The 15 Most Important KPIs to Grow Your eCommerce Store

What are KPIs?

KPIs, or key performance indicators, are metrics that can be used to evaluate performance and measure the success of your eCommerce business. 

Why are they important?

KPIs are important to success because they can help you measure goals and determine which areas need improvement, ultimately improving your bottom line and helping you grow your business. And from sales to marketing to shipping, we’ve got you covered on the most important metrics for eCommerce. 

15 eCommerce KPIs Skyrocket Your Business Growth

1. Return on Ad Spend

Return on ad spend (ROAS) measures the revenue generated per dollar spent on an advertising campaign. So if you put $1 into a marketing campaign which generates $5 of revenue, your ROAS would be 5:1, representing $5 made for every $1 spent. It’s difficult to pin down a “target” ROAS across all of online retail, but most experts agree on a 4:1 ratio as a benchmark. 

If your ROAS for a particular campaign has not quite hit the industry benchmark, it’s not always best to just end the campaign. Instead, try experimenting with different creatives, calls to action (CTAs), audiences, and more. 

2. Average Order Value

Average order value (AOV) measures the average total of every order placed over a defined period of time. Depending on the niche your business operates in, your AOV will likely vary greatly from a company in a different niche (ex. an auto parts supplier will have a very different AOV from an apparel site). 

Understanding this metric can help you determine future marketing & pricing strategies. In the case of your shipping strategy for example, a low AOV may suggest that you need to tack on extra shipping costs to avoid cutting into your bottom line. Oppositely, if your AOV is high enough to avoid sacrificing margins, you can offer  your customers free shipping, potentially increasing your AOV even further.

3. Average Customer Lifetime Value

Average customer lifetime value is the total worth to your business of an average customer over the entire period of the relationship. It helps paint a picture of product to market fit and brand loyalty. Moreover, customer lifetime value can help you determine how much you can afford to spend to retain existing customers and to acquire new customers.  

4. Shopping Cart Abandonment Rate

Shopping cart abandonment rate is the percentage of shoppers that add products to their cart but abandon it before completing the purchase/conversion. Industry data puts the average shopping cart abandonment rate around 60-80%. And though this number may seem staggering, there are several ways to reduce this metric on your own site. 

On most popular eCommerce platforms, there are plugins & apps, commonly known as heat maps, that track the customer journey from the time they enter your site until they either purchase a product or exit the website. An in-depth look at these heat maps may indicate at which point in their journey customers are abandoning their purchase. 

One of the biggest reasons that customers abandon their cart is due to shipping costs. Offering free shipping is a great way to reduce the abandonment rate. 

If you have an email opt-in for new users to your site, sending automated follow-up emails to those who failed to complete a purchase can potentially prompt them to revisit the site and complete a purchase. 

And rather than trying all of these methods at once, it’s important to split test different options to understand why your customers are abandoning their carts. 

5. New v. Returning Customers

This metric shows the relationship in conversions between new & existing customers. 

Acquiring new customers & subscribers is how eCommerce stores grow. But, new customers are not the only way to generate revenue. 

Spending money on customer retention can lead to higher order values, brand loyalty, and increased customer lifetime value. 

6. Customer Acquisition Cost

Customer acquisition cost is the amount of money spent to acquire a new customer. 

To relate this to customer lifetime value, a good benchmark to aim for is 3:1. This means that the average customer spends three times more than the cost to acquire them. 

If your ratio is significantly lower than the benchmark, you’re probably spending too much to acquire them. 

If your ratio is much higher than this, you may be spending too little; meaning you could spend more: acquiring more new customers and increasing revenue.  

7. Conversion Rate

Conversion rate is the percentage of visitors who purchase a product or service on your site. It can also be applied to other goals on your site such as subscribing to a newsletter or filling out a contact form.

Conversion rate is closely related to many other KPIs. For example, can you afford to continue running a digital marketing campaign at such a low conversion rate in order to achieve an optimal return on ad spend? Or if your conversion rate is so low, could it be attributed to a high shopping cart abandonment rate? 

8. Profit Margin

Profit margin is the amount of profit in your company, and arguably the most important KPI for any online retail business. It’s no secret that you need to make more than you spend; that’s how business works. 

