Excerpt from the presentation at the 2016 AAM Annual Meeting with Manask & Associates on May 26, 2016. Includes online performance metrics, ecommerce trends, and an overview of Millennial shopping habits.
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Online Stores Experiencing Growth
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Sales are expected to grow to more than $400 billion in the next several years
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Growth Rate & % of Sales Increasing
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In 2016 ecommerce will grow 8% and represent 10% of retail sales
5. Online Performance Metrics
1. Conversion Rate – The percentage of total site visits
that result in an order
Number of Orders ÷ Number of Visits (aka Sessions)
The key indicator of ecommerce success. Conversion is affected by
your product appeal, pricing, shipping, and ease of use of your site.
If you have 2 orders for every 100 visits, your conversion rate is 2%
Aim for a yearly average of 2% – 3%
Peak season 7% – 10%; slower times 1% or less
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Best Practice: Review conversion rate monthly
to ensure your site is performing optimally
6. Online Performance Metrics
2. Ecommerce Sales to Total – Measures how much of
your business is accomplished online
Online Revenue ÷ Total Revenue
A well managed online store can generate 20% of your total retail
operation’s sales or more.
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Best Practice: Aim for 5% – 10% of
your total retail sales figure
Promote your website in store to
encourage subsequent online
purchases.
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Online Performance Metrics
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3. Bounce Rate – Measures how many visits to
your site end on a single page
Number of Single Page Visits ÷ Total Visits
Leaving a site after viewing just one page page is an
indication the design, navigation or theme is not appealing.
Best Practice: Keep bounce rate below
60%. Target 50% – 55% as a healthy
yearly average.
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Online Performance Metrics
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4. Cart Abandonment Rate – Measures the number
of purchases initiated but not completed
1 - (Completed Orders ÷ Visits to Cart Page)
Assume there are 80 shoppers who reach the cart page and 25
orders are placed.
25 orders ÷ 80 shoppers = 0.31
1- 0.31 = 0.69, or 69%. The cart abandonment rate is 69%.
Ways to measure differ—site abandonment, cart abandonment,
checkout abandonment. Set a standard and stick with it.
Best Practice: Industry figures for cart abandonment range
from 55% – 70%. Aim for 50% – 60% as a goal.
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Online Performance Metrics
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5. Visit Duration – Measures how appealing
your site content and product assortment are
4 minutes or more is a good average time on the site
6. Pages Per Visit – Measures how much
interaction visitors desire with your site
4 – 5 pages shows engaging content. Try for 8 or more
Note: Unless you are a content rich site where lots of
reading or research is encouraged, excessive time on the
site or numerous pages viewed could indicate user
frustration or searching for items or answers to questions.
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Online Performance Metrics
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7. Shipping Income Per Order – Measures the
profit after expenses for each order shipped
Shipping Revenue – Shipping Cost ÷ Number of Orders
Online sales should generally bring $3 – $5 of profit per
order. Make sure you are charging enough for shipping so
fulfillment is generating income, not hurting the bottom line.
Best Practice: Sales less than $75,000,
aim to break even. Sales $75,000 –
$200,000, aim for $3 – $5 of shipping
income per order. Sales greater than
$200,000, target $5 – $7.
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Online Performance Metrics
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8. Acquisition Cost Per Order – Measures the cost
to produce the advertising that leads to a sale
Marketing Cost ÷ Number of Orders from the Campaign
Cost Per Order (CPO) varies widely by marketing vehicle and vertical:
Printed catalogues generally have a CPO of $25 – $50
Direct Mail (postcards and mailers) range from $19 – $25
Paid search marketing ideally ranges from $8 – $20 CPO, but can
rise to $50 or $60 depending on channel
Email has the lowest cost, from a few cents to $10 CPO
Best Practice: CPO across all your campaigns should be $2 – $10
for sites with sales of $75,000 – $200,000.
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Ecommerce Trends
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Cross-Device Shopping
Use of multiple devices to browse, research, and make a
purchase is increasing.
Smartphones are preferred for social recommendations,
searches, and responding to ads. Most purchases are still made
on desktop.
81% used more
than one device to
browse
64% used more
than one device to
research the same
item
EBay Enterprise
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Ecommerce Trends
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Social Selling
With Buy buttons on Pinterest, Facebook, Twitter, and Instagram,
selling via social media channels is becoming commonplace.
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Ecommerce Trends
Hero Images and Video
Dramatic homepages with single images and full screen
backgrounds are enlivening web design.
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Ecommerce Trends
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Online Chat
Customer Service interaction before there is a request is on the
rise. Chat increases shopper satisfaction and assists sales.
“44% of online consumers
say that having questions
answered by a live person
while in the middle of an
online purchase is one of
the most important
features a Web site can
offer.”
Forrester Research
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Ecommerce Trends
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Pop-Ups
Once a source of customer frustration, pop-ups are ubiquitous
again. They are larger and more eye-catching than ever.
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Ecommerce Trends
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These Trends Are All Continuing:
Flash Sales
Customer Loyalty / Reward Points
Brands Exposed in Multiple Marketplaces
Expanding Payment Options
Faster Shipping