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The company, regardless of size, should generate profit. It is calculated to take into account many different factors, which in turn are determined by a given industry. The best indicator of a company’s success is financial profit, most often calculated at the end of the month.
However, there are indicators that help to determine a company’s performance in a situation where we do not know whether specific results are good or better than the competition. Similarly, when a company is just starting its business and there is still no experience in assessing the success of an investment.
Key Performance Indicators (KPI), i.e. in Polish, key performance indicators are indicators of the degree to which the company’s goals are being achieved. They make it easier to standardize performance reporting and interpretation, as well as planning company strategies. They can also be an audit tool for management departments. Needless to say, they help the company grow and improve its performance.
In the case of e-Commerce, performance indicators should be considered in the context of the industry and sales strategy. The results should be related to the whole activity and analyzed collectively, not separately.
The basic issue that interests the owner of an online store is the comparison of network traffic from different devices and its characteristics. It is important to know which device users use most often when making purchases. According to the Wolfgang report for 2019 regarding the e-commerce market, product information is sought mostly by smartphone users (53%), much less by personal computer users (37%), and least from tablets (10%). However, the results of finalising the purchase transaction are slightly different. Buyers prefer to switch to computers to shop (56%), leaving only 26% for phones and 12% for tablets.
There are no surprises in this matter. The largest source of network traffic is organic traffic, which is 43%, and the profit it generates is at 38%. Organic traffic is otherwise free traffic, which is derived from organic search results. This is a marketing channel that is mainly created by positioning.
Paid search results generate 18% of network traffic and the same percentage of revenue. However, direct entries are responsible for 20% of traffic and 19% of sales. Recommended traffic is 7%, and the profits it generates are at 17%. The rest is traffic from social media, email and others, which together do not exceed 13% of network traffic and only 8% of profit.
The conversion rate is simply the number of users who performed a specific action, such as making a purchase. This indicator also measures the effectiveness of advertising.
The conversion rate for personal computer users is 5%. Although up to 13% add products to the basket. For tablets, the conversion rate is 4%, but 12% of users add shopping to the cart. The worst is the smartphone with a 2% conversion and a 10% level of adding to the basket.
Thanks to this data, it can be seen that the majority of phone users are only browsing the offer, but finalising their purchases on another device. The most common operating system on which users visit online stores is iOS (45%), followed by Windows (23%), third in Android (20%), and fourth in Macintosh (9%). The rest of the systems barely exceed 2% in total.
The conversion rate has also been sorted by geographical arrangement. In Europe (1.51%) it is higher than in the United States (1.37%). It is on an even level in individual EU countries. However, the United Kingdom dominates with 1.8%, followed by Ireland with 1.6%. Spain is still with 1.5%. Germany, the Netherlands and Denmark have an equivalent of 1.4%. Portugal, Sweden and Norway have a 1.3% average conversion rate. Italy and Belgium are at the end of the ranking with a result of 1.2%.
Marketing channels also affect the conversion rate. Over 5% of conversions come from recommended traffic and email. From direct entry and from organic traffic 2%. Google Ads is responsible for over 1%, and Facebook has less than 1%.
The average level of abandonment by the user is at the limit of 69%. There are many reasons why a potential customer thinks and abandons the basket. However, the most popular is the lack of readiness to buy (59%), resulting from an initial reconnaissance.
55% of users are discouraged by additional costs related to e.g. delivery costs or commissions. Buyers don’t like setting up an account to make purchases. As many as 34% of users for this reason give up the transaction. 26% lose patience through a long and demanding shopping path high clicks and data completion. Delivery costs, which are only displayed in the basket, discourage 21% of customers. 17% of buyers did not trust the site due to the payment method and the same percentage of users abandoned the cart due to errors on the site. 16% of customers were not satisfied with the speed of delivery, and 11% found the return policy unfriendly. Finally, 6% of users abandoned their shopping cart due to the insufficient selection of payment methods available.
Based on the available data, the most common mistakes in the e-commerce industry can be seen. So let’s take them as a warning and take into account when planning to improve the quality of service for your store. These results are a great signpost for an e-commerce company that wants to improve its performance against the competition and increase the overall conversion rate.
However, KPIs may be non-financial and financial. Average purchases made on the internet amount to 121 € or about 524 PLN. By marketing channels, direct entry leads with a result of PLN 403. Next is the email – PLN 395, search engine entry – PLN 352 and finally social media entry – PLN 305.
This data can be referred to the results of your e-commerce store. However, it should be remembered that these are average data, and the most important thing in the interpretation is the individual context. Results may vary from industry to industry for different sites. In addition, the financial indicators should take into account the size of the online store and the diversity of the range.
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