The 9 Most Important Ecommerce Metrics for Shopify Stores in 2023
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As a Shopify store owner, you know that tracking ecommerce metrics is essential to the success of your business. But what are the most important ecommerce metrics to track? And how will they change in 2023 and beyond?
In this blog post, we'll discuss 9 ecommerce metrics that you need to be aware of in order to make data-driven decisions for your business. We'll look at the following key performance indicators (KPIs), how to measure or find them, and how they can help you make improvements to your marketing and business.
We can break these ecommerce metrics down into 4 categories.
Online store metrics
top traffic sources
average order value (AOV)
cart abandonment rate
customer acquisition cost
customer retention rate
customer lifetime value (CLV)
top sold products
number of refunds
Online store metrics
Monitoring and improving your online store's performance is a must for ecommerce success.
Website traffic sources
By understanding the sources of your store's traffic, you can focus on areas that you want to grow or leverage existing platforms that drive the most traffic.
If you discover that most of your website visitors are coming from organic search, you can focus more of your marketing budget and efforts on SEO to optimize for those keywords and increase organic search results. Additionally, you can use the information to tweak other areas of the website and make sure it's optimized for better search engine rankings.
Your conversion rate is the percentage of store sessions and those that end a purchase. This metric allows you to understand how effective your website is at converting visitors into buyers, so you can identify areas to improve. You can also compare this against industry standards and competitor conversion rates to see how you stack up.
The average ecommerce conversion rate is between 2 and 3%, however, subcategories of online stores have more specific averages you can use to measure your business against. We've done a lot of work in Beauty & Skincare, so we're benchmarking against an average of 2.4% (as of the writing of this article).
Conversion rate doesn't only reference purchases - your marketing strategy will have other goals that are also considered "conversions".
Average order value (AOV)
Your average order value is the average amount of money customers spend in a single purchase from your store. This metric can help you measure and improve customer loyalty, by understanding the type of products they are buying and why they may be buying more than one item.
You can measure your AOV by dividing the total sales revenue for a certain period of time by the number of orders received in that same period, however, Shopify tracks this metric for your right in the admin dashboard!
Cart abandonment rate
Shopping cart abandonment is when a visitor on your site adds products to their cart without completing the purchase. Shopping cart abandonment rate measures the percentage of website visitors that add items to their shopping carts, but do not complete the checkout process.
Monitoring your cart abandonment rate can alert you to issues on your website, and help you improve the user experience on your website to grow the top of your conversion funnel.
Many who get started in online sales start by focusing on their online store's performance. It's equally important for ecommerce business owners to monitor important metrics related to the health of their business.
Customer acquisition cost (CAC / CPA)
Customer acquisition cost, sometimes also called "cost per acquisition", is how much your brand is spending to get each new customer.
Your cost per acquisition of each new customer is an essential metric for the financial health of your brand.
To calculate CAC, divide your total revenue for the period (month/quarter/year) and divide by your total marketing spend for the same period.
Example: 200 new customers / $1000 marketing expense = $5/new customer.
If you know your brand's average order value, comparing your acquisition cost immediately shows you if your marketing is successful or not. If our average order value is $20, then we're getting $20 in revenue for every $5 we spend on marketing!
Monitoring our customer acquisition cost over time allows us to see if new marketing campaigns and efforts are positively impacting our online business as a whole.
Customer retention rate
Your customer retention rate measures the percentage of repeat customers, which helps your online business understand customer loyalty, the success of loyalty programs, and identify repeat customers.
For consumable goods, your customer retention rate also gives you insight into how many customers are enjoying your product enough to buy again.
According to Gorgias, repeat customers typically generate almost half of a brand's orders, while only being about 20% of their customer base.
Average customer retention rates across industries
Beauty and fitness: 38%
People and society: 37%
Food and drinks: 36%
Books at literature: 31%
Pets and animals: 30%
Home and garden: 25%
Toys and hobbies: 23%
Shoes: 78% churn rate
Apparel clothing accessories: 21%
Consumer electronics: 19%
Gifts and special events: 18%
Note: retention is the inverse of "churn rate". Ecommerce churn rate is a measure of customer attrition - i.e. the number that don't buy a second time.
Customer lifetime value (CLV)
Customer lifetime value is a measure of the total amount of revenue generated by a customer for an ecommerce business, over their entire period of engagement with the business (customer lifetime). It considers factors like purchase frequency, order size, and customer tenure to calculate how much value customers bring to the business in terms of revenue and loyalty.
While average lifetime value for in ecommerce is $168, sectors of ecommerce businesses will have a different industry.
Top sold products
Most ecommerce analytics tools will track most commonly viewed and purchased products. Google Analytics, Shopify Analytics and
Recording this data over time, and digging deeper to see if customers are purchasing the same product multiple times, or if one product is the main purchase for new customers while second and third purchases include other products.
This can help understand your average customer and their journey through your brand.
Monitoring customer refunds and returns is incredibly valuable for any ecommerce business. Through tracking customer feedback like this, a business can gain insight into customer satisfaction, customer expectations, and customer experience. By evaluating this information on a monthly basis, businesses can discover if there are drastic changes or certain trends in customer refunds and returns such as whether certain products have an abnormally high return rate.
This data can be used to adjust customer service standards or product quality/functionality as needed to ensure customers remain satisfied with their purchasing experience.
How to track your ecommerce metrics
For brands using Shopify, Shopify's knows what they're doing with ecommerce metrics. Shopify monitors everything from website traffic, top products, top traffic sources and pages. It will also calculate key ecommerce metrics like average order value, repeat customer rate and conversion rates for multiple goals. Your ecommerce platform, whatever it is, will have some set of basic ecommerce metrics mentioned.
Google Analytics can unlock new insights, allow you to create custom dashboards with Google Data Studio, but takes considerably more work to get right (you should still install GA on your store - Shopify makes it incredibly easy). With it latest release, Google Analytics 4 now uses machine learning to identify key performance indicators (KPIs) for your site as well!
One tool we recommend for everyone that we work with is Microsoft Clarity. Clarity is a heat mapping tool that plugs into Google Analytics and adds great insight into how your customers are using your website, and provides a great dashboard for key metrics, as well as other metrics.
Even though you could set up every dashboard in the books to monitor your ecommerce metrics - for soloprenuers and early-stage ecommerce businesses, tracking these metrics over time in a simple spreadsheet, keeps you on top of the trends and changes to your online store's performance.
These metrics are crucial before starting an effort like conversion rate optimization. Your site conversion rate doesn't matter if your cost to acquire new customers is above your AOV (because you'll be losing money!).
On the other side, increasing conversion rates & reducing shopping cart abandonment rate can be a huge lever for total revenue. If you're currently converting 1% of visitors, and you can start converting 2%, you'll have doubled your revenue - without even touching other metrics.
One of the best ways to start is to start monitoring and tracking these key e-commerce metrics.
The ultimate goal is find a way to acquire a new paying customer at a cost less than the average value of a first time order, and build a sustainable brand with repeat purchases from existing customers with an increasing customer lifetime value.
Understanding and tracking these ecommerce metrics and KPIs will get you closer, and help you measure ecommerce success.