Industry standards deem a 10% profit margin as “average,” with 5% being considered “low” and 20% being considered “high.” 

As your business grows, your margins should grow as well. Using some of these KPIs, along with others, will help you develop a plan to increase your margins. 

9. Primary Traffic Source

Unless you’re a massive eCommerce brand, it’s likely that an overwhelming majority of your traffic comes from one source. And whether it’s social media, organic, paid campaigns, or email, this is likely where you’ve focused most of your attention when evaluating customer acquisition. 

If you don’t know your primary traffic source, there are several tools such as Google Analytics which can help you determine the primary source, along with thousands of other data points.

10. Site Traffic

Site traffic is the amount of visitors entering your site through a particular acquisition channel. 

Site traffic is a pretty broad KPI, especially given the amount of acquisition channels: organic, direct, social media, and email, to name a few. And depending on your digital marketing strategy, some of these traffic sources will be more important than others. 

If you’ve allocated a majority of your resources to a search engine optimization (SEO) strategy, then you’ll primarily be tracking organic traffic. Conversely, if you are running a paid social media or pay per click (PPC) campaign, you’ll be tracking paid traffic. 

By examining the amount of site traffic across all acquisition channels, you can determine if you should spend more or less acquiring customers from certain channels. 

11. Email Open Rate

Email open rate is the percentage of emails opened in an email campaign. This metric can be even further examined by looking at total opens (the total number of times an email was opened) vs. unique opens (the amount of people who have opened your email).  

And though not one of the top acquisition sources for eCommerce companies, email is one of the most successful re-acquisition sources. If a customer subscribes to your newsletter, it’s because they’re interested in your products. By sending them new product alerts, sales announcements, special offers, and more, the likelihood of them making a first, second, or third purchase increases tremendously.

Fortunately, email related metrics such as open rate are automatically calculated if your eCommerce brand utilizes an email marketing tool. 

12. Inventory Levels

Inventory levels are simply the amount of units available at any given time for a particular product. Maintaining proper inventory levels is critical for any eCommerce business; you don’t want to find yourself with too many customers and too few products or vice versa. 

To properly manage inventory, you’ll need to look back at your sales history & rate of growth to determine future inventory requirements. As your business grows, so too will your inventory.

No Storage Fees for Your Inventory

13. Shipping Error Rate

Whether you’re shipping yourself or using a fulfillment partner, shipping errors are bound to occur. Common errors include sending the wrong product, the wrong size, the wrong color, or even shipping it to the incorrect address. 

Ideally, this number should be 0%. But unfortunately, mistakes do sometimes occur. 

The benchmark for shipping error rate is < 0.5%; meaning that for every 10,000 orders shipped, 50 of them are incorrect in some way.

At Dollar Fulfillment, our error rate is just 0.02%, meaning that for every 10,000 orders shipped, just 2 are incorrect.    

Maintaining a low shipping error rate is critical to creating a positive customer experience, enticing customers to purchase from your store again in the future (increasing your customer lifetime value).

14. Shipping Delivery Times

Living in the age of Amazon, consumers have come to expect their products to ship for free and arrive in 1-2 days. Given that your eCommerce store doesn’t have quite the delivery network that Amazon has, these expectations are a bit unrealistic. 

Therefore, you must still try to meet customer expectations without breaking the bank and cutting into your bottom line. 

If feasible, offering free shipping is a great way to positively affect certain KPIs like conversion rate, average order value, average customer lifetime value, and more.

If you partner with a fulfillment company, make sure to be up front about delivery time expectations to make sure that your goals align with the service they can provide.

And if shipping through the USPS, UPS, FedEx, or DHL, it is very possible to deliver orders to domestic customers within 3-5 business days. 

Same Day Shipping if Ordered Before Noon

15. Customer Satisfaction Score

The Customer Satisfaction Score (CSAT) is the percentage of customers who are satisfied with a brand’s products and/or services. 

Essentially, it’s a measurement to evaluate your average level of customer service. After completing a purchase, you can prompt customers with a pop-up after the checkout process or send them a follow-up email to rate their level of service after they’ve received their product.

Maintaining a high CSAT score is critical not only to customer retention, but to word of mouth advertising and product review performance. 

