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E-commerce KPIs: Choosing the Right Data for Growth

Sep 05, 2023 - Nicole Kofman
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In the world of e-commerce, the competition is fierce. As businesses compete for customers, sifting through oceans of data becomes a huge undertaking. Yet, discerning the right data is crucial. Within this mountain of information, KPIs stand out - serving as guideposts for stores inundated with too much data. 

The difference between metrics and KPIs

While many may use 'metrics' and 'KPIs' interchangeably, there's a critical distinction between the two. Metrics provide a data point. KPIs, however, are tied to specific goals - they offer direction and purpose. By differentiating the two, businesses can hone in on what matters, ensuring that they're not just moving, but moving in the right direction.

Setting effective KPIs

The e-commerce space is filled with stories of businesses that set unclear objectives or failed to adapt to changing market conditions. To avoid these common pitfalls, businesses must align their goals with their vision from the onset. When setting KPIs, take the following into consideration:

  1. Industry Dynamics: Are you in a niche market or a saturated one? Understanding the nuances of your specific industry is important as the answers to these questions should dictate your strategy.
  2. Company's Maturity: An established organization will have different KPI's from that or a startup. Know where you stand on the maturity scale and set goals accordingly.
  3. Business Model Compatibility: Don't just set goals, make sure they are the right ones. Your KPIs should reflect what your business truly stands for.

The interaction between strategy and data

It's important to understand the relationship between strategy and data. While data provides the numbers, it's the approach to using it that's key. By combining the insights drawn from KPIs with a solid strategy, businesses can go from not only collecting data, but using it. Recognizing that it's not just the volume of data but the ability to draw and use actionable insights from it is what will allow a business to grow. Below are some of the top KPIs for most e-commerce businesses:

Top E-commerce KPIs

  1. Conversion Rate: The conversion rate reflects the efficacy of your store and marketing motion. It reveals the user experience, product quality, and overall trustworthiness, in addition to the bare number of conversions. By optimizing for this KPI, businesses can increasing sales as well as enhance the entire customer journey.

    How to Increase Conversions: 
        • Offer customers free shipping: This strategy can significantly enhance perceived value of the product that's being sold.
        • Optimize landing pages: A well-done landing page is very likely to boost conversions.
        • Use automated repricing platforms: Stay competitive by ensuring your prices reflect the market.
        • Run promotions: Now that you've gotten a potential customer's attention, giving them a deal is a lower-cost way to get them in the door the first time. 
  2. Shopping Cart Abandonment Rate: Beyond the statistic, there is a story behind this metric. Why did a potential customer hesitate at the last moment? Was it the shipping fee, a complicated checkout process, or perhaps second thoughts about the product? By understanding and addressing these concerns, businesses can reclaim lost sales.

    Strategies to Combat Cart Abandonment: 
        • Simplify the checkout process: Find areas that impede an easy checkout on your website's checkout page. A streamlined, user-friendly checkout experience is essential for getting customers to convert. 
        • Use exit pop-ups: Save a sale with exit popups, messages that pop up when a shopper is about to leave your checkout page. They can offer incentives or just give the nudge a customer needs to reconsider.
        • Set up abandoned cart reminder emails: A gentle nudge at a later time can save a sale. 
  3. Average Order Value (AOV): AOV represents the mean amount spent on each purchase. This KPI reveals shopping behavior patterns and can be boosted by:

          • Introducing product bundles.
          • Offering multipacks to increase online sale potential.
  4. Inventory Turnover Ratio (ITR): Tracking ITR for inventory management is pivotal, especially if a business operates on multiple platforms. High ITR signals strong sales, whereas a low ITR indicates weaker sales.
  5. Customer Lifetime Value (CLTV): Understanding the revenue a customer will generate over their lifetime helps businesses invest in the right channels. Improving CLTV by even 10% can have a significant impact on profit margins.


With the right KPIs, businesses can navigate the complex e-commerce landscape with confidence and precision, when the margin for error is slim. Whether you're just starting out as an entrepreneur or a seasoned business owner, understanding and leveraging these KPIs is your ticket to sustainable growth.