ECommerce KPI Examples: 5 Must-Track Retail Performance Indicators

Running an eCommerce business is fast-paced, with owners and entrepreneurs always looking at their retail performance indicators with an eye on ways to improve, grow, and stay ahead of their competition.

Whether it’s improving customer satisfaction, boosting sales, or streamlining operations, there’s always room to push your online business forward. But how do you know if your efforts are truly paying off?

The answer lies in the right eCommerce metrics to track, that’s your retail KPIs. Let’s dive into the best KPI for eCommerce, and the 5 major KPIs you should use to measure your success and take your business to the next level.

What is an eCommerce KPI?

A KPI (Key Performance Indicator) is a measurable value that helps businesses track and assess how well they’re achieving their goals. Think of a KPI in the retail industry as the important signposts that show how different aspects of your business are performing. By focusing on specific eCommerce metrics to track, you can get a clear picture of what’s working, where improvements are needed, and how you can make data-driven decisions to grow your business. Having retail KPIs will help you stay on top of your overall performance, and can serve as a guide for your future business objectives. Your CRM for sales and marketing is also a simple way to collect and organise your customer data so you can use it to track your online sales KPIs, like conversion rates and year-over-year growth.

Why are eCommerce KPIs Important?

Running an eCommerce business is directly connected to making the right decisions, afterall, there’s a lot of competition in the market. KPIs will help you to understand where your online store currently stands, identify any problems in a timely way so that you can minimise the effects, make more informed decisions in order to avoid ongoing losses, and you can use them to achieve your other business goals. Instead of guessing whether your strategies are working, your eCommerce KPI will provide solid data that shows where you’re excelling and where you might need to improve. ECommerce KPIs help you stay focused in key areas like sales, customer satisfaction, and inventory management. By regularly tracking and analysing your sales (through a customer database software like Tall Emu) as part the KPI of your retail eCommerce business, you can make informed decisions, identify trends, and respond quickly to changes in the market. Ultimately, an eCommerce KPI is essential for growing your business in a smart, data-driven way.

What are 5 eCommerce KPI Examples

Here are five of the best KPI for eCommerce, that you can use to improve your business:

1. Year-over-Year (YoY) Growth
   • Definition: Year-over-year growth measures the percentage change in your revenue or another key metric from one year to the next.
   • Formula: [(This year’s sales – Previous year’s sales) / Previous year’s sales] x 100
   • Why it’s Important: This eCommerce KPI gives a clear picture of how your business is growing over time and your long-term progress. You’ll be able to see trends and if your sales grew or declined compared to the previous year.YoY is also important for helping you to identify what’s contributed to a decline/growth, including the impact of new strategies.
2. Conversion Rate
   • Definition: The conversion rate shows the percentage of visitors to your online store who make a purchase.
   • Formula: (Number of sales/Number of visitors) x 100
   • Why it’s Important: It helps your business to understand how effectively you are at encouraging or persuading visitors to make a purchase. If you have traffic but a low conversion rate, you know you will need to adjust your sales process, making improvements in customer experience (simplifying the purchase journey), or new and more compelling marketing strategies may be needed.
3. Gross Margin Return on Investment (GMROI)
   • Definition: GMROI evaluates how much gross profit your business made overall, minus the cost to make or purchase goods.
   • Formula: Total revenue – Cost of goods sold
   • Why it’s Important: This KPI in the retail industry will help your business to determine whether your investment in inventory is generating enough profit. You can use these eCommerce metrics to track and manage inventory efficiently, ensuring profitability, so that you will know if you can afford to make additional investments into your business or not.
4. Inventory Turnover
   • Definition: Inventory turnover measures how often inventory is sold and replaced over a specific period.
   • Formula: Cost of goods sold/Average inventory cost
   • Why it’s Important: A high turnover rate indicates that products are selling quickly, while a low turnover rate may suggest overstocking or slow-moving products. This eCommerce KPI helps businesses manage inventory more effectively.
5. Customer Retention Rate
   •Definition: Customer retention rate measures the percentage of customers you are able to retain or who continue to make purchases over a specific time period.
   •Formula: [(Number of customers at the end of the period – Number of customers during the period) / Number of customers at the start of the period] x 100
   •Why it’s Important: Retaining customers is often more cost-effective than acquiring new ones. This KPI helps eCommerce businesses understand how well they are at keeping their customers loyal and can indicate areas for improvement in customer service or product offerings. If you find custom retention low, you could consider introducing additional incentives to encourage customers to stick with you. Tall Emu’s workflow automation software is an easy solution for better customer management and retention.

Improve Business Performance With Data-Based Decision Making

Improving business performance starts with making data-based decisions that are informed by real insights, not guesswork. By regularly tracking your eCommerce retail performance indicators, you can gain a clear understanding of how well your business is doing, where improvements are needed, and which strategies are driving success.

The good news is that gathering, analysing, and acting on this data is much easier when you have the right tools. Tall Emu’s business software solutions are designed to help you to capture and track essential business performance data. For online retail businesses, Tall Emu integrates with instant buy webforms and Woocommerce, so that you can streamline your operations, and make smarter, more informed decisions—all from one easy-to-use platform. 

Try Tall Emu for Free today and discover how it can transform any eCommerce KPI you have in place for your business, with our real-time CRM report and measure dashboards!