Ecommerce Conversion Rate: The Ultimate Guide

September 7, 2022
7 minutes
Ecommerce Conversion Rate: The Ultimate Guide

Most online store owners use ecommerce conversion rate as their key metric for determining success. It is directly proportional to your revenue. Therefore, sellers constantly find ways to optimise it.

Here’s a detailed guide on ecommerce conversion rate and how to optimise it for your business.

What is an ecommerce conversion?

A conversion is usually an action you expect a customer to perform on your website. It is up to each online store and its team to decide what constitutes a conversion. Usually, sellers consider conversions to be the actions taken by their customers that have a quantifiable impact on their business.

An ecommerce conversion is when your website visitors turn into paying customers. It is the event where shoppers complete a purchase after visiting your website.

What is ecommerce conversion rate?

Ecommerce conversion rate refers to the percentage of visitors who become customers out of the total number of website visitors. It is simply the amount of traffic that converts into sales.

For example, let’s say a website gets 100 visits per day. Out of those 100, a total of 4 visitors actually end up buying something (which is the conversion event in the scenario). In this case, the ecommerce conversion rate can be calculated as follows:

Ecommerce conversion rate = orders / visits to your website

4/100 = 0.04 or 4% conversion rate

Using this, merchants can now improve their efforts based on the knowledge that 4% of users visited their website and converted.

Why is ecommerce conversion rate important?

The ecommerce conversion rate is super important for an online business as it is the driving factor for revenue. Even a 1% drop in ecommerce conversion rate can have a massive impact on your overall sales.

For example, if you get 25,000 monthly visits and your average monthly orders are around 600, then your ecommerce conversion rate would be 2.40%. If you increase that by 1%, it becomes 3.40%, which means you get 250 more orders. Let’s suppose the average order value is £100; then your additional revenue would be:

250 orders x £100 = £25,000

The higher your ecommerce conversion rate, the more efficiently you convert your website traffic.

Also, with paid media costs increasing dramatically and organic results flooding the SERPs, the competition for ad space is fierce. It can be expensive to acquire new customers. But when you improve your conversion rate, the marketing channel you use becomes less expensive. This is because more of your site’s visitors from that marketing channel are now converting and producing sales while you spend the same amount of money as before. In addition, you increase your return on investment when you lower the cost of acquiring customers.

As a result, a good ecommerce conversion rate helps you make the most of what you already have.

How to monitor ecommerce conversion rates?

The ecommerce conversion rate can be measured or monitored via any website analytics tool. As 'the holy grail' of monitoring web traffic, Google Analytics is one of the most commonly used conversion tracking tools for ecommerce websites. There are many other website analytics tools in the market, but it depends on your goals, budget and acquisition channels.

Here's a list of the most widely used website analytics platforms used by ecommerce brands worldwide to get meaningful insights into their website and business performance:

Here’s how these platforms usually work:

Typically, analytics tools provide you with a snippet of code that you add to your website, and that code intercepts when sessions start and finish and when orders occur. Once you have installed the code on your website, it starts tracking the activity on each page of your online store.

It records the number of visits to your store, the number of page clicks, the total number of orders placed and much more. Furthermore, website analytics tools visualise all that data in a simple and easy-to-understand manner so you can make informed decisions.

For example, this is how Google Analytics displays the ecommerce conversion rate and other trends on your website:

An example of how Google Analytics displays the ecommerce conversion rate and other trends on your website

To make informed decisions from your website's performance data, you can monitor your ecommerce conversion rates weekly, monthly, quarterly or after a marketing campaign to identify trends, significant dips or spikes and seasonal performance.

Short-term monitoring can help you identify if something is broken. Monitoring long-term can help you determine which product categories perform best, as well as help determine the overall strategy and user experience of the website. You should also look at your conversion rates after a particular marketing campaign to understand its performance.

What is a good ecommerce checkout conversion rate?

A good ecommerce conversion rate ranges from 2% to 5%, depending on the respective industries. As of 2021, the average ecommerce conversion rate across sectors was 2.96%.

Devices make the most significant difference in ecommerce conversion rates. Even though mobile devices account for the majority (58%) of all traffic, desktops convert at 3%, having double the average ecommerce conversion rate of smartphones at 1.6%.

In the graph below, you can see that mobile ecommerce conversion rates are almost half of desktop conversion rates.

Average ecommerce conversion rate for desktop and mobile

Let’s look at the average conversion rates for different industries, and you can see your ecommerce business stacks up against your competitors.

average conversion rates for different industries

As you can see, 2021 was the year of the pandemic, which is why the Grocery and Health & Beauty industry has the highest average ecommerce conversion rate. Also, the travel industry saw a massive boost in average ecommerce conversion rate as people wanted to travel after being at home for almost a year during the pandemic.

As the items in the luxury industry and home furniture are of high value, the average ecommerce conversion rate was low as people think twice before purchasing.

How to increase ecommerce conversion rate?

While there are numerous ways through which you can optimise your ecommerce conversion rate, let’s look at the most important ones that make a huge difference:

1. Prioritise your customers' needs

Ecommerce success depends heavily on customer-centricity. To direct your web store experience, product development, marketing efforts, and customer service, it is important to understand your customers' motivations, interests, and needs.

You will have to look at things from your customer's perspectives if you want them to convert. Your products and website should be tailored around what your customers want, what makes them convert, and what their pain points are. There’s nothing better than selling something that your customers actually want to buy.

2. Provide a good UX

In addition to tailoring your products and offerings to your customer's needs, you should also customise your website and digital experiences. Providing a good user experience on your website is crucial if you want to win over your visitors.

The best way to do this is to track your customer’s journey and constantly analyse your website’s analytics. Based on how your customers behave, you can A/B test solutions and see what excites them the most and makes them buy your products.

For example, you can test a combination of different payment and delivery options on your website and see what they prefer the most.

Aside from that, ensure your navigation is simple and easy to follow. Call-to-actions need to be clearly visible and easy to find to make sure that people know where to go. Make your forms as simple and short as possible to avoid overwhelming your users.

Also, think about optimising your site speed. Conversion rates can be affected by up to 20% by a delay of only one second in mobile loading time.

This is what the user experience of a first-time customer using Simpler one click checkout looks like:

User experince of a person using simpler one click checkout for the first time

And this is what it looks like for a returning customer:

User experince of a person using simpler one click checkout for the second time

3. Offer a simpler checkout process

It is crucial to simplify your customers’ checkout experience to maximise sales and boost conversions. Due to a lengthy and friction-ridden checkout process, about 70% of the customers who visit your website may abandon their cart. This can lead to a tremendous decrease in conversion rates and a significant drop in revenue.

Provide your customers with a simplified experience requiring the least effort and let them checkout quickly. To achieve this, you can offer one click checkout on your website.

For example, Simpler one click checkout elevates your shoppers’ buying experience. It reduces the number of clicks to one, removes redundant form fields and eliminates the need to remember usernames and passwords. It makes checkout 50% faster for first-time users and one click for second-time customers.

Standard checkout process vs. Simpler one click checkout process

Get more conversions with Simpler one click checkout.

Simpler checkout is the simplest way to buy things online. It is faster, more seamless, and gets 35% higher conversions than the average checkout, thanks to a frictionless experience and flexible payment options.

Simpler checkout can be installed on your website within minutes, and it supports all major e-commerce platforms. Using Simpler doesn't require replacing your existing payment processor. It works as an additional payment processor and checkout method for your website.

Stop leaving money on the table! Reach out to us and learn more about how Simpler Checkout can help get a better ecommerce conversion rate.

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