Every decision that you make regarding your online business is important to its success. You need to be able to make informed choices that are in the business’ best interest. To do that, you have to have accurate and useful data. Without it, the decisions you make are shots in the dark. That’s why ecommerce reporting and effective metrics are essential to understanding where your business is and where it’s going.
Here are some of the key metrics to pay attention to in your ecommerce reporting.
The conversion rate of your online store tells you how many of your customers are actually buying from you compared to how many just browse. Obviously, you want to make sure that your conversion rate is continually increasing.
Knowing what your rate is at all times lets you know if your marketing and social media promotion is attracting the right kind of traffic. This will help you optimize your marketing, branding, or pay-per-click strategy.
Accurately tracking your product inventory is crucial. Some of your items will sell more rapidly than others. For example, suppose you realize that your tablet collection is outselling your laptop collection. It won’t benefit you to increase your inventory of laptops – you need more tablets. It’s also important to recognize which types of items customers are buying. If you are selling more 10 inch tablets than 7 inch, stock up on the bigger ones.
The inventory management system that you choose will compile all this data so you can make the most informed decisions about your inventory, avoid surprise stock outs or oversells, and quickly create purchase orders to keep your business efficient.
Just as the reporting from a good inventory management system will help you track which of products are selling the best, it can help you track and prevent inventory errors. Some common inventory mistakes are:
- Stockouts – This is when you unexpectedly run out of inventory for a product.
- Oversells – This happens when an item is mistakenly sold when you don’t actually have it in stock. Amazon is notorious for suspending sellers who do this.
- Mis-picks – This is when an incorrect product is picked to fulfill an order.
- Mis-ships – This happens when an order is shipped to the wrong address.
- Undersells – These are the slow-moving products languishing on the shelves in your warehouse without being listed for sale.
Inventory mistakes can result in a wide array of negative consequences – dissatisfied or angry customers, suspension from marketplaces, negative feedback and comments, lower search engine rankings, and of course, lost or decreased sales. Monitoring your inventory error metrics with ecommerce reports will help you address large-scale problems in your business practices.
Cost of Acquiring Customers (CAC)
In order to get converted sales, you have to have to drive online traffic to your store. Sometimes that means incentivizing potential buyers to make purchases, and that costs you money. The CAC metric allows you to see just how much you are spending do so. Specifically, the CAC is the dollar amount you have to spend to acquire one customer.
Knowing this metric will allow you make good decisions about how to bring in customers at the lowest possible expense to your business. To keep your CAC low, you can try employing different marketing techniques that bring in customers including SEO, ad campaigns, social media marketing, and different incentives like free shipping, discounts, and sales. Tracking your CAC along with your conversion rate will help you determine what works and what doesn’t.
Average Order Value (AOV)
The AOV indicates the average size of an order on your online store. It’s important to monitor the AOV for your store so you can forecast your revenue. Knowing your AOV means that you can figure out how much revenue you can expect to generate from the current amount of traffic and conversion rate of your store.
Keeping track of your AOV can also open up new potential ideas for increasing revenue. For example, if your store has a low AOV, instead of spending more money on marketing to increase conversions, maybe you can upsell to your current customers. Increasing the AOV could prove a valuable alternate strategy.
Shopping Cart Abandonment
If your conversion rate is low, it’s important to know how many shoppers had at least the inclination to buy from your store. Cart abandonment tells you this.
It’s a percentage of potential customers who placed products in their shopping carts, but did not end up purchasing them. Over 67% of carts go abandoned. That’s a whole lot of money to lose.
The lower your cart abandonment rate, the better. Adding products to the cart usually indicates an intent to buy, so a cart abandonment rate is a warning sign that you are losing potential customers. A low cart abandonment rate will increase your conversion rate. Check out these tips for reducing shopping cart abandonment.
Final Thoughts on Ecommerce Reporting and Metrics
What all of this means for your ecommerce store is that the information you gather from reporting is essential to making decisions that result in improvement. Ecommerce reporting software can help you track down this vital data. Collect it, analyze it, and use it.