eCommerce Analytics- Complete Guide to Understand eCommerce Analytics

Introduction

We have often heard phrases like ‘Data is the new crude oil.’ But have you ever wondered how we harvest it? We harvest it through analytical dashboards and insightful numbers.

Ecommerce analytics encompasses all these numbers to enable deeper insights into ways of growth. For a field based on technology, it has to continuously adapt to better formats.

The numbers are the only foolproof way to know which adoption is for the better. For example, you will see apps like Swiggy and Myntra are always making small changes to the layout.

These layouts are based on metrics from the application heat map and user journeys.

In this article, we will explore how these small insights into your platform performance and customer experience can have a much greater impact.

What can be defined as eCommerce analytics?

Ecommerce analytics are a combination of numbers that are used to measure the performance of various aspects of your ecommerce business.

These data points are used to deduce the quality of customer experience on your platform so that apt changes can be made.

This can be anything from your monthly visitors to the delivery success rate. Irrespective of the type of numbers you look at, e-commerce analytics is imperative for you to determine the right direction of growth for your platform.

Furthermore, it will allow a better understanding of the everyday functioning of your platform without having to tediously scour your platform for hours.

4 Types of E-commerce Analytics

While looking at data from your e-commerce platform, you can classify the data points into four main categories.

1) Audience
The audience is basically any visitor or consumer that visits your website/platform. From any standard analytical dashboard, you will be able to gauge various characteristics of your audience.

This includes their place of residence, age, gender, interests, and behavior. This will allow you to understand the audience that is landing on your website.

This will enable you to create the ideal buyer personas on your website and make the right tweaks to the e-commerce experience.

You can even add other metrics from social media and email campaigns to understand where your ideal buyer can be easily engaged.

2) Acquisition

The method of customer acquisition will essentially dictate the scalability and profitability of an e-commerce business.

Therefore, understanding the acquisition metrics to understand the actual output of your sales and marketing efforts.

These metrics become crucial in determining the feasibility of your marketing efforts.

This includes ratios and percentages of success for a particular effort. Additionally, it can include the cost incurred to generate leads or acquire a customer.

Customer Acquisition Costs (CAC) and Cost Per Lead (CPL) are the two key metrics that determine the feasibility of any e-commerce marketing campaign. 

3) Behavior 

Behavioral metrics study and denote the various deviations in the user journey. These metrics can be crucial in determining the position of the customer in your funnel. This will allow you to curate product content to convert the majority of visitors into customers.

The behavioral data will include the session times, bounce rate, checkout process score, etc. This will also allow you to make the right changes to your user journey and checkout process.

A better experience also means the general customer is more likely to recommend your platform and products to others.

4) Conversions

Conversions are the ultimate goal of every eCommerce customer journey. Therefore, your e-commerce analytical process has to have the majority of data indicating the success or failure of conversions.

This data can include various conversion rates like Sales Conversion Rate, Average Order Value, Cart Abandonment Rate, etc. These figures will indicate the effectiveness of the current Conversion Rate Optimisation (CRO) efforts.

4 Key Reasons to Start Using E-commerce Analytics

Here are the top four reasons you should not miss out on using e-commerce analytics for your e-commerce business.

1) Measure Marketing Return on Investment (ROI)

Analytical insights are an excellent way to determine the effectiveness of the marketing effort. Marketing involves a broad spectrum of effort, all of which may not be effective.

Therefore, it becomes crucial to measure your marketing ROI to optimize your strategies for a profitable output.

2) Inventory and Sales Forecasting

Smart Inventory Acquisition is a great way to empower your supply chain through data. With the help of analytical insights, you forecast sales figures for the next quarter.

You can acquire inventory accordingly so that you can make the optimal use of available financial resources.

Additionally, you can be reassured that you won’t have to face sudden stockouts or carry your inventory for an extended period of time.

However, you have to ensure that you consider every factor, including seasonal fluctuations and marketing projections.

3) Optimize Website Performance

Analytical numbers like the bounce rate and the heat map enable you to understand the weak points in your web experience.

These metrics will show you the problem areas on your website and customer journeys that are resulting in drop offs.

You can then use these insights to create a shopping experience that addresses these issues for a better conversion rate.

4) Implement Data-driven Strategy

Formulating strategies without any data-backed insights is just a fool’s errand. The analytical insights help you determine where the platform is lagging behind.

This will allow you to formulate marketing and customer acquisition strategies that have a measurable impact on the performance.

5 Key Ecommerce Metrics to Measure

With so many factors to weigh in, it becomes quite difficult to keep an eye on the right metrics. If you fail to do so, then you may make headway in the wrong direction before realizing it. Here are the top five metrics to look out for.

