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E-Commerce Key Metrics Guide

The document outlines key metrics in e-commerce, including revenue, profit margin, conversion rate, customer acquisition cost, and average order value. It provides examples and formulas for calculating monthly revenue, profit margin, conversion rate, CAC, and AOV. Each metric is essential for evaluating the performance and profitability of an online business.

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Ammad Khan
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99 views2 pages

E-Commerce Key Metrics Guide

The document outlines key metrics in e-commerce, including revenue, profit margin, conversion rate, customer acquisition cost, and average order value. It provides examples and formulas for calculating monthly revenue, profit margin, conversion rate, CAC, and AOV. Each metric is essential for evaluating the performance and profitability of an online business.

Uploaded by

Ammad Khan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Key Metrics in E-Commerce

• Revenue (Sales): Total income generated from selling products/services online.

• Profit Margin: The percentage of revenue that remains as profit after expenses.

• Conversion Rate: The percentage of visitors who complete a purchase.

• Customer Acquisition Cost (CAC): The cost to acquire a new customer.

• Average Order Value (AOV): The average amount spent per order.

2. Revenue Calculation in E-Commerce

Example 1: Monthly Revenue Calculation


A clothing e-commerce store sells 500 shirts per month at an average price of $25 per shirt.

Revenue Formula:

Revenue = Number of Sales × Selling Price per Unit

Calculation:

Revenue = 500 × 25 = 12,500

The monthly revenue of the store is $12,500.

3. Profit Margin Calculation

Example 2: Gross Profit & Profit Margin Calculation


• Selling price per unit: $25

• Cost per unit: $15

• Number of units sold: 500

Gross Profit Formula:

Gross Profit = (Selling Price - Cost Price) × Units Sold

Gross Profit = (25 - 15) × 500 = 10 × 500 = 5,000

Profit Margin Formula:

Profit Margin = (Gross Profit / Revenue) × 100

Profit Margin = (5,000 / 12,500) × 100 = 40%

The profit margin is 40%.


4. Conversion Rate in E-Commerce

Example 3: Conversion Rate Calculation


An online store receives 10,000 visitors in a month. Out of these, 500 visitors make a
purchase.

Conversion Rate Formula:

Conversion Rate = (Number of Purchases / Total Visitors) × 100

Conversion Rate = (500 / 10,000) × 100 = 5%

The conversion rate is 5%.

5. Customer Acquisition Cost (CAC) Calculation

Example 4: CAC Calculation


A company spends $5,000 on marketing campaigns in a month and gains 250 new
customers.

CAC Formula:

CAC = Total Marketing Cost / Number of New Customers

CAC = 5,000 / 250 = 20

The customer acquisition cost (CAC) is $20 per customer.

6. Average Order Value (AOV) Calculation

Example 5: AOV Calculation


An e-commerce store generates $50,000 in total revenue from 1,000 orders in a month.

AOV Formula:

AOV = Total Revenue / Total Orders

AOV = 50,000 / 1,000 = 50

The average order value (AOV) is $50 per order.

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