E-commerce benchmarks

Part
01
of two
Part
01

E-Commerce Benchmarks - Standard E-Commerce Sites

The global e-commerce benchmarks found are the following: 1) the conversion rates is 1.85%; 2) the checkout abandonment is 69.57%; 3) the average order value is $107.59; 4) the customer lifetime value is about $1,300; 5) the customer acquisition cost is $45.27(paid search) and $65.80(display advertising); 6) the average purchase per year is 15.4 transactions.

E-commerce benchmarks

1.conversion rate

  • According to a study by Wolfgang, where they analyzed over 250 million website sessions from July 2017 to June 2018, the overall conversion rate is at 1.85%.
  • According to Wolfgang, conversion rates in Europe was 1.51%, 1.37% in the US, and 1.78% in the UK.
  • According to Monetate report, the global conversion rate for Q1 of 2018 was 2.59%.

2. Checkout abandonment

  • According to Baymard Institute, the average documented online shopping cart abandonment rate sits at 69.57%.

3. Average order value (proxy for average cart size)

  • According to Monetate report, the global average order value for Q1 of 2018 is at $110.32.
  • The average order value (AOV) or average basket size is a KPI for an e-commerce site.
  • According to Littledata, AOV for a US e-commerce website is $97.15.
  • According to Littledata, the AOV for a UK e-commerce website is $118.18.

4. Purchase per year

  • Generation X (people born between 1966-1981) make more online purchases than any other age group, averaging nearly 19 transactions per year.
  • Baby boomers makes 15.1 online transactions per year on average.
  • Millennials makes 15.6 online purchases per year on average.
  • The average number of online purchases per year in North America is 19.
  • The average number of online purchases per year in Asia is 22.1.
  • The average number of online purchases per year in Western Europe is 18.4.
  • The average number of online purchases per year in Latin America is 9.2.
  • The average number of online purchases per year in Africa and Middle East is 11.
  • The average number of online purchases per year in Eastern Europe and Russia is 11.9.
  • The average number of online purchases per year in Australia and New Zealand is 16.1
  • The global average online purchases per year based on the 7 regions above is 15.4 [(19+22.1+18.4+9.2+11+11.9+16.1)/7].

5. Customer lifetime value (LTV)

  • Since the customer acquisition cost varies significantly depending on the company and products, a good reference point is to aim for a lifetime value of your customers (LTV) that is three times bigger than the cost of acquisition.
  • LTV/CAC benchmark is supposed to be at a 3:1 ratio.
  • In a study by RJMetrics, top-performing businesses (those that have a $45 million in revenue in first few years) have an average of $3641 LTV which is five times higher than other business.
  • Across all companies, the CLV is about $1,300. For example, Amazon Prime has a CLV of $2,500, while non-Prime only has a CLV of a $1,000.

6. Customer acquisition cost (CAC)

  • Cost per acquisition (CPA) is a related metric to CAC, which focuses on the total cost of acquiring a new customer via a specific channel or campaign. [s4]
  • The average CPA of the e-commerce industry via the google display network is $65.80.
  • The e-commerce average paid search CAC is $45.27.
  • The e-commerce average display advertising CAC is $65.80.

ASSUMPTIONS:

  • For the average cart size, we made use of the average order value since it was more commonly reported in industry reports than the average cart size.
  • For the customer lifetime value, we also presented the customer lifetime value and customer acquisition cost ratio benchmark at 3:1 since studies show that the customer lifetime value varies significantly depending on company and products. We still provided the average CLV for top performing businesses, calculated to be $3641.
  • For the purchase per year, we considered the survey study presented by KPMG. We estimated the global average by getting the average of all 7 regions' purchase per year.



Part
02
of two
Part
02

E-Commerce Benchmarks - Specific E-Commerce Sites

E-commerce conversion rates for electrical and commercial equipment is 2.49%, jewelry and accessories is 2.14%, electronics is 1.27%, and sports and recreation is 1.85%. The average online shopping cart abandonment is 69.57%. The average customer makes online purchases three to four times per year.

Useful Findings:

conversion rates:

  • Although the benchmark for conversion rate pertaining to sites that sell instrumentation equipment was not publicly available, e-commerce conversion rates for electrical & commercial equipment was 2.49%.
  • Although the benchmark for conversion rates relating to the e-commerce sites that sell large dollar value products like a gold bar, coin or configurable products such as computers or bicycles were not available, the median e-commerce conversion rate for jewelry & accessories was found to be 2.14%. Electronics was 1.27%, and sports & recreation 1.85%.

Checkout abandonment :

  • According to data published by Baymard Institute, which averaged 41 different studies containing statistics on e-commerce shopping cart abandonment, it was found that average documented online shopping cart abandonment rate was 69.57%.
  • Sports & recreation e-commerce sites have a checkout abandonment rate of 25.2%, jewelry & accessories has an abandonment rate of 27.0%, and electronics has a rate of 28.4%.

Customer lifetime value

  • The median CLV for all e-commerce brands is $163.09.

Purchases per year

  • In e-commerce, across all industries, customers tend to make purchases between 3 and 4 times per year.
  • Industry wise, loyal customers in categories such as books, music, education, and pets come back to buy 4.5 times on average in a single year. While on the lower end of the spectrum, categories such as sports, men’s grooming and beauty, and cosmetics, the comeback frequency is much lower at 2.46 and 2.81 yearly.

Average cart size

  • According to Martin Drapeau, the CTO of AmiliaApp, regarding product-based e-commerce, the average cart size is $80.

Customer acquisition cost

  • Although specific CAC data was not publicly available for e-commerce, the average CAC through Paid Search was found to be at $45.27, while average CAC through display advertising was $65.80.

Your Research Team Applied the following Strategies:

We began our research looking for pre-compiled reports. We consulted McKinsey, PWC, Deloitte, Bain, BCG, Euromonitor, and Accenture. The information we obtained was on e-commerce as an overall segment, rather than broken down into specific segments. To dive deeper, we researched the topic on Mintel, Quantitative, and Statista hoping