An ecommerce store can be responsible for selling just about anything you can think of from beauty supplies, cell phone accessories, clothing, health supplements, art and art supplies, and even pet food. So to ask the question of what is a good conversion rate for an ecommerce store, we have to dig a little bit deeper.
The short answer is that it depends… It depends on several other factors which we will cover here.
Good conversion rate for an ecommerce store?
We have seen ecommerce stores convert the average unique visitor at less than one percent and still be wildly profitable while we have also seen stores convert at close to 5% and barely be in profit at all.
To get an average might be a little bit difficult. There are loads of sights out there that claim they have the average but again it greatly depends on several factors.
- Where is the traffic coming from?
- What is being sold?
- What price points?
- What is the traffic cost?
Then you must also look at what devices your visitors are shopping on? Desktop visitors are going to perform and convert at different rates than mobile or tablet so you need to take that into consideration as well when looking at a good conversion rate for an ecommerce store.
Once you understand the basic metrics we must then look a bit deeper to find out what conversion rate makes sense for your particular store and customers.
To do this you need to figure out a couple more metrics.
- Average order value (AOV)
- Cost per acquision (CPA)
If for example you know that you spend an average of $100 to acquire a new customer and on average click costs are $1.
This means you will need an average of 100 clicks to acquire a new customer and you have an average conversion rate of about 1%.
If your AOV is $120 that means for every $100 you spend you make $120 or $20 in gross profit.
Over the course of $1000 in spend you would have 10 new customers or $200 in profit.
So in this case a good conversion rate for an ecommerce store would be 1% for you to still be profitable.
Looking at conversion rate before you have a handle on the other metrics is tough to judge. As mentioned, we have seen stores with 5% conversion rate that were barely profitable at all.
This is where optimization comes into play. You can make a good conversion rate for an ecommerce store even better through this process.
Optimization allows you to lower your CPA cost, increase your average conversion rate and increase your AOV.
Let’s take a look at the above example on a good conversion rate for an ecommerce store after a little bit of optimization…
If click costs are still at $1 but through a bit of optimization you were able to bring your CPA costs down to $80 and your AOV was bumped to $130.
For every $100 spent you would still have 1 customer but now you made a profit of $30.
And let’s say you spent $1000 on traffic or got 1000 clicks. This means you get an average of 12.5 customers and a new conversion rate of 1.25%.
$625 in profit for every $1000 spent.
All thanks to optimization.
So before you look at what a good conversion for an ecommerce store is you need to get a good handle on your numbers then optimize to make them more profitable.
What are your numbers? Do you know your AOV and your CPA values?
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If you want help determining your numbers and figuring out ways to make them work more in your favor be sure to reach out for a no obligation conversion acceleration session.