of time.

If the sell thru rate is too high for this period of time, it could mean that not enough inventory has been ordered. If the sell through is too low, it could mean that the business is overstocked and need to resort to discounting or liquidation.

Read Also: Open to Buy

A D V E R T I S E M E N T

8. Forward Stock Cover

Forward stock cover is an inventory KPI that measures how many months (or weeks) the current inventory can cover the projected sales.

It is used to gauge the level of inventory and whether more needs to be bought or markdowns are needed to clear merchandise.

9. Net Promoter Score (NPS)

The Net Promoter Score is an ecommerce KPI used to measure customer satisfaction and whether or not they are willing to recommend (promote) the business to other people.

10. Returning Customers

Returning customer rate measures how many of the buyers are ones who have bough before and have returned to buy again.

If it is too low, it means that the business is churning customers, or that the ones who bought might not be satisfied with their purchases.

If it is too high it could indicate high loyalty, but could also mean that the business is not acquiring enough new customers and can do better with spending more on marketing.

Importance of Tracking Ecommerce KPIs

In order to manage the performance of any business, you need to be able to measure it first.

Key performance indicators help in singling out the root causes of low performance and help managers take the right actions to solve the underlying problems.

For example, if sales are down, it could be for many different reasons. Tracking ecommerce KPIs related to sales, inventory and customer satisfaction can show why exactly sales are down.

Is i because there is no traffic?

Is traffic coming but there is low conversion?

Are customers converting but buying less items?

Is there enough inventory or are all the best sellers sold out?

Are customers satisfied with their previous purchases?

Those are the types of questions that need to be asked, and tracking KPIs will help answering them.

How To Manage Ecommerce KPIs

Managing ecommerce KPIs happens by generating and analyzing those KPIs on a regular basis (e.g weekly & monthly) and sharing those KPIs in the form of dashboards with the right teams to track the performance of the entire business, as well as the different teams.

Those KPIs need to also be linked to the performance management goals and KPIs set for the managers and team members of each department at the beginning of the year, and they should be measured and rewarded based on them.

Understanding what the benchmarks for each KPI are in the industry will help set realistic goals to aim for.

Once the right goals are set for the entire year, they can then be broken down into milestones to be achieved and tracked on a quarterly basis, and each respective team member can define the needed tasks to achieve those milestones and start working on them.