Ep. 63 Five Important Tips for Retail E-Commerce Success
When the pandemic hit in 2020, many of us were mandated to close. Many retailers had to scramble just to get a website up and, hopefully, some form of an online shop.
Online shopping isn’t going away. If anything, customers who maybe never purchased online now find that they enjoy this convenience. We should all expect this revenue stream to grow in the coming years—it’s here to stay.
A Note on the Importance of Qualified Traffic
Before diving into my five tips for retail e-commerce success, we need to recognize the importance of qualified traffic. Not having qualified traffic can skew metrics for e-commerce businesses.
For example, The Salvaged Boutique blog brings in thousands of views each month. We have 300 blog posts spanning eight years of regular posting.
However, this traffic isn’t qualified traffic for the e-commerce side of our business. We were initially a DIY blog and then shifted into a brick-and-mortar business. Whenever I run our e-commerce numbers, I keep this in mind, as I’m certain it is skewing our data.
Tip #1: Know Your Average Order Value, Then Work to Increase It
Calculating your average order value (AOV) is simple: divide your total revenue from your online shop by the number of orders.
Once you know your AOV, you can work on increasing it. Whether you use Woocommerce, Shopify, or something else, there are many apps and plugins you can use for upsells, cross-sells, and bundles.
The simplest way to increase your AOV, though, is to increase your prices. You can increase them on just a few popular categories or across your entire store.
Tip #2: Determine Your Return Customer Rate
When you read “return customer rate,” you might automatically think of your loyalty program. I want to differentiate between the two, though. Loyal customers come in four or more times a year, while return customers just come back more than once.
To calculate your loyalty rate, divide the number of customers who’ve purchased more than four times a year by the number of unique customers in a year.
For your return customer rate, divide the number of customers who’ve purchased two or more times in a year by the number of unique customers in the same period.
Here are some average rates for a loyalty program:
- 20% is low
- 30-40% is average
- 50% average is high
- More than 50% is probably a coffee shop or other consumable goods store, or subscriptions
The point here isn’t to overwhelm you with which rate to choose. It’s more about understanding the value of a “returning” or loyal customer. These customers will spend more with you over time.
Tip #3: Calculate Your Added to Cart Rate
The added to cart rate tells you what percentage of customers are adding items to their carts. That doesn’t mean they’re checking out. It just means that they’re considering shopping with you.
To calculate this, you’ll take the number of sessions where someone adds an item to the cart and divide it by the total number of sessions.
If you have many people who are adding things to their cart but not checking out, consider using abandoned cart emails. In our online shop, it’s after two hours. WooCommerce (and other software programs) can automatically email customers and nudges them to go back to their cart to complete their order.
This means they had to at least enter their email address. Sometimes the customer won’t have entered their email address. But if they go beyond adding the item to their cart and start to add their information, these emails automatically get sent to them.
You’ve probably received these abandoned cart emails yourself! Sometimes you leave a cart behind, and big retailers will entice you with like 10% off. That’s not a bad idea! You could include a unique code in your abandoned cart email, too.
Tip #4: Calculate Your Conversion Rate
The conversion rate is the percentage of visitors who bought something from your shop.
All you have to do is divide the number of orders you get in a given time frame by the total number of people who visited your site or landing page and multiply it by 100%.
For example, if your site had 100 orders and 5000 visitors, your conversion rate is 2%. 2% is the average for most online shops.
One thing that I want to mention is the difference between visits and pageviews. When you visit a website, and you read three blog posts and look at four products, that’s seven pageviews. When you calculate your conversion rate, you want to make sure that you’re using the number of visitors and not the total number of times they view your website’s pages.
Don’t forget to take into account the traffic coming to your site. Our store received more online orders during the pandemic than ever before, but our conversion rate was less than 1%. And that’s because we don’t have the most qualified traffic coming to our site.
Here are some benchmarks for conversion rates:
- Average order value $500 or more, conversion rate is usually less than 1%
- Average order value is around $200, typical conversion rate is 1%
- Average order value is less than $100, typical conversion rate is 2%
If you’re converting at 3% or more, that’s great—pat yourself on the back. And if you’re hitting double-digit conversion rates, this is most likely because you’ve nailed the concept of qualified traffic. You’re doing some incredible marketing, and you know your customer really well.
This year, my store is at a 2% conversion rate Things are improving! But I’m also paying more attention to this stream of revenue and taking action to make improvements to our site and online shopping experience. For example, I removed blog posts from our home page—we don’t blog regularly AT ALL anymore, so our home page’s focus shouldn’t be the blog.
Lastly, don’t look at conversion rate (or any metric data) daily. It’s deceiving and disheartening. Instead, look over a LONG period.
Tip #5: Know Your Free Shipping Threshold
I’ve recently had multiple conversations with 1:1 clients where our conversation ends up with this critical point: Business is MATH. And I don’t mean this to minimize the human connection or our emotions around it, but if you want to run a business well, it’s just MATH.
Yes, treat your customers well, love on them, and do all the things that make you unique but when you put your CEO outfit on, it’s MATH. And this is a great example.
Don’t set your free shipping threshold blindly. Here it is, super simple: Take your AOV and increase that by 15%.
If your average order is $55, you’ll want your free shipping threshold to be $64. If your average order is $30, you’ll want your free shipping threshold to be $35. Once that does well, go higher, maybe 20-25%.
Bonus Tip: Offer Multiple Ways to Pay
One last tip, add multiple ways to pay. Everyone has their favorite—some options to consider are PayPal, Apple Pay, and Google Wallet. The more ways to pay, the better.
Half of our online orders are paid with PayPal, and it always surprises me. I often think if we didn’t have that in place, how many orders would we have lost?
All of these little things count.
- You should know your AOV for both in-store AND online
- You should also know the return/loyal rate for both your online store and your brick-and-mortar location
- Once you get them to shop, how many are adding items to their cart?
- And once they’re adding to their cart, is your website doing a good job of getting them to convert?
- Now that you know your AOV, it’s easy to set the benchmark for free shipping. You put this at a dollar value that nudges customers to spend more than your AOV. This is strategic and should be for you to cover the cost of shipping without “eating” the price yourself as a business owner.
When you understand that you have to pay attention to both the in-store and online experience for your customers, you’ll start to think of ways to get them to come back. This is natural for brick-and-mortar store owners who pride themselves on giving their customers excellent experiences or customer service in their stores.
I’d love your feedback via the 2021 Savvy Shopkeeper Survey. It only takes 5 minutes to complete, and you’ll get entered into a drawing where I’ll give away a one-hour coaching call to two winners.
Entering the giveaway is entirely optional—anonymous entries can be submitted too. The survey is open until Friday, March 19, 2021, at 5 pm EST.
- Shopkeeper Shoutout: Tracy from Relish on Instagram & the web
- The Salvaged Boutique blog
- Fill out the 2021 Savvy Shopkeeper Survey for a chance to win a 1:1 coaching session with Kathy!
-  A note on the importance of qualified traffic
- [06:45] Tip #1: Know your average order value, then work to increase it
- [08:28] Tip #2: Determine your return customer rate
- [10:54] Tip #3: Calculate your added to cart rate
- [14:12] Tip #4: Calculate your conversion rate
- [20:28] Tip #5: Know your free shipping threshold
- [22:48] Bonus Tip: Offer multiple ways to pay