E-Commerce conversion rate. Hints for decision makers

In a previous article on conversion rates for branded online stores, I wrote:

“If a brand’s online store is well made […] in any standard vertical it can aim at 0.8% yearly average conversion rate, assuming traffic comes from a mix of international markets.”

In that article, I briefly expanded on what is meant by “well made”, but some readers asked me say more about conversion timing and about conversion from different markets. I’ll give it a shot here, and more. Consider two facts:

1. Conversion rate changes over time (e.g. high at the beginning of the sales period, low at the end of full-season, etc.)
2. Conversion rate varies on types of traffic (e.g. higher on visits coming from certain markets, higher on returning visitors, etc.)

Often the conversion rate you get reported is averaged over time and calculated on your whole traffic. Such CR is therefore useless to forecast a campaign ROI, because it is really a blend of different rates and visits stemming from a specific campaign may produce a completely different conversion.

What is a low and a high conversion rate?

The highest average conversion rate I’ve seen on a branded online store is 4.4%. The lowest is 0.1%, after a lot of work had been done. I know that 4.4% is almost impossible to achieve, while it is not hard to drop at 0.1%.

4.4% belonged to a brand well known in its vertical, that distributed a large (but not too large) set of easy to buy, easy to deliver, easy to describe, recurring-consumption goods. It had little, well targeted, mostly organic traffic.

0.1% belonged to a brand with a higher awareness, but in a broader vertical, that distributed an extremely large set of items, most of which were hard to describe, to stock, and to deliver.

All other conversion rates I’ve seen sat in between these two, with the mode around 0.8%.

These two consumer brands represent the extremes of a spectrum. Where is your brand in this spectrum? Can you really move it?

Things to consider to improve your conversion

• Conversion rate goes up on traffic coming from the markets where your brand is better known → buying clicks on a new market will likely bear less fruit in the short term.
• Conversion rate goes up at the beginning of the end-of-season sales period, then lowers, then is up again when you launch the new collection, then lowers before the sales → advertising in different moments will bear different fruit.
• Conversion rate is typically higher on visits from mature markets (such as the US or northern Europe). But because such users have higher expectations, unless your content, tech, and service match these expectations, their clicks will kill your conversion and budget.
• Conversion rate goes up for recurring consumption goods.
• Conversion rate goes down, not up, for brands with vast catalogues, unless they somehow manage to have everything in stock (note: this is one of the several reasons why Amazon became a marketplace).
• Conversion rate goes up for multi-brand and multi-product stores (consumers like variety). This means that a large store (including Amazon and eBay) converts by definition more than a smaller store.
• Lastly, the actions of competitors will move your conversion rate: if competitors are good, your CR will go down; if competitors are weak, your CR will go up.

Bottomline: there are factors influencing your conversion that you cannot change. Within this reality, both your company and you as a manager may be better off if you focus your strategy on maximising your brand’s overall online sales and not strictly your own store’s sales.

Originally published on Nembol.com