Considerable eCommerce Metrics Sellers Need to Track This Year!
There is a vast difference between running an eCommerce business and running a successful one. Today millions of sellers are selling their products on eCommerce marketplaces. But not all of them are acquiring success; the reason is that some are not analyzing their business’s overall performance or may not follow the latest metrics of the eCommerce industry.
Believe it or not but for the tremendous success of your online business, you must follow all the latest metrics of this industry. The eCommerce metrics may change from time to time per the market trend and customer demand. The metrics mentioned in this blog are essential in terms of serving your customers dynamically. If you are unaware of these, this blog is just for you. Here in this particular blog, we are going to mention some of the vital eCommerce metrics that can help you to know whether you need to implement them in your online business or not. The following metrics will help you understand how well your business performs. So what are we waiting for? Let’s get down and find out these considerable metrics of eCommerce.
Five Elementary eCommerce Metrics That You Need to Follow
eCommerce Transaction Rate
How many transactions have been done from your seller page can not precisely tell how well your business is doing. However, over time, it does demonstrate how popular your product is on various eCommerce platforms. That is why it is necessary to track every online business transaction. Now the real challenge is it is impossible to track every transaction manually, so what is the solution? Well, you need not worry about it because there is various accounting software of eCommerce available that can help you to tackle this problem tremendously. Some software, such as eVanik OWS, has the efficient feature of managing all your transactions by integrating with your accounting software such as Tally, Zoho books, Quick books, etc.
With the help of such software it can become easier for you to track each transaction and know what is actually happening with your business. This is one of the most considerable metrics of this industry that you must follow if you want to up-scale or grow your business.
Calculate Your Cost of Goods Sold (COGS)
The cost of goods sold is basically associated with your sales. The enormous eCommerce industry incorporates various factors such as the price you paid to the manufacturer or supplier for your products or the price related to formulating your products yourself. Accurately calculating the cost of goods sold (COGS) can be challenging for any eCommerce seller. These eCommerce metrics can also help analyze the inventory turnover margins and ratios as well. To calculate the COGS, you can start with the basic level, and the formula is; Initial inventory+Total acquisition-closure inventory.
To acquire the accurate cost of goods sold value, you need to keep track of your inventory or manage your inventory perfectly. Lack of inventory management can make you lose the chance to get along with this eCommerce metric. To manage your inventory, you can acquire inventory management software. Such software can automatically provide you with all the inventory reports on a real-time basis. Thus it can help in calculating the COGS.
Recognize Your Return Rate
Returns are a significant pain for any eCommerce seller; you must have experienced this issue maybe on a daily basis or occasionally. It can be more or less, but it is present there. The eCommerce industry has accepted that they have to live with this issue, but they can try their best to reduce the return rate. According to the research of the National retail federation and apprises retail, it has been found that returns have increased from 10.5% to 16.8% this year.
These statistics are a matter of concern. Handling the courier and customer return can be a clumsy task to perform, but with the help of return reconciliation software, it can be done perfectly and precisely. Such software can help you enormously in terms of managing your returns and ultimately increase your profitability. If you are not focusing on your return rates, you may not only lose your money but can also diminish your market image. Along with evaluating your return rate, you must focus on minimizing it by understanding the customers’ concerns regarding your product.
Measure Your Customer Retention Rate
In the eCommerce world, it can be easy to attract new customers because there are so many effective ways that you can execute to make them buy your product at once. But it is way too difficult to retain a current customer because they already know you, and if your product is not as per their requirement or if they have some other issue, they might never return to you. However, measuring the customer retention rate is imperative to know how well you can hold your existing customers.
To calculate your CRR (Customer retention rate), you can divide the total number of return customers by the total number of existing customers and multiply that by a hundred. If your CRR value is below 30%, it means you need to work on increasing it by improving your product quality, delivery time, price, etc. To increase the CRR rate, you can offer attractive discounts and offers to your customers.
Calculate Your Net Profit Margin
You must agree that you are not in the eCommerce business to sell your products but also to generate enormous revenue. You need to calculate your net profit margin if your business is doing as per your expectations. This measure can give you an overall idea of what you need to add or minimize to increase your profit margin. Calculating your net profit margin is a comparatively simple task to perform.
It will help if you use a calculator and manually minus the cost of goods sold from the gross revenue and then divide the figure by the actual sales. The formula for executing this process is; net profit margin= [(Gross revenue- COGS-other expenses and taxes) / net sales]. In such a way, you can know your net profit margin and run your business accordingly.
Thus, several eCommerce metrics can empower online sellers to analyze and measure the overall performance of their online business and let them make essential decisions. As an eCommerce seller, you can use such metrics to obtain a much more reasonable and precise way to evaluate the performance of each product you are selling on diverse eCommerce marketplaces. To attain your business goals efficiently, you must follow these eCommerce metrics.
Suppose you find that your business is not performing well on such metrics. In that case, you may require to subscribe to some robust software such as eVanik OWS to improve the parameter of several metrics such as COGS, return rate, transaction rate, etc. It can effectively minimize the issue related to inventory management, return reconciliation, accounting, shipping, and payment also. This centralized software can easily integrate your ERP system and manage your multi-channel business performance in a single dashboard.