What are the most important metrics for e-commerce companies?
Metrics are critical to e-commerce companies, especially since they help in bench-marking and tracking progress and performance. Let's look at some metrics.
Based on my experience consulting with e-commerce companies I've listed 5 metrics that I consider very important ...
Gross Merchandise Value (GMV): Total sales value for goods or services purchased through marketplace over a certain time.
Average Order Value (AOV): GMV / Total number of transactions
Take Rate: Percentage of GMV the marketplace takes in fees. Revenue / GMV
Customer Acquisition Cost (CAC): The price paid to acquire a new customer. In essence, you arrive at the CAC by dividing the total costs associated with acquisition by total new customers, within a specific time period.
Customer Lifetime Contribution (CLC): The Net Present Value of the profit from a customer's purchases, should be more than CAC for a profitable customer. Hence, it is important to calculate CLC accurately. If your CLC is at least two times the cost of acquiring a new customer, with at least 1X coming in the first 12 months after acquisition, you are in great shape.