By helloDarwin
November 24, 2023
E-commerce analytics 101: Definition, key metrics, and top e-commerce analytics tools
In e-commerce, your customers have access to more data than ever before when making a purchasing decision. They can read peer-created product reviews, quickly compare prices between online stores, and interact with brands across channels and devices—and, as a result, their expectations are higher.
To keep up, e-commerce businesses need to leverage reliable data insights to anticipate, and adapt to, changes in the market. And if you want to offer the best possible online shopping experience, there’s only one thing that will help you do it right: data. In short, you need e-commerce analytics.
Looking for more e-commerce trends and optimization tips? Get caught up with the other articles in our e-commerce optimization blog series:
Or, read on for our introductory guide to e-commerce analytics.
What is e-commerce analytics? Analytics in e-commerce defined
E-commerce analytics is the process of gathering and analyzing data in order to produce actionable insights.
Because e-commerce exists in an almost entirely virtual space, it generates complex, comprehensive datasets —particularly those related to client behaviour. E-commerce analytics include metrics related to the full customer journey, and involves using this information to understand trends and shifts in consumer behaviour in order to make data-driven decisions that will drive more online sales.
With Canadian e-commerce sales expected to more than double within the next five years and grow from C$77.25 billion in 2020 up to C$238.28 billion in 2025, the key drivers of success over the next decade will be centred on building a deep understanding of and connection to the empowered consumer. And the only way to understand consumer behaviour is to measure and analyze the resulting data.
Key e-commerce metrics and KPIs
So, you understand the value that data can bring to your business. But with more data at your disposal, and an increasing amount of data being generated each and every day, which e-commerce metrics should you be paying closer attention to?
While every business is different, you’ll definitely want to focus on the metrics that will have the greatest impact on your bottom-line. Instead of monitoring dozens of different metrics, we recommend that you go through the larger list of metrics you currently track (or are considering tracking) and identify the key performance indicators (KPIs) that consistently have the greatest impact on your overall business objectives.
To clarify the difference between the two terms, metrics track the progress of any business process, whereas KPIs are metrics that show how effective you are at achieving specific goals. For example, a common metric for digital brands to track would be traffic generated from paid search, but a KPI would focus on the number of qualified leads generated from paid search.
5 types of e-commerce metrics to look at
Still looking for somewhere to start? We’ve compiled a list of some of the fundamental types of metrics that many highly-successful e-commerce managers focus on.
Familiarize yourself with these foundational areas of e-commerce metrics to better understand the big picture. Then, narrow in on the more granular metrics and KPIs you want to track within each metric type over time:
- Audience: Checking analytics information about your customers’ geographic location, age, gender, and device type provides you with insights into the habits and preferences of your target audience.
- Acquisition: Data related to acquisition tells you how customers found your store and how they arrived at your website. This information can help inform which marketing channels your business should be focusing on.
- Behaviour: This data shows you how your customers respond to information on your e-commerce site. Customer behaviour relates to the content customers click, the products that interest them, and what they buy. This data could include how long customers spend before making a purchase or leaving a site.
- Conversions: Conversion data refers to the point when an online user turns into an actual customer. You should track conversion data over time and identify when conversion rates increase, decrease, and the potential causes.
- Paid marketing activities: When you invest in paid ads to boost web traffic, you need to gather data from these platforms (Facebook Ads, Instagram Ads, etc.) to determine the return on investment (ROI).
Top e-commerce analytics tools to consider
E-commerce analytics tools provide you with the ability to visualize, understand, and utilize the data that’s being collected on your website. As an online retailer, there are tons of different web analytics tools at your disposal that vary widely in terms of complexity, accessibility, and price.
If you’re going crazy trying to make sense of your e-commerce data, don’t panic! Chances are, you just haven’t found a tool that shows you the data they way you need to see it yet. And you’re not alone! As reported by Profitero, 51% of brands say that “measuring and reporting on how ecommerce is performing as a distribution channel” is a top challenge.
To help ensure you’re not part of that statistic, we’ve put together a list of some of our favorite web analytics tools for e-commerce professionals. Regardless of your budget or sector, any combination of these tools is a good solution for e-commerce analytics:
Google Analytics (and Enhanced Ecommerce plugin): Great all-around free tool
Google Analytics is one of the most widely used web analytics tools—and for good reason! Over the years, Google’s popular (and free!) platform has evolved from a mainly traffic-driven analytics service to a complete data tracking and e-commerce analysis tool.
This essential tool can track data and provide comprehensive reports on e-commerce metrics like sales conversions, product performance, customer acquisition, and various customer behaviour and interest insights. And with the Google Analytics Enhanced Ecommerce plugin, you can track and collect data at every step of the customer journey, from arriving at a page, through research, evaluation, purchase, and even returns.
Hotjar: Heatmap software to understand on-site customer behaviour
Want to get a closer look at how people are interacting with your website once they get there? Consider testing out Hotjar, one example of a type of analytics software referred to as ‘heatmap tools’.
Hotjar displays things like a visitor’s mouse movements, where they click, and how far down the page they scroll and has a freemium version to help get you started. If you’re looking to up your conversion rate optimization game, heatmap software like Hotjar can give you an insider’s glimpse into the clicks and scrolls that land on your website and help you see what’s working (and what isn’t).
Kissmetrics: Advanced analytical tools with enterprise-level features
Already familiar with the basics of e-commerce analytics and need something a little more advanced? Kissmetrics reports focus on individuals rather than on the general level of traffic—from knowing how many times a specific visitor has visited your site to how often they visit a product page.
Kissmetrics’ granular level of analysis is ideal for businesses that want to remarket to large audiences and determine which specific marketing channels have the highest ROI. It also delves into design aspects of your e-commerce site to help you improve your conversion rate.
Needless to say, those advanced capabilities and features don’t come free. That said, Kissmetrics is an ideal tool for serious e-commerce businesses that are ready to upgrade from Google Analytics.
There are a number of considerations when choosing an analytics tool for your business and deciding which key metrics and KPIs to track. Every business is different, and what works for one e-commerce retailer might not work for another. What’s universal for all e-commerce merchants is that data is an important asset, and investing time and money in e-commerce analytics will only become more important moving forward.
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helloDarwin
We create successful business alliances through tailor-made partnerships. Web marketing, video production, ERP/CRM integration... Whatever professional service you need for your business, helloDarwin helps you find the best service providers for your project. Free of charge, without any obligation and within 48 hours on average. We help you find grants, loans, aid and assist you throughout your digital transformation.
