When doing business on an e-commerce platform, we have to find down the formula to increase revenue on E-commerce. To analyze the results achieved. As well as things that have not been done well in order to have a future development plan.
Sellers also need to continuously monitor and analyze the shop’s business situation. From there, there is a reasonable and appropriate strategy for each stage. To do so, in this article Apexcorp consultants will help you learn about important operating indicators of e-commerce stores. Helps you analyze deeply the formula for increasing revenue on e-commerce platforms. Research factors affecting each index.
1. Performance page of the e-commerce platform
E-commerce platforms have provided an effective tool. So that sellers can monitor the shop’s performance. Not only in the past but also in the present. That is the “performance” page in Seller Channels.
If there are some metrics you don’t understand or need more information. You can hover over the “?” and click on it. You need to learn more about the definition and meaning of that index. As depicted below:
Currently, the performance page provides overview information about 4 groups of indicators:
- Infringing products
- Order management
- Customer care
- Buyer satisfaction level
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2. Basic formula to increase revenue on e-commerce
The basic increase revenue on e-commerce formula that salespeople may already know through courses that are often mentioned by many people is:
Revenue = Traffic* CTR*CR*AOV*RR
Each index is understood according to the following definitions:
2.1 Sales (GMV/NMV)
It seems that this index is too familiar to all sellers. Revenue is the amount of money you receive thanks to business activities. That number gives you information about the total value of your confirmed orders. Including unpaid orders, payment confirmations, canceled orders, returns, and refunds.
2.2 Visits (Traffic)
Is the total number of customers that your shop or product can reach. This index is very important because no matter how good the store is, quality products that customers don’t know about are useless. As people often joke, doing business on an e-commerce platform is “No traffic, no money”.
2.3 Click-through rate (CTR)
Is the rate at which customers, after seeing a product, click to learn more about that product. It can be said that this index is the gateway to get the next index.
2.4 Conversion rate (CR)
This index reflects the conversion from the customer visiting the shop to successfully closing the order. It is calculated by the total number of visitors and confirmed applications. Divide this number by the total number of visitors during the specified time period.
2.5 Average order revenue (AOR)
We can easily understand this index as the average value of each order purchased at the shop. This index helps shops know which level of orders customers are focusing on purchasing. From there, there is a strategy to use vouchers appropriately.
2.6 Return Rate (RR)
This ratio reflects the number of old customers who return to make purchases at the store. Shows the level of customer loyalty to the shop. As well as partly reflecting the level of success in the store’s operations.
3. Factors affecting each index on the e-commerce floor
When doing business on the e-commerce platform, all performance indicators are very important for sellers. However, at each specific time, you need to have a specific strategy. To improve a small number of certain indicators. Because business resources are limited. So allocating to improve all indicators at the same time is not satisfactory.
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To do so, let’s find out together. What factors are the above indicators affected by? As well as ways to promote each development index.
3.1 Factors affecting Visits
Traffic is a particularly important factor when selling on e-commerce platforms. It can be said “No traffic, no money”.
Factors affecting the amount of traffic are divided into 3 main groups. That is internal traffic, external traffic and from the product itself.
Product
Right from the beginning when choosing potential products on the e-commerce platform. You also somewhat determine the maximum amount of traffic you can receive. Traffic may increase over time but it is not significant. So, when determining the type of product you want to sell. Then you must determine to increase visits by going to the keyword advertising section on the e-commerce platform. The system will return the number of searches in the last 30 days. From there you can somewhat predict the market size of that product.
Product industry
The product categories you include also have an impact on the amount of traffic you can receive. Each industry will have different business development support personnel. So if you try to become the best shop of a BD support to be more profitable. Not only about the amount of traffic allocated, but also promotion codes, product subsidies, etc.
Main keyword
Based on customers’ keyword search behavior. You need to change the keyword arrangement a bit to bring different traffic results. So it’s important to research and optimize the main keyword in the product title. Will help increase traffic a lot.
Internal visits
- Video production: Exchange platforms often offer a lot of support to push traffic for stores that regularly post video reviews, share about products and tag products in accordance with exchange policies.
- Livestream sales on the floor: The e-commerce floor has also launched solutions for sellers to attract viewers. Like giving away livestream eye-catching coins and most recently, livestream advertising.
- Optimize floor search: The amount of traffic available in the floor will be allocated to the booths on the floor when you do well to appear naturally in the top product searches when optimizing keywords.
- Advertising: In addition, traffic will be greatly affected by keyword advertising. To have a huge amount of traffic, running ads is indispensable. However, you need to pay attention to the trade-off between costs and profits. From there, you can have a more reasonable and effective advertising strategy.
- Internal affiliate marketing: Currently, with a team of video content creators that the platform attracts. They serve the activity of posting videos to tag related products. Helps creators make money from affiliate marketing. This not only helps increase user experience. It also helps sellers exploit affiliate marketing for sales activities more easily.
Off-floor visits
In addition to the available traffic resources in the floor. You need to have larger traffic sources from off-floor traffic. Such as exploiting off-exchange affiliate marketing. Such as producing product promotional content on social platforms such as Facebook, Youtube, Tiktok,…
Currently, some sellers do very well in creating product review content. Attract a large amount of accurate off-exchange traffic. Contributing significantly to rapid revenue growth.
