Sunday, December 3, 2023

Which eCommerce metrics and KPIs you should measure

To make any business or activity successful, you need to understand how to track its progress and results. To do so, you need the right metrics and KPIs already incorporated in your strategy. Those metrics will show you if you are going in the right direction and if you are close to achieving your goals. It is the same when it comes to eCommerce business and activities. You have to know what to set as metrics and KPIs and how to measure them. We will give you some insights on the topic with this article.

What is the difference between metrics and KPIs?

To better understand the concept of metrics and KPIs, we will start by explaining what each of them is and the difference between them.

What are metrics?

A metric is a quantifiable measure for the performance of a particular asset like your site, for example. It is a defined measurement that can be tracked at any moment and show you the progress of your activity. An example of a metric is the percentage of people that, for example, abandon their carts compared to the traffic source they came from.

What are KPIs?

Key performance indicators or KPIs are a measurable value of the important metrics. Those are the metrics you actually want to improve the most, and you aimed at that with, for example, a website redesign meant to help with the conversion rate. The numbers that you regularly track and measure your growth with are KPIs.

What is the difference?

The difference is that the KPIs are the essential metrics for your business. The ones on base of which you set your goals and track your progress. Usually, there are just a handpick of KPIs you choose compared to the much bigger number of metrics available for tracking. 

Metrics will show you the progress, and the KPIs will tell you if this progress is enough to achieve your goals. This is why you should carefully pick the most important KPIs for you and not get overexcited and say you will track every metric available. The metrics you select as KPIs should be the most relevant ones and be aligned with the goals of your business.

eCommerce metrics and KPIs you should measure

There are many metrics you can track, and they can be used as KPIs if they will help you achieve your goals. Below we will mention some of the most important ones.

Conversion rate

This is the metric that will show you how well your eCommerce business is performing. It is a percentage metric calculated by dividing the total number of conversions by the total number of visitors and then multiplying it by 100. You can measure different conversion types, but maybe the most important ones are the one — how many people performed a purchase, how many people returned to complete another one, etc. In this way, you will understand if anything alarming needs to be changed.

Average order value (AOV)

Average order value or AOV is also a vital sales metric. It will show you how much an average person spends on your site. You can track this and split it by different characteristics like gender, age, new or returning customers, etc. AOV is calculated by dividing your revenue by the total number of orders.

Customer lifetime value (CLV)

Understanding how much money every customer brings you is very valuable, and the metric that helps you with that is customer lifetime value or CLV. It is calculated by multiplying the annual gross profit per customer by the customer relationship in years and then removing the customer acquisition cost. Of course, the customers with the highest CLV are the ones you want, so based on the performance of this metric, you can make the needed changes to make more customers profitable for you.


Availability or out-of-stock rate is a metric that will show you which items you offer are most often unavailable. This metric is crucial because if a customer doesn't find what they want and need on your site, they might go to a competitor and become a regular user there. So, whenever you see that something is often out of stock, this would mean it is a very popular item, and you need to make sure it is always available.

Cost per acquisition (CPA)

If you are running any type of paid acquisition, this is a metric you should keep an eye on. Cost per acquisition or CPA will show you how much you spend to acquire a new customer. It is calculated by dividing the total money you spend by the number of new customers. You should aim at a low CPA but not too low because it might not bring you customers willing to pay.

Cart abandonment rate

Cart abandonment rate shows how many people visited your store put something in their cart but never finished the process. If this rate is very high, maybe your check-out process is a bit too complicated, and you need to improve the conversion rate.

Customer retention rate (CRR)

Acquiring new customers is essential but keeping them even more. This is because you can't count on only new people finding your eCommerce store and performing one purchase. They need to come back. This is why customer retention rate or CRR is one of the most critical metrics.

Product Revenue

It is pretty obvious that you need to keep track of your revenue number. But you need to track it in the right way. Don't just check the number in total and say that it is increasing and this is enough. You can divide it into different streams like one-time customers, customers on mobile and desktop, age, gender, location, etc. Like this, you will understand that maybe you need to improve your customers' experience on mobile or that you have fewer buyers below 30 and will try to make changes to improve this. 

Profit margins

This is highly linked with the revenue metric because the profit margins will tell you how well you managed your costs and your gross revenue at the end. The gross profit margin is basically the difference between the price of a product and the costs of goods sold like production, materials, transport, etc.

Why do you need to measure metrics and KPIs?

Tracking is crucial to understanding the progress of your business. It will allow you to see if you are on the right track to achieving your goals or something needs fixing. For example, you set a goal to improve your conversion rate because you see that many people visiting your site are not performing any purchases. To do so, you will be thinking about optimizing your site, improving the customer journey or your offerings, etc. Once you do those changes, you need to see if they actually brought you any improvement. 

With the idea that you want a better conversion rate and you did , Y, and Z to improve it, you will keep an eye on this KPI and the ones linked to it. If you see a positive trend, then this would mean that you made the right changes. But if you see that the conversion rate remains the same or even gets worse, you will have to take other measures and implement more changes. 

So, measuring metrics and, more importantly, KPIs will show you what can be improved and track the performance of already improved aspects of your business. KPIs are not set in stone, and they might change depending on your business goals. But they are important because you might not notice if something needs to be improved without them.

Wrapping up

Having clear goals and measuring your progress towards achieving them is the key to success. To do so, you need to measure the right metrics and KPIs. Depending on your goals, you will choose the KPIs to keep track of your progress. If you notice a metric that needs improvement, turn it into a KPI and take the necessary measures to improve it. Continuous optimization and measuring will bring your business to the next level. 

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Gabriela Gavrailova
Gabriela Gavrailova
Gabriela is a freelance writer at Tech Edition, where she writes about technology and often does listicles and product reviews. Based in Austria, Gabriela is a person with many and diverse hobbies. If you don't find her reading a book at home or baking something, she will probably be out hiking or taking some classes to learn a new skill.

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