1) Customer Acquisition Cost (CAC)

One of the most important metrics to measure the marketing ROI, CAC is essentially used to determine the success of the marketing run. It is usually calculated by dividing the entire cost of the campaign by the number of customers acquired.

This will essentially determine your expenses to acquire one customer for your platform. You can then compare this value with the average customer value to determine whether the marketing strategy is financially and operationally feasible for your e-commerce platform.

2) Sales Conversion Rate

Attracting a customer to your product and website is the first step. However, converting this visit into a purchase is a whole different ball game.

The Sales Conversion Rate is an effective metric to gauge the quality of experience and the landing page.

This is because 1000 customers visiting you every hour have no value if they are not making purchases. The Sales Conversion Rate is determined by dividing the total number of purchases by the total number of visits.

This gives you a clear percentage of purchasing customers, directing you in the right way to improve your conversions. 

3) Customer Retention Rate (CRR)

Repeat purchases are crucial for you to convert your e-commerce platform into a brand. Furthermore, e-commerce platforms enjoy a better margin on these repeat purchases as it lowers their CAC and increases the lifetime value. 

This is simply the percentage of customers that return for a purchase on your platform. This metric is especially important for businesses from the marketplace, consumable and apparel categories. This is because there is a lot of competition to acquire customers in this category. 

4) Clickthrough Rate (CTR)

This metric is like the lifeblood of every digital marketer. It is used to determine the success of every possible type of digital campaign.

CTR is basically the percentage of visitors on a blog, ad, or guest post that click on the Call-to-Action (CTA) link placed.

This metric is crucial in testing the effectiveness of your web and ad design. This metric is also important in determining the acquisition rate from various channels, as you can separate CTR metrics for different links.

Clickthrough Rate also becomes extremely important when it comes to determining the success of your social media campaigns.

5) Customer Lifetime Value (CLV)

Before looking at and formulating any kind of marketing strategy, calculating the CLV is important. This is because it enables you to understand the value of an acquired customer and thus make your marketing investment accordingly.

This metric has to be compared against metrics like CAC and other acquisition metrics to determine their feasibility. Along with this, you can understand the customer's lifetime journey and make tweaks to improve the CLV.

3 Best Practices to Ensure Best Use of E-commerce Analytics

Here are some of the best practices you can follow to ensure that you make the ideal use of the data at your disposal. 

1) Automate Data Dashboards

Collecting data and converting them into meaningful insights can be cumbersome if you do it manually. Instead, use automated systems that pull in real-time data from your e-commerce platform.

This can be done just by integrating your backend with popular analytical software like Google Search Console. It is quite useful for website-related metrics. 

There are other dashboards that can be used to measure the KPIs for other types of marketing and e-commerce efforts. A shipping software will empower you with delivery metrics and data.

Social advertising platforms like Instagram and Facebook will also enable automated dashboards for your ad account. This is done in an effort to increase the visibility of the performance of the advertisements on these platforms.

2) Diversify Data Gathering

If you are looking at the acquisition metrics, then it becomes important to add various sales channels. Through this, you can understand the CLV of each customer acquired from various customers.

This will enable you to determine what’s the most effective medium to reach out to your ideal customer. 

Along with this, the variety of Sales channels will allow you to gauge the performance of various marketing efforts. This allows you to introduce a variety of customer data and improve the final result of your analysis. 

3) Adjust Analytics for Seasons and Trends

Seasons and trends tend to have unpredictable effects on the stats. If you fail to consider their impact on your numbers, it may lead to inconclusive or worse, wrong final conclusions.

For example, a social media post may have performed better because of trending audio. But, it won’t be a reliable source of leads as social media can be quite volatile.

Additionally, you have to consider seasonality in purchase and delivery metrics. Deliveries are typically slow around the holiday season due to the increased load. Seasonal sales can yield good results, but they won’t sustain you all year long. 

Conclusion

Google Maps analyzes and calculates a route from Point A to Point B while taking several factors into account.

Similarly, eCommerce analytics act as a medium to show you the right direction to focus your efforts to further the growth of your platform.

In a way, they can act as a guide to tell you whether the steps you implement impact you for better or worse.

FAQs

1) What is the ideal time frame for periodic data analysis?

Ideally, you would want to look at analytics for your e-commerce platform on a fortnightly or monthly basis for website-related numbers.

For more intricate operations like delivery or engagement, it would be ideal to look at day-wise numbers. 

2) What are the best tools for e-commerce analytical insights?

Google's analytics dashboard in the Search Console is one of the best tools for web-related metrics. Further, your shipping software is the best tool for visibility on delivery and shipping-related metrics.