Set Realistic KPI Goals for Your Business

It’s possible that all of these metrics won’t apply to your eCommerce business, and that’s fine. Depending on the stage of growth, you may choose to track certain KPIs rather than others. 

Regardless of your current stage of growth, it’s important to set goals for each of your focus KPIs. Once you’ve reached these goals, you can either choose to set new goals or maintain them. 

10 Shipping Tips to Help Grow Your Small Business in 2021

How do small businesses handle shipping?

Most small eCommerce businesses all start the same way; managing your own inventory and packing & shipping the products out of your home, garage, local post office, etc. And if you don’t have a team of employees to help you with shipping distribution, it can be very time-consuming. 

And in the age of Amazon Prime, consumers have come to expect fast & free shipping. So to best satisfy the customer without cutting into your bottom line, follow these tips to streamline your shipping in 2021.

1. Understand Your Shipping Costs

Before determining how much you plan to charge & how fast you can deliver packages to your customers, you need to know how much shipping is going to cost you. Shipping costs are calculated using weight & distance; meaning that costs increase as package weight and shipping distance increase. Fortunately, with a variety of companies such as FedEx, UPS, the USPS, and DHL, there’s plenty of small business shipping solutions available. 

If your products are larger in size or heavier in weight, FedEx typically offers better rates than UPS & the USPS and will deliver your packages in 3 days. If you are shipping smaller packages such as jewelry or apparel, USPS Priority Mail is likely your best choice. 

If you’re looking for the most cost effective method, final leg delivery may be your best bet. Final leg delivery is when two or more shipping companies “team up” to ship packages. For example, UPS may pick up the product from a facility, then deliver it to a local post office, and the USPS would handle the final leg to the destination. 

2. Know Your Shipping Zones

As popular shipping carriers continue to move to zonal based shipping, it can become a bit easier to estimate your shipping costs. As the distance increases from point A to B, so too does cost. Thus, local shipping in zones 1 & 2 (see table below) are the least expensive shipping options. 

Shipping ZoneMile Radius (from origin)
Zone 1 (local)50 mi.
Zone 251 – 150 mi.
Zone 3151 – 300 mi.
Zone 4301 – 600 mi.
Zone 5601 – 1000 mi.
Zone 61001 – 1400 mi.
Zone 71401 – 1800mi.
Zone 81801 + mi.

Knowing these shipping zones, along with your product weight & dimensions, will help you determine your shipping strategy. You can then look at the zones and come up with an “average” cost of Zones 1-8. For example, let’s say the average shipping  cost given your product dimensions lies somewhere within Zone 6. Then you can  better determine how much you’ll charge for shipping, whether it will be a flat fee or baked into the product price. 

3. Determine Your Shipping Strategy

Once you’ve determined your shipping costs, you’ll need to decide how to charge for shipping. The most common shipping methods for small businesses are standard, flat rate, and free shipping. Standard shipping is based on weight and distance traveled, while flat rate shipping means you can ship any package (usually up to a certain weight & dimensions) for a constant rate. 

And though free shipping may seem difficult to offer as a new business, the majority of consumers expect free shipping even on smaller orders

4. Adjust Product Prices to Offer Free Shipping

Consumers want to feel like they’re getting a deal; thus, offering free shipping can decrease cart abandonment rate and increase conversion rate.So once you’ve determined your average shipping costs, you can bake this into the product price, charging just a few extra dollars and likely boosting your conversion rate. 

Another way to offer free shipping to customers is to offer free shipping over $ X, which can also entice customers to spend more to reach the free shipping threshold. If a customer’s cart totals $80-90 and you offer free shipping at $99, they’ll likely opt to purchase another product rather than paying for shipping. 

5. Take Advantage of Free Shipping Supplies

All major carriers such as the USPS, FedEx, UPS, and DHL offer free shipping supplies ranging from boxes to envelopes to poly mailers to shipping labels. It also goes without saying that if you take advantage of these free supplies, you are required to use that provider’s courier service. If you plan to use a less popular shipping service however, you’ll likely need to supply your own packaging. 

If you choose to partner with a fulfillment service or 3PL provider, they will supply the packaging and other necessary supplies. At Dollar Fulfillment, a standard bubble or poly mailer is included with our $1/order fee. 

