Conversion rate, what can a brand’s store expect?

I keep meeting heads of digital of consumer brands — two just within the past five days, hence this post — who tell me:

“Can you please take a look at our online store? It has a huge potential, but it is currently underperforming”.

Is this really true? Let’s see if they’re making the right statement.

The most important metric in an online store is its conversion rate: the ratio between number of paid orders and number of visits.

If a brand’s online store is well made, presents the whole collection, with good pictures and articulated descriptions, is on a fast platform with an easy checkout process and a complete set of payment methods, then data tell us that in any standard vertical it can aim at 0.8% yearly average conversion rate assuming traffic comes from a mix of international markets.

Most of the times though, not all is in place and conversion is lower. 0.6% is a common figure and 0.2% or 0.4% are not too surprising. Why this?

The main reason is that brands typically cannot promote based on discounts. Hence if a brand distributes wholesale, consumers will find most of their products more conveniently priced on several third-party channels.

This is good for your wholesale structure but it’s often a chasm between reality and management’s expectations. If you are a brand, most of your digital suppliers will tell you that you can reach 1.5% CR if you work hard. Of course this is the best way to sell their optimization services: new tech, SEO, SEM, etc. But if you face reality, and calculate your ROI assuming 0.8% CR, many elements of your strategy may have to change.

What is a good strategy?

1. Large online retailers, and marketplaces such as Amazon or eBay, will structurally have a higher conversion rate than yours. Therefore bidding on pay-per-click keywords against them is often suicidal.
2. Your online store’s function may be “just” customer engagement and brand positioning. I.e. your store should be a container with all your products very well presented, that sets the mood, the looks, the prices, and the pace of end-of-season discounts.
3. If this is the case, you should invest in photographers, copywriters, UX, and remarketing. You should not invest in PPC.
4. You should help and coordinate the e-commerce presence of as many as possible among your resellers, always with perfect branded content. Multi-brand online stores and large marketplaces are all e-commerce search engines for their own sake: your products should be there at their best.

Too simple?