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eCommerce Owners Must Learn to Monitor These 3 Important Metrics

Managing an eCommerce business is now more important than ever. Given the state of the world, most consumers today lean towards the internet to consume information, purchase products, and avail a brand’s services.

Since competition has become tighter, especially with how brick-and-mortar stores are moving online, too, zero guessing is allowed. If your goal is to expand your enterprise, you must do everything you can to focus on building a digital presence.

What’s more, companies and organisations have to meet all of their goals, whether short or long-term. Business metrics are downright for eCommerce. While it can seem daunting to keep track of varying figures and numbers, it's essential.

Why Do Metrics Matter for eCommerce?

Look at it this way: when you're driving a car, you pay attention to the speedometer and such. Why wouldn't you focus on what your business metrics are like as you move forward? Scaling becomes much easier when there are metrics to consider as well.

Identifying key metrics is crucial for eCommerce owners, and they need to manage them properly. Read on to learn more about metrics that eCommerce owners must manage:

Their Conversion Rate

Conversion rate is the percentage of visitors who become paying customers. These metrics are not foreign to any eCommerce owner, but more than anything, it's the most crucial one.

When the conversion rate is notably higher, it's got a return on investment (ROI) on traffic that's pretty high. It applies to organic traffic and paid traffic. In turn, spending on paid traffic can increase since converting traffic into sales continues to go smoothly.

When there's plenty of traffic with a low sales volume, instead of investing in more traffic, it would be ideal for the conversion rate to get better.

Their Gross Margin Rate

Gross margin is essentially the difference between the cost of goods sold (COGS) and sales revenue. The gross margin rate comes from dividing the gross margin by sales revenue.

Business owners need to have an awareness of their "margin". You must note, though, that a positive margin figure standing alone isn't an end-all-be-all reference point. Or, at least, it really shouldn't be. Whether it's a matter of business profitability or checking on stats in comparison to peers, you must take the gross margin rate into account.

Gross margin rate formula: (Revenue - Cost of Goods Sold) / Revenue

Their Average Order Value

The average order value (AOV) is the average amount customers spend per order. When you make sales from a certain period and add them up, you must divide the resulting sum by the number of sales within that period. That's how you can determine the AOV accurately. In that sense, it will be easy to tell if the orders customers make are small or large.

You must note that multiplying the AOV by gross margin rate will yield the average margin per order.


eCommerce is one of the most competitive industries out there today. Owners need to keep tabs on their metrics. Key ones that should be particularly managed include average order value, gross margin rate, and conversion rate.

Are you in need of an eCommerce accountant in Australia? Contact The ECommerce Accountant today! We’re business advisors for influencers and online stores alike.

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