Picked, Packed, and Shipped All for $1 per Order

6. Use the Correct Size Packaging

Bubble mailers and boxes come in all shapes and sizes. But, if you choose the wrong one, you could be stuck paying with unnecessary costs. 

If you use packaging that is too large for your product, you will have to use filler/padding to prevent your products from rattling. Not to mention, you can run into the problem of dimensional pricing. To elaborate, your product may only weigh 3-4 pounds for example, but if you pack it in a box that is far larger than the product, the box will actually “weigh” far greater than its actual weight due to dimensional pricing. 

Thus, your products all vary in size & weight, it will be an extra cost to properly stock packaging to fit all of your products. And depending on the size of your company, stocking extra packaging supplies might be space-restricted if you’re working out of your home or garage.

Due to their high volume of shipping & transportation however, fulfillment & 3PL providers always have access to the correct size packaging for your product.

7. Consider Sustainable Packaging Solutions

It’s no surprise that modern consumers have become more environmentally conscious. In fact, nearly three-quarters of consumers said they would pay extra for sustainable packaging. And though modern cardboard packaging is often made from recycled materials, poly mailers are not always recyclable due to their largely plastic composition.

So even though sustainable packaging solutions may cost a bit more than traditional options, your business may benefit in other ways if your customers view you as environmentally conscious. 

8. Include Return Slip in Packaging for Easy Returns

If you own an apparel company that is likely to incur returns due to wrong or incorrect sizes, including a return slip is a handy way to ensure hassle-free returns. If the customer has to search back through their emails or login to their shopping account to locate the return label., they likely won’t be too thrilled about the return process. 

By providing the packing slip the first time around, you can streamline the return process and insure the best possible customer service. 

9. Automate Your Shipping

If you’ve surpassed the dropshipping phase, where you order products directly from the supplier and have them shipped to your customers, you’ve likely already considered shipping automation. And whether this is done via internal processes or with the help of third-party shipping software, automation is critical to ensuring you can process orders quickly. 

Fortunately, there are plenty of automated shipping platforms available such as Shipstation and ShippingEasy which integrate directly with your eCommerce website. Once an order is placed, these platforms will automatically create shipping labels, update your inventory, and more. 

10. Consider a 3PL or Fulfillment Partner

If automated shipping solutions aren’t the right fit for your business, a 3PL or fulfillment center is your best bet. Because that’s all these types of businesses do, they’re going to be faster, more efficient, and make less mistakes. 

Rather than your team packing each & every order and driving them to the local post office, a 3PL will handle every aspect of shipping, without you ever even touching the product. Saving this kind of time & money will allow you to scale other aspects of the business such as sales, marketing, and more. 

Find the Shipping Service That Works for You

As a small business, it’s important to get shipping right; and there are many things to consider. From costs to packaging to automation, a streamlined & customer-friendly process can make or break your business.

Customers want free shipping. They also want sustainable packaging. Fortunately, there are plenty of options available to satisfy both your margins and customers. And with the help of a fulfillment center, you can grow your business while we scale your shipping alongside. 

Scale Your Business Today

Why Chinese New Years
Sucks for Drop Shippers

More than 33% of online stores use dropshipping as their source of fulfillment. While it has its benefits, such as low costs and convenience, it does have one major drawback. Chinese New Year.

Many dropshippers work with wholesalers that are from China, or use websites like Alibaba and Aliexpress to fulfill orders. The Chinese new year is different than most of the world, running from February 5th to 19th in 2019.

That means during this time of the year, if you are a dropshipper, you won’t be able to get your orders filled on time, causing a huge delay. This can seriously cut into your revenue, and perhaps most importantly, it can give your customers a poor experience. They’ll have to wait much longer for their order or be disappointed when you notify of them of shipping delays.

How do you get around this? By using local product fulfillment services. You already have a relationship with a wholesaler in China. Now, you can take it to the next level by purchasing product in bulk.

This can be shipped directly to a fulfillment center near you, where they will pack and ship it on your behalf. You’re also going to be able to get large quantities at a discount, reducing your costs compared to ordering one product at a time.

Want to learn how to get around the Chinese New Year with this strategy? Then keep reading as we guide you step-by-step how to do so.

Why you’re missing out by not using local product fulfillment

There are countless benefits that you gain when working with a stateside product fulfillment company. Here are some of the many upsides you can look forward to.

