Compass Ecommerce Benchmarks for 2016

e-commerce

The global e-commerce industry is growing at a rapid speed. In 2015 more than 10 Million E-Commerce stores made more than $1.8 Trillion in revenue. For 2016 we’re expecting the overall revenue of the sector to grow by 15%.

Against many expectations, much of this growth is driven by niche online stores that are popping up all around the world. Many of them are offline retailers seizing the opportunity to put their stakes into the digital ground. But even though the overall market is growing fast, competition is fierce. Small players need to quickly learn the ropes of online sales and marketing to compete in the global marketplace.

In June 2015 we opened the gates for a few E-Commerce businesses to try our new “Analyst as a Service” application. We have now more than 1,400 businesses using Compass whose revenue in aggregate for 2015 totals more than $2.5 Billion.

This is a look back on how these companies performed on their most important metrics. By showing how you stacked up against the average of companies out there, we hope to give you some important insights about your business and help you plan a great year ahead.

Note: Custom benchmarks for your particular business are available in the Compass.co dashboard. All benchmarks differ based on the type of product(s) sold, customer segments, pricing, etc.

1. Google Adwords was the paid acquisition channel in e-commerce with highest conversion rate

Google Adwords and Facebook Ads were the most used acquisition channels in 2015. Even though they can be costly, Google Adwords and Facebook Ads were also the best performing in conversion rates. Google Adwords was the winner, earning an average of a 1.75% conversion rate. Facebook came in second with 1.42%.

Adwords was the best paid acquisition channel in 2016 for ecommerce with 1.75% CVR. Facebook's CVR was 1.42% Click To Tweet

Paid channels are among the easiest and most reliable ways to scale an online business. The challenge is to keep conversion rates up and costs per acquisition low at the same time. So don’t underestimate the importance of hiring channel specialists and testing everything, from headlines and images of ads to landing pages and purchase flows.

You might also want to experiment with upcoming acquisition channels too, as they tend to perform well while they are new. Good examples of this today are Instagram and Twitter Ads.

2. The average conversion rate in e-commerce was 1.4%, top performers 3%

The overall conversion rate from visitors to transactions in 2015 was 1.4%. Top performers hit an average of 3%. Time of the year played a big role in the purchasing behavior and, unsurprisingly, December was the best converting month for e-commerce owing to Christmas. March and July were the worst, but keep in mind that seasonality impacts may differ in your industry.

Conversion rates are low hanging fruits to increase profits. They have direct impact on revenue and relatively low optimization costs compared to other marketing activities. Conversion Rate Optimization (CRO) is a big missed opportunity for many online businesses, since having a 30-100% improvement in conversion rates is often easy to achieve. You can learn more about how to improve this important metric in our post about The ROI of Conversion Rate Optimization for e-commerce companies.

3. The average Bounce rate was 57%, top performers 35%

Bounce Rates reflect the percentage of users who visited only one page and didn’t perform any action on your website before leaving. The average Bounce Rate for E-Commerce businesses in 2015 was 57%, while the best companies performed at 35%.

In general, a high Bounce Rate indicates that visitors didn’t find what they were looking for. This can happen when stores are offering something different from what shoppers are expecting to find or they are having a bad experience with the site. Bounce Rates can directly affect Conversion Rates, which in turn can have a direct impact on sales.

We recommend using analytics tools like Google Analytics to identify your highest bouncing pages and then run qualitative tests to understand why your visitors are dropping off. Try A/B testing your most problematic pages with different design and text elements to see how they can better cater to what your users are expecting to see in them.

4. The average monthly repurchase rate was 9%, top performers 16%

Arguably the most important metric in evaluating whether customers are satisfied, monthly repurchase rate was relatively high among online retailers in 2015: around 9%. Top performers achieved a 16% repurchasing rate.

Repurchase Rates are defined by how many transactions are coming from existing customers. Since the acquisition of new customers is often very expensive, profitability is highly dependent on how much revenue is generated from each customer.

It’s important that online retailers do everything in their power to convince shoppers to keep coming back after their first purchase, including maybe offering a subscription option. You can learn more about how to improve your repurchase rate in our post on How To Build a Profitable Business – Demystifying Customer Lifetime Value

So was your business above average in any of these metrics in 2015? Where did it perform worse? Start 2016 by making impactful changes in areas that present the highest opportunities. Your goal should be to to be your own benchmark and work hard on always having better numbers than what you had last month.

Signup to Compass.co to find out how your most important metrics are performing today.

Find and compare your store’s conversion rate »

  • Great post and numbers look pretty much what I did expect. Although it would be interesting to know number of e-commerce businesses you did use and some kind of breakdown by industry.

    / Samuli

  • Ratneshwar Prasad Sinha

    i like it