We all know that knowledge is power, and the amount of data you can access as an eCommerce business is tremendous. But the only data you have is from your own company, not your competitors. You need to know now only how youâre doing, but also how that compares to similar businesses.Thatâs where eCommerce benchmarks come in.
A powerful tool for helping you make informed decisions based on past performance, eCommerce benchmarks help you make sense of the data you collect and leverage it to improve your business. In this article, weâll explore everything you need to know about eCommerce benchmarks, from what they are to the stats to how they can help you to how you can use them.
The best way to get real-time and accurate is using Varos, which has built a whole company that is solely revolved around showing you how you compared to similar businesses.Â
Benchmarking is the process of measuring performance by comparing results and data points. Businesses use benchmarks to measure their success through comparison, helping them to continually improve their processes and workflows.
There are two types of benchmarks, differentiated by who you are comparing your results to.
Internal benchmarks measure and compare different things within your own business. For example, comparing your sales this quarter to the same quarter last year is an example of internal benchmarking.
External benchmarking compares things from your business to standards outside of your business. For example, comparing your sales this quarter to a competitorâs sales this quarter is a form of external benchmarking. This is Varosâ focus.Â
Within the practice of benchmarking, the data points that you compare are referred to as âbenchmarks.â
As an eCommerce business, there are a number of benchmarks that you can use to reveal important insights. These include:
All of this data that you probably already collect is incredibly important in helping you evaluate the success of your business, pointing you to areas where you can improve and areas where youâre excelling. But itâs all much more powerful in context.
It isnât enough just to know that your home page has a 5-second page load time. Because while that may sound short (after all, 5 seconds is nothing, right?), itâs actually considered long for this KPI â especially if your competitorsâ home pages load in 2 seconds or less.
Similarly, it isnât enough just to know that you have a 55% customer retention rate. How does that compare to last year? How does it compare to your biggest competitors? The answer to those questions is where the money is.
When getting started with benchmarking, the first step is to choose which benchmarks youâll look at. As part of deciding what eCommerce KPI benchmarks to work with, youâll have to ask yourself the following questions.
Keep the answers to these questions in mind when reviewing the below list of some of the most relevant eCommerce KPIs to track.
The average repeat customer rate, also called returning customer rate, measures the number of customers who have made more than one purchase from you. This is one of the most important eCommerce ROI benchmarks because new customers are much more costly to acquire than repeat ones, pointing to the importance of marketing to repeat customers.
The formula for average repeat customer rate is (# of repeat customers / total # of customers) x 100.
For reference, according to Varos, the average repeat customer rate in the eCommerce space is 21% (itâs important to normalize this for product category, size and AOV - which you can do within the Varos app). If yours is much lower than that, you might want to work on retargeting and improving the customer experience. If itâs much higher, it might indicate a need to shift your focus to acquiring new customers.
eCommerce conversion rate benchmarks are some of the most important ones you can look at. Your conversion rate is the number of site visitors who make a purchase. You can calculate it with this formula: conversion rate = (# of purchases / # of sessions) x 100. The average eCommerce conversion rate in 2021 was 5.2%.
Ideally, your conversion rate will remain steady or even increase over time. If itâs low or suddenly drops, it might indicate a few different things, like that your website isnât working properly or your shipping rates are too high.
Customer lifetime value is the total revenue your business can expect from a single customer throughout their entire relationship with you. You can calculate it with this formula: customer lifetime value = average value of a purchase x # of times the customer will buy each year x average length of the customer relationship (in years).
This number varies significantly based on industry and product, but itâs a good indicator of how much you can spend on acquisition and still make a profit.
Your customer acquisition cost tells you how much it costs to get a new customer on average. You can calculate it with this formula: customer acquisition cost = amount spent on marketing / # of new customers.
This KPI for eCommerce goes hand in hand with customer lifetime value to help you make sure youâre not overspending on customer acquisition.
For reference, according to Varos, the average CAC in the eCommerce space is $45 (itâs important to normalize this for your product category, size and AOV - which you can do within the Varos app)
When customers add a product to their cart and donât finish the checkout process, itâs called cart abandonment. Your abandoned cart rate is calculated with this formula: (# of completed purchases / # of shopping carts created) x 100.
If your abandoned cart rate is much higher than your competitors, it could mean that there are errors in the checkout process stopping people from completing their purchases. But with average abandoned cart rates hovering between 70% and 85%, donât worry if they seem high â thatâs normal.
