A Glossary of Key eCommerce Financial Metrics
As you run your eCommerce business, financial metrics play a crucial role in evaluating performance and making informed business decisions. Understanding key eCommerce financial metrics is essential for tracking growth, identifying areas for improvement, and ensuring the overall financial health of your business. In this comprehensive guide, we will delve deep into the definition, importance, and monitoring of essential eCommerce financial metrics.
What are eCommerce financial metrics?
- Ecommerce financial metrics are any data sets that help inform your business’s financial performance. There is an abundance of metrics you can use to gauge the health of your eCommerce operation.
Why all eCommerce entrepreneurs should know their numbers
- Monitoring your financial metrics lets you know how your business is performing. Without them, you wouldn’t know which areas are doing well and which ones need to improve.
- Key performance metrics (KPIs) set unique metrics that hold value for your store and help in tracking and monitoring the business growth.
How often should you check your eCommerce metrics?
- A good rule of thumb is to check your metrics on at least a monthly basis to track growth, performance, and gauge your inventory needs for the upcoming months.
What can go wrong if you don’t regularly track your financial metrics?
- Not understanding the financial health of your business is a recipe for disaster. Regularly monitoring your financial metrics reduces the risk of missing important business insights.
24 most important eCommerce financial metrics to monitor
- Revenue: Your sales minus any returns or undeliverable products. Critical to track revenue growth to gauge the overall performance of the business.
- Profit: Your actual financial gain from running your eCommerce business.
- Gross Margin: Measure of your profits as a share of your revenue.
- Profit Margin: A calculation of gross profit margin and net profit margin.
- Cash flow: Refers to how much cash your company generates in a period.
- Contribution margin: Relates directly to the cost of your products and indicates the profitability of each item.
- Conversion Rate: The percentage of people visiting your website that make a purchase.
- Customer Acquisition Cost (CAC): The cost it takes to bring in a new customer.
- Customer Lifetime Value (CLV): The amount of money a single customer will spend throughout their relationship with the business.
- And many more...
How Bean Ninjas can help you stay on top of your financial metrics
- Running a successful eCommerce store means closely monitoring a handful of financial metrics to streamline operations and scale more efficiently.
- Looking for help with your eCommerce accounting? Schedule a free call with Bean Ninjas team here.
