Running a successful ecommerce store goes beyond simply selling products online. To stay competitive and grow your business, it’s essential to understand your store’s performance. That’s where tracking key ecommerce metrics comes in—these data insights help you make well-informed decisions, avoid costly mistakes, and stay ahead of the curve.
If you’re an ecommerce entrepreneur or store owner, this guide will take you through the most important ecommerce metrics you should track, what they mean, and how they can transform your business into a profit-generating machine.
Why Tracking Ecommerce Metrics is Crucial
Metrics are the heartbeat of your business. They tell you what’s working, what isn’t, and help you predict what’s next. Understanding these key insights allows you to:
- Optimize operations
- Increase profitability
- Improve the customer experience
Below, we break down 10 essential metrics you should start tracking today.
1. Cost of Goods Sold (COGS)
One of the most fundamental metrics for ecommerce businesses is Cost of Goods Sold (COGS). This is the total direct cost of acquiring or manufacturing the products you sell, including raw materials, labor, and shipping to your warehouse.Indirect costs like distribution are excluded.
Why it matters:
- Profitability Insight: COGS helps you determine your gross profit by subtracting it from revenue. If your COGS is too high, your margins take a hit.
- Pricing Decisions: A low margin may mean your pricing isn’t adequate to cover all your costs—or your production is too expensive.
How to calculate COGS:
COGS = Starting Inventory + Purchases – Ending Inventory
Tip:Insights into COGS also allow you to negotiate better terms with suppliers or adjust your sales strategy.
2.Gross Profit Margin
Gross profit margin is the percentage of revenue you keep after covering your COGS. It’s a critical metric that reveals how well you’re pricing your products and controlling production or acquisition costs.
Why it matters:
- It shows operational efficiency.
- It’s essential for reinvesting in marketing, new product lines, or infrastructure.
How to calculate:
Gross Profit Margin (%) = [(Revenue – COGS) / Revenue] x 100
For example, if you generate $15,000 in revenue and your COGS is $6,000, your gross profit margin is 60%.
Ideal goal:
Aim for a healthy margin of at least 50%, depending on your industry. High-ticket or niche items might command even larger margins.
3. Net Profit
While gross profit gives you an idea of revenue vs. cost of production, net profit goes deeper by calculating what’s left after accounting for operating expenses, taxes, and other costs.
Why it matters:
- It gives a clear picture of overall financial health.
- It ensures you’re not running your ecommerce store at a loss.
How to calculate net profit:
Net Profit = Total Revenue – (COGS + Operating Expenses + Taxes + Interest)
If you’re not achieving net profit, revisit your business workflows to cut unnecessary expenses without sacrificing quality.
4. Average Order Value (AOV)
What It Is:
AOV is the average dollar amount a customer spends per transaction. Calculate it by dividing your total revenue by the number of orders.
Why It Matters:
Increasing your AOV means you’re getting more value out of every customer. Strategies like bundling products, suggesting complementary items, or running discount thresholds (e.g., “Spend $50 to get free shipping”) and limited time offers can help drive this number up.
Example Insight:
If your current AOV is $40 and your goal is to reach $100,000 in monthly revenue, you’ll need 2,500 orders per month. By increasing your AOV to $50 through bundling or discount thresholds, you’d only need 2,000 orders to achieve the same revenue. This measurable impact can help you focus your marketing and sales efforts on strategies that drive higher value per customer.
Boosting your AOV isn’t just about increasing revenue—it’s about optimizing every opportunity to create value for both you and your customers.
5. Cart Abandonment Rate
What It Is:
This metric tells you the percentage of visitors who add items to their carts but don’t complete the checkout process.
Why It Matters:
A high cart abandonment rate translates into lost sales. Monitoring this metric helps you identify checkout issues and implement recovery strategies like cart reminders or incentives.
Pro Tip:
Industry studies estimate the average cart abandonment rate to be 70%. Reducing it by even a small amount can dramatically boost your revenue.
6. Return Orders Rate
What It Is:
This metric gauges the percentage of customer orders that are returned, relative to the total number of orders placed.
Why It Matters:
A high return rate may indicate product quality issues, misleading product descriptions, or inefficient sizing guides. By addressing these concerns, you can minimize costs and improve customer satisfaction.
