Why Are E-Commerce Metrics So Critical?
Everyone in the e-commerce business knows that making sales is only the visible part of the job. The real challenge is making those sales sustainable and scaling the business. And for that, simply looking at basic figures like “how many orders did we get” or “how much revenue did we make” isn’t enough.
A truly successful e-commerce manager runs the business through metrics. Because metrics reveal the health of the business, its weak points, and potential growth opportunities.
Many of my e-commerce clients tell me the same thing:
“Faruk, there are so many numbers — which ones should we actually focus on?”
That’s exactly why, in this article, I’ll walk you through the most critical metrics — the ones every e-commerce professional must know — along with their formulas.
Before Diving Into the Metrics
There are countless metrics in e-commerce, but trying to focus on all of them at once can be overwhelming. Start by understanding and applying the fundamental ones to your business. Once those are in place, you can move on to more advanced metrics.
Now, let’s go through the most important e-commerce metrics one by one.
1. Conversion Rate (CR)
What Is It?
In e-commerce, the conversion rate shows what percentage of website visitors make a purchase — essentially, how many people take out their wallets out of every 100 who visit your site.
Formula:
Conversion Rate = (Number of Purchases / Total Visitors) × 100
Example:
Your site had 10,000 visitors and 200 of them made a purchase.
200 ÷ 10,000 × 100 = 2% conversion rate.
Why It Matters:
If your conversion rate is low, your ad budget is being wasted — you’re driving traffic, but not sales. A higher conversion rate means more revenue from the same amount of traffic.
2. Average Order Value (AOV)
What Is It?
AOV measures how much customers spend on average per transaction.
Formula:
AOV = Total Revenue / Number of Orders
Example:
You earned 100,000 TL in revenue from 500 orders.
100,000 ÷ 500 = 200 TL AOV.
Why It Matters:
A higher AOV means more revenue without increasing traffic. You can improve AOV through cross-selling (complementary products) and upselling (premium options).
3. Customer Acquisition Cost (CAC)
What Is It?
CAC measures how much you spend on average to acquire one new customer.
Formula:
CAC = Total Marketing & Sales Costs / Number of New Customers
Example:
You spent 50,000 TL on ads in one month and gained 250 new customers.
50,000 ÷ 250 = 200 TL CAC.
Why It Matters:
If your CAC exceeds the revenue you earn from that customer, you’re losing money — simple as that.
4. Customer Lifetime Value (CLV)
What Is It?
CLV represents the total value a customer brings to your business throughout their entire relationship with your brand — not just one purchase.
Formula (Simplified):
CLV = Average Order Value × Purchase Frequency × Average Customer Lifespan
Example:
Average order value: 200 TL
Buys 3 times per year
Average customer lifespan: 4 years
200 × 3 × 4 = 2,400 TL CLV.
Why It Matters:
CLV shows how valuable your customers truly are. When planning your marketing budget, your CAC must always be lower than your CLV.
5. Cart Abandonment Rate
What Is It?
The percentage of users who add items to their cart but don’t complete the purchase.
Formula:
Cart Abandonment Rate = (Abandoned Carts ÷ Carts Created) × 100
Example:
1,000 users added products to their cart, but only 300 completed checkout.
(700 ÷ 1,000) × 100 = 70% cart abandonment rate.
Why It Matters:
This is where most e-commerce revenue is lost. Smart email automation or WhatsApp reminders can significantly reduce this rate.
6. Return on Ad Spend (ROAS)
What Is It?
ROAS shows how much revenue you earn for every unit of currency spent on advertising.
Formula:
ROAS = Revenue from Ads ÷ Advertising Spend
Example:
You spent 20,000 TL on Google Ads and generated 100,000 TL in sales.
100,000 ÷ 20,000 = 5 ROAS (meaning 1 to 5 return).
Why It Matters:
A low ROAS signals that it’s time to optimize or rethink your campaigns.
7. Gross Profit Margin
What Is It?
It measures how much of your revenue remains after deducting the cost of goods sold (COGS).
Formula:
Gross Profit Margin = (Revenue – COGS) ÷ Revenue × 100
Example:
Revenue = 100,000 TL, Cost = 60,000 TL.
(100,000 – 60,000) ÷ 100,000 × 100 = 40% gross profit margin.
Why It Matters:
Don’t be fooled by high revenue — if your margins are weak, your business won’t survive long-term.
8. Repeat Purchase Rate (RPR)
What Is It?
The percentage of customers who make a second or subsequent purchase.
Formula:
RPR = Number of Returning Customers ÷ Total Customers
Example:
Out of 1,000 customers, 300 made another purchase.
300 ÷ 1,000 = 30% repeat purchase rate.
Why It Matters:
Acquiring new customers is expensive — retaining existing ones is much cheaper and more profitable.
9. Average Fulfillment and Delivery Time
What Is It?
It shows how quickly orders are prepared and delivered to customers.
Why It Matters:
Speed is everything. Delayed deliveries lead to dissatisfaction and negative reviews.
10. Net Promoter Score (NPS)
What Is It?
A measure of how likely your customers are to recommend your business to others.
How It’s Measured:
By asking, “How likely are you to recommend us to a friend?” on a scale from 0 to 10.
Why It Matters:
Happy customers bring in new ones — simple as that.
Bonus: The 3 Golden Formulas Every E-Commerce Manager Should Apply
LTV > CAC
A customer’s lifetime value must always exceed the cost of acquiring them.
ROAS ≥ 4
Your return on ad spend should be at least 4:1 to sustain profitability.
Conversion Rate ≥ 2%
This is the general industry benchmark. If you’re below 1%, there’s a serious issue.
Insights from Faruk Toprak
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E-commerce sites not integrated with CRM systems can’t track these metrics accurately.
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Knowing the numbers isn’t enough — action is what drives growth.
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Small businesses often overlook AOV and ROAS, but that’s exactly where the growth potential lies.
Conclusion: Knowing Your Metrics Means Controlling the Future
Being an e-commerce manager is like being a pilot — you must keep your eyes on the instruments to keep the plane in the air. These metrics are your flight indicators.
Conversion Rate, AOV, CAC, CLV, ROAS… they all measure the pulse of your business. And remember this golden rule: You can’t manage what you don’t measure.
Ready to scale your brand? Connect with us on Instagram for insights and inspiration, or get in touch to start building your next success story.