1 – It prevents you from losing extra revenue

The Chinese New Year lasts for approximately two weeks. If your business generates $5,000 per week on average, that’s $10,000 in revenue you’re now losing because of delays.

Bringing your fulfillment stateside allows you to continue shipping out orders despite the holidays. With so many other dropshippers sourcing from China, this means that you also get to stand out among competitors.

2 – You gain more control of the process and your business

Sacrificing control is one of the biggest downsides to dropshipping. You don’t own the product or manage the inventory. You’re depending on another party, and you must take responsibility for anything that goes wrong — including delays during Chinese New Year.

When you build a relationship with an order fulfillment company, you gain back control of your business and the shipment process. You are in charge of inventory, when items are shipped, and even how fast.

In fact, a study published in the Nang Yan Business Journal found that the most important factors in inventory management are:

  • Creating a strategic partnership and long term relationship with suppliers and customers.
  • Always maintaining a healthy level of inventory, not too little or too much.
  • Improving the IT infrastructure of the order fulfillment process to make collaboration easier.

In other words, having more organization, control, and communication is key to success. This brings us to our next point.

3 – It makes the ability to scale easier

Do you plan to expand your eCommerce store over time? With the eCommerce industry looking to increase to $4.8 trillion by 2021, there’s more potential than ever for you to scale.

However, there’s one issue. Dropshipping is a limited business model. You need to depend on a third party to not only manufacture products, but also send out orders. Once again, you’re sacrificing control, and that will hurt your ability to scale.

Product fulfillment companies instantly remove this problem. With warehousing capabilities and online integration, you don’t have to worry about not being able to send out orders or limited quantities. This means that you can scale your business and inventory with no hiccups.

However, there’s one issue. Dropshipping is a limited business model. You need to depend on a third party to not only manufacture products, but also send out orders. Once again, you’re sacrificing control, and that will hurt your ability to scale.

Product fulfillment companies instantly remove this problem. With warehousing capabilities and online integration, you don’t have to worry about not being able to send out orders or limited quantities. This means that you can scale your business and inventory with no hiccups.

4 – You can brand your packages

What kind of impression do you think your customer gets when a beat up box from China arrives at their doorstep? It probably isn’t very good. It can also confuse them when it has a Chinese address and no labelling related to your brand. (Never forget about Yelp, it can kill your business.)

Private labelling, or the practice of placing your brand on a generic product, can greatly improve the growth of your eCommerce business. The fashion marketplace Myntra is a great example of this.

The company began creating private label product lines in 2017, and they now take up 22% of their total sales. With a $1 billion annual run rate, that is a seriously impressive number. Myntra also achieved 1.6 million orders in three days from a special sale during this period.

Product fulfillment companies can place custom logos and other branding onto packages before they are shipped out. This will impress your customers, prevent any confusion, and make your business appear more professional.

5 – Faster shipping times

26% of online shoppers in the United States will abandon their cart if shipping times are too long. Dropshipping from China can commonly take weeks with ePacket and other slow shipping methods. Imagine how many sales you might be missing out on because of this.

Upgrading to a local product fulfillment company will ensure that your customers are satisfied with faster deliveries. This can also help lower the amount of chargebacks or refunds that your store receives due to late orders.

6 – It improves customer satisfaction

Late orders and buggy tracking codes aren’t uncommon when dropshipping from China. It’s a surefire way to upset your customers, and 33% of Americans will stop shopping from you after one poor customer service experience.

This problem is solved when proper systems and more reliable shipping modes are used by a fulfillment company. The customer gets their order quicker, and they will also have peace of mind being able to watch the process, from the moment it leaves the warehouse, until it show up at their door. Along with good support and an optimized website, this greatly improves customer satisfaction.

Ships a lot + DF Merger

Big News!

Ships-a-Lot and Dollar Fulfillment have merged to create a stronger and more capable logistics solution for our customers. We promise there will be no interruptions to your services and you will continue to receive personalized support from our team.

Thank you for your trust and loyalty. We look forward to serving you with an even stronger logistics solution as we move forward, operating as one under the Dollar Fulfillment name. All invoices and future communication will come from Dollar Fulfillment beginning Monday, July 3.

Please feel free to contact your rep with any questions, and visit our website for additional news and updates.