Your average order value tells you the amount of money customers typically spend at one time in your store. You can calculate it using this formula: average order value = total revenue / total number of orders.
This metric is highly helpful in goal-setting. For example, if your sales goal for next quarter is $250,000 and your average order value is $250, youâll know that you should strive to acquire 1,000 customers during the quarter.
Bounce rate is actually a metric relevant to anybody with a website, not just online retail benchmarks. This metric tells you the number of people who go to your website and leave without taking any action like visiting another page. Your websiteâs analytics engine should be able to provide you with the average bounce rate for each page.
The average eCommerce bounce rate is between 20 and 45%, with one higher than that potentially indicating flaws in your websiteâs design or usability.
The net promoter score is a measure of customer loyalty and satisfaction calculated by asking your customers âOn a scale of 1â10, how likely are you to recommend us to a friend or family member?â. Anybody who answers a 9 or 10 is considered a promoter, a 7 or 8 is considered passive, and a 6 or less is considered a detractor.
You can calculate your net promoter score with this formula: NPS = % of promoters - % of detractors. The higher your net promoter score, the better. Any score over 0 is considered good, and scores over 50 are considered excellent.
If your net promoter score falls into the negative numbers, take a look at your customer experience and customer service conversations to see what issues people might be having.
eCommerce benchmarks can offer you invaluable insights, but they arenât going to improve your business on their own. To make the most of the insights you get from your benchmarks, youâll need to analyze and apply them. Ask yourself:
Another important point to consider is where youâre finding your benchmark data. This is much easier with internal benchmarking as opposed to external benchmarking, as you can use your own internal analytics. But the kind of insight you can mine from external benchmarking is considerable, helping to give you a valuable picture of how youâre doing against your competitors.
To help you out, Varos offers a free external benchmarking tool you can use to get benchmark data from companies like yours. Youâll get accurate, real-time metrics from thousands of eCommerce businesses in your vertical that you can use to see how youâre doing and how you can improve. Schedule a demo today to learn how Varos can take your benchmarking to the next level by providing the data youâve been looking for.
Bottom line: Iâm recommending Varos to you all because itâs FREE (for now) and itâs already added a ton of value for myself and my clients.Check it out đ
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I would definitely recommend checking out Varos. With Varos you can easily see how your peers are performing, for free. You get insights into not only TikTok Ads benchmarks, but also similar data for Facebook Ads, Google Ads, and more. #VarosAmbassador
Varos allows thousands merchants to upload anonymize marketing data across meta and google and aggregating it to show what the average is across different categories and ad spend
With varos.com, I can see exactly how our performance across channels stacks up against our competitors in our space.
Compare your ad performance to benchmarks of companies just like yours, anonymously.
I would've killed for this tool years ago and now it's here and oh it's free. Amazing.
I've been seeing some content about @Varos_com so we decided to check it out.
One underrated feature of theirs is the Shopify Benchmarking, which is FREE btw.
Literally impossible to access this data anywhere else. Check out what we're seeing at @my_obvi đ
â
I'm loving what @Varos_com is doing with providing much more relevant benchmarks for #ecommerce... especially since it shows that we are absolutely DOMINATING @Elumynt on #facebookads!
This is in the Baby and Children vertical.#fbads #ppcchat #retail #dtc
Bottom line: Iâm recommending Varos to you all because itâs FREE (for now) and itâs already added a ton of value for myself and my clients.Check it out đ
â
I would definitely recommend checking out Varos. With Varos you can easily see how your peers are performing, for free. You get insights into not only TikTok Ads benchmarks, but also similar data for Facebook Ads, Google Ads, and more. #VarosAmbassador
Varos allows thousands merchants to upload anonymize marketing data across meta and google and aggregating it to show what the average is across different categories and ad spend
With varos.com, I can see exactly how our performance across channels stacks up against our competitors in our space.
Compare your ad performance to benchmarks of companies just like yours, anonymously.
I would've killed for this tool years ago and now it's here and oh it's free. Amazing.
I've been seeing some content about @Varos_com so we decided to check it out.
One underrated feature of theirs is the Shopify Benchmarking, which is FREE btw.
Literally impossible to access this data anywhere else. Check out what we're seeing at @my_obvi đ
â
I'm loving what @Varos_com is doing with providing much more relevant benchmarks for #ecommerce... especially since it shows that we are absolutely DOMINATING @Elumynt on #facebookads!
This is in the Baby and Children vertical.#fbads #ppcchat #retail #dtc
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