When you’re driving a car down the road, you have to keep your eye on a few things: how much gas is in the tank, how fast you’re going, whe-ther or not you left the blinker on, to name a few. A quick glance at your dashboard tells you everything you need to know in order to keep moving safely. Now if only you had a dashboard to keep your ecommerce business running.
Well, guess what? You do. They’re called metrics, a set of constantly changing numbers and percentages that tell you how you’re doing from one day to the next. There are dozens of metrics you could track, but some are so important you should check them frequently. These are the metrics that will quickly tell you when something needs your attention, or when your business is having an exceptionally great day and it’s time to celebrate. These are the metrics you want on your dashboard.
So, what’s on your dashboard? Today we’re going to help you pick the most important metrics for each area of your ecommerce business.
What is a Metric?
A metric is a measurable indicator that changes over time. Each time you look at it, it gives you a snapshot of how you’re doing at that particular moment in time. By comparing the same measurement at different points in time, a business can tell what’s normal, what’s abnormal, what’s working, and what’s not, so you can adjust things before you get too far down the road.
The metric might be a number (such as the number of new visitors to your website each day) or a percentage (such as your conversion rate). There are distribution metrics, fulfillment metrics, marketing metrics — metrics for every part of your business. Fortunately, most metrics are tracked automatically, using tools and software systems you may already have.
What is a KPI?
A KPI (Key Performance Indicator) is a metric. Repeat. A KPI is a metric. It just so happens to be a KEY metric, that tells stakeholders how well they’re doing at reaching a particular business goal. So, some of the metrics on your dashboard might also be KPIs. We recently covered KPIs for Ecommerce Businesses in another blog post. The purpose of this article is to highlight the top metrics to watch.
Top Ecommerce Metrics to Track
Your marketing VP is going to be interested in very different metrics from your operations VP, and if you’re the founder, you’re likely more interested in the big picture. Below, we’ve listed the top metrics for each area of expertise. Track as many or as few as you like, depending on your role in the company.
Top Sales Metrics
Sales metrics help executive teams evaluate the overall health of their business.
- Orders: the number of transactions in a given timeframe, such as the number of orders per day
- Average Order Value (AOV): total sales divided by the number of orders
- Cost of Goods Sold (COGS): Total cost to produce or procure the goods sold, including manufacturing, fulfillment costs and inventory carrying costs, as well as the direct labor and overhead required to manage these processes
- Gross Sales: the dollar value of all goods sold in a specific timeframe, before tax, shipping, discounts or returns
- Average Gross Margin: gross profit (net sales minus COGS) divided by net sales (gross sales minus returns), expressed as a percentage and averaged over time
Top Inventory Metrics
Inventory metrics help product teams identify their bestselling products, and keep the perfect balance of too much vs. too little inventory in stock.
- Lead Time: number of days it takes to restock a product from the day it’s ordered from the supplier to the day it’s in stock and available for purchase
- Stockout days: how many days you have before a specific SKU will be out of stock, based on sales rate and current inventory level
- Orders by SKU: the number of orders in a given timeframe, broken down by SKU, to identify top selling or slow selling products
- Inventory Snapshot: the dollar value of the inventory you have in stock at the end of the month
- Average Inventory Sold Per Day: average number of units sold per day in a given timeframe
Web Store Performance Metrics
If you’re getting a lot of traffic but your sales don’t reflect that, web store performance metrics (together with marketing metrics) can help you figure out why visitors aren’t turning into customers.
- Traffic: the total number of visitors to your web store in a given timeframe
- Conversion Rate: the percentage of visitors to your website (traffic) during a certain time period who actually make a purchase
- Bounce Rate: percentage of visitors who leave without clicking past the landing page
- Abandoned Cart Rate: the number of orders, divided by the number of visitors who put items in their cart during the same timeframe, tracked as a percentage
- Top Search Terms: tracks the most frequently searched terms on your website
- Net Promoter Score: a number on a sliding scale that measures how likely a customer is to recommend your store or products to a friend
Marketing is expensive. If you don’t know what’s working, you could be throwing your money away. Marketing metrics can help you see what channels and what types of messages bring in the best types of visitors.
- Traffic by Source: the number of visitors to your web store, broken down by geographic region, sales channel, source, or device
- Conversion Rate by Source: identifies where your most-interested customers are coming from
- Click Through Rate: percentage of potential customers exposed to a marketing message (email, digital ad, social media post, search result) that click to see more
- Customer Lifetime Value: the sum total of all the purchases a single customer has made
- Repeat Customer Rate: the percentage of purchasers on your website who have placed more than one order
- Customer Acquisition Cost: total marketing spend, divided by the number of new customers who made a purchase during that marketing campaign
- Return On Ad Spend (ROAS): the amount of revenue earned for each dollar spent on marketing
Your fulfillment team or 3PL should be independently tracking their own performance, so you don’t need to get too granular here, but there are a few metrics you should watch to monitor their performance.
- On-time Shipping Rate: percentage of orders that are picked, packed and shipped out within the expected timeframe
- Pick and Pack Accuracy Rate: the percentage of orders fulfilled accurately
- Average Shipping Cost: the average shipping cost per order during a specific time period (domestic or international)
- Delivery Exceptions: orders that cannot be delivered without action on your part
How to Track Metrics
These all look great, but how do you actually track ecommerce metrics? The good news is that most shopping platforms and backend order management systems are already tracking these metrics for you. All you have to do is pick the ones you want to watch.
The first place to look is your shopping platform or website shopping cart. Most shopping carts, including Shopify, WooCommerce, BigCommerce and others, collect data with every order. You can create your own customized dashboard to view orders and other metrics at a glance. For example, Shopify’s Analytics dashboard tracks important sales metrics and will calculate the percentage of change from one timeframe to the next.
As for marketing metrics, Google Analytics, Meta, and other media channels have powerful tools that track traffic, page clicks, click-through rates and much more, so you can measure the success of your marketing campaigns.
In addition, your fulfillment center or third-party logistics (3PL) provider should have its own order and inventory management system that tracks orders through the fulfillment process. This system should easily integrate with your shopping platform and back-end systems to provide real-time order and inventory information. ShipMonk’s industry-leading 3PL software platform makes monitoring orders and inventory levels a breeze, with custom reporting and robust features that put you in the driver’s seat.
Start Tracking Metrics Now
Tracking ecommerce metrics can help you better understand how and why your ecommerce business is (or isn’t) growing. It helps you better understand your customers, where they’re coming from, what products they like, and what message draws them in. It helps you identify trends, seasonality, and business cycles as you watch those numbers increase or decrease. It helps you maintain safe inventory levels to avoid stockouts or overstocks. And it helps you identify problems with your web store and areas that need fixing, such as search, navigation, or the checkout process.
If you’re already one of ShipMonk’s ecommerce clients, you’re in luck. Our cloud-based advanced fulfillment software puts real-time data in your hands, 24/7. Whether you’re responsible for inventory management or customer service, you can customize your dashboard to show the metrics you want to see! Contact us today for a software demo, and a peek at all the ways we can help your ecommerce business grow.