3.2 Factors affecting click-through rate
In the revenue formula, CTR is also known as click-through rate. It is an indicator that can be changed and results can be seen immediately. That change may come from one of the following factors:
Product cover photo
Effective and unique product cover photos on the shop are the most important factor. Customers decide whether to click to see more information about the product or not. A good cover photo can double that product’s CTR or even more.
Product selling price
Products with high purchases and low prices will attract more customers to click, so they have a higher CTR rate. However, it is not always the cheapest that will have the highest CTR, it also depends on the price that customers are aiming for. For example, when it comes to gifts, customers usually will not buy cheap items like tens of thousands, but gift products with mid-range prices of about 1-2 hundred will have higher clicks.
Sales
Just like the price factor, the sales of the product sold is also one of the factors that influence customers to click on the product. Especially for low-cost, multi-use products such as trash bags, paper towels, etc., which have high revenue, CTR will also increase proportionally to revenue.
Trademark
For items that need to be guaranteed and safe, the brand will have a significant impact on customers’ product viewing behavior. For example, for items such as televisions and phones, branded products will have higher clicks.
Shop type
In addition to product brand, shop brand also affects this index. Shops that are familiar with customers will click on other products from the shop more.
Regular shipping/express shipping
For items with immediate needs such as food or gifts, products with expedited shipping will attract more customers because they meet customer needs.
Loyal customers
E-commerce floors are very smart when measuring customer purchasing behavior. For example, if you have placed a product in the shopping cart or made a purchase, it will be given priority for display. So the more loyal customers a store has, the higher the CTR rate will be.
3.3 Factors affecting conversion rate
Conversion rate is an indicator that directly affects the amount of money that sellers can receive. After optimizing the click rate to about 10%, you can consider strategies to increase conversion rates through doing well the following influencing factors:
Competitive advantage
What makes customers switch the fastest is based on the product’s differences compared to other competitors on the floor. If your product has a superior advantage and no competitor can compare to you, the conversion rate will definitely be high. If you don’t have any advantage over your competitors, in the long run it will be difficult to survive and develop on the floor.
To gain this competitive advantage, sellers are required to have outstanding points in one of the following aspects such as: product features, price, after-sales service, etc.
Product reviews
It can be easily seen that the normal thing in customers’ buying behavior is that they will not pay too much attention to what the seller says or speaks well of their products. Which will put more trust in real experiences, real people who have used and commented on the product. So if you do a good job with product reviews, especially top reviews, it will help your shop increase conversions significantly.
Customer care
When customers chat, they have a need for their product, but there are still some concerns that make them not intend to close the order. Therefore, if the shop has good customer service staff who know how to skillfully solve customer problems, the rate of converting orders will be much higher than if there is no customer service or if there is poor customer service.
Vouchers/Promotions
One of the things that makes customers decide to buy a product is the psychology of getting a bargain when buying that product. And promotional vouchers are a great tool to satisfy that psychology of customers. For example, a customer will choose to close an order for a product priced at 500k and receive a 50k promotion rather than a product priced at 450k but not receive a voucher code even though the check out price is the same.
Accurate hits
The more accurate the traffic, the higher the conversion rate. Because traffic comes exactly from customer needs. So when there is a need, they will tend to close orders faster.
3.4 Factors affecting the average single value
Product niche and customer base
Right from the beginning when choosing the products to sell as well as the target customer segment, the average possible unit value has been determined. Just like selling a mid-range clothing store, it is impossible to have an average unit value of 10 million.
Sales strategy
However, store owners can also increase this index by applying sales strategies such as Buying with shock deals or promotional combos.
Promotion strategy
You can set up vouchers for certain order levels such as 20k off for orders of 400k, customers with a total order value of 350k will be willing to buy an additional 50k to receive the promotion. However, although the above two methods increase the average single value, it is not significant.
How to increase AOV and what strategy should be applied requires sellers to clearly understand and analyze the store’s business data clearly to adjust accordingly.
3.5 Factors affecting repurchase rate
For business, every seller wants customers to come back to buy products. Because 1 old customer will equal N new customers. To get more loyal customers, you need to understand that this index is affected by the following factors:
Specific product type
The characteristics of each product type will greatly affect the rate of customers returning to buy that product. For example, products with a small life cycle and high demand, such as printing paper, will have a higher repurchase rate than printer products. And paper towels or makeup remover pads also have higher repeat purchases. For heavy users, the return rate may be monthly.
Enhance customer experience
Customer experience when purchasing a product for the first time at a store has a great influence on future purchases. However, that doesn’t mean it’s okay to do well the first time and then neglect customers the next time. But the customer experience needs to be maintained so that customers can return to the store to purchase.
VIP customer care
For loyal customers, the shop can consider preferential policies for customers who buy high orders or repeat purchases many times. For each product sold, sellers estimate advertising costs and can use a portion to make vouchers to give to loyal customers to motivate customers to buy the next orders.
Summary
Although e-commerce is an extremely potential sales channel, there is also enormous competition. If you don’t know how to increase sales on the e-commerce platform, your store can be lost among hundreds of thousands of other stores. So, quickly apply the methods in the article to achieve the goal of thousands of orders for your shop!
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