Optimize Returns Management:
To reduce unnecessary returns and create a seamless post-purchase experience, focus on these strategies:
- Identify Return Drivers: Analyze patterns to identify problem areas. Are returns concentrated around specific products, categories, or sizing issues? By narrowing down these insights, you can implement targeted solutions.
- Provide Accurate Product Information: Ensure that your product descriptions are clear, detailed, and truthful. Incorporate high-quality images from multiple angles, videos, and context (e.g., models or scale references) to set realistic customer expectations.
- Implement Sizing Solutions: For apparel or footwear, integrate sizing guides that include detailed measurements and fit recommendations. Use AI-driven tools to suggest sizes based on previous customer preferences.
- Enhance Customer Support: Offer responsive, easily accessible support to address potential buyer questions pre-purchase—this reduces preventable returns caused by a lack of clarity.
- Leverage Customer Feedback: Analyze reasons provided for returns and track satisfaction levels. Use this data to proactively adjust product quality or listings.
7. Shipping Costs
What It Is:
This tracks how much you are spending on shipping, per order.
Why It Matters:
Shipping costs eat directly into your profit margins. Keep an eye on this metric to identify opportunities for cheaper, faster, or bundled shipping options.
Pro Tip:
Many top-performing stores negotiate discounted rates with couriers or use fulfillment solutions like Fulfillment by Amazon (FBA) to reduce costs.
8. Customer Acquisition Cost (CAC)
What It Is:
CAC is how much it costs to acquire a new customer, calculated by dividing your total marketing spend by the number of new customers in a given period.
Why It Matters:
Knowing your CAC is critical to evaluating the efficiency of marketing campaigns. Compare it with your customer lifetime value (CLV) to ensure acquisition efforts are cost-effective.
Pro Tip:
The golden rule is to keep your CLV at least 3-4 times higher than your CAC for a sustainable business model.
9. Return on Ad Spend (ROAS)
What It Is:
ROAS measures the revenue you generate for every dollar spent on advertising.
For example:If you’ve spent $500 on Facebook ads but generated only $1,200 in revenue, your ROAS is 2.4
Why It Matters:
ROAS is one of the best indicators of the effectiveness of your marketing efforts.However, benchmarks vary widely based on industry, product type and marketing channels. Platforms like google often achieve higher ROAS due to intent-driven traffic , while Facebook typically has lower ROAs, but excels at building awareness and retargeting.
ROAS is also affected by your profit margin (higher margin can accommodate a lower ROAS goal), how strong is your brand and funnel stage – Top-of-funnel campaigns usually have lower ROAS but are essential for long-term growth.
Here is what our data reveals about average ROAS across leading categories and channels:
Industry | Facebook ROAS | Google ROAS |
Apparel | 1.2 | 1.1 |
Home | 1.8 | 1.65 |
Electronics | 1.5 | 1.9 |
By keeping a close eye on your ROAS you can fine-tune your campaigns to maximize impact and drive your business forward with great efficiency
Pro Tip:
Don’t confuse ROAS and ROI, the later take into consideration all your marketing expenses, while ROAS takes only the ad spend
10. Cash Flow
What It Is:
Cash flow outlines how much cash your business has on hand at any given moment.
Why It Matters:
Positive cash flow ensures that your store can pay bills, restock inventory, and invest in marketing campaigns. Negative cash flow for extended periods often leads to financial trouble.
Pro Tip:
Monitor cash flow regularly to avoid unexpected shortages, and consider taking advantage of short-term funding solutions if needed.
Streamline Ecommerce Metrics Tracking with the Right Tools
Calculating and tracking these metrics can feel overwhelming, but it doesn’t have to be. Using the right tools and solutions can simplify the process. Whether it’s analytics dashboards or ecommerce software, reliable tools provide real-time visibility into your business performance.
For hands-free tracking and actionable insights, consider a solution like Profit Analytics. With seamless integration for expenses, marketing spend, and shipping costs, this tool empowers you to:
- Quickly calculate margins and net profits
- Monitor all key business metrics on one intuitive dashboard
- Access detailed, granular reports for deeper insights
- Optimize performance based on actionable data
Make Smarter Decisions with Data
By regularly monitoring these important ecommerce metrics, you’ll be equipped to make data-driven decisions that elevate your store’s performance.
Whether you’re optimizing checkout flows, refining ad campaigns, or scaling operations, your metrics are the blueprint for success. Start tracking today and take the guesswork out of growing your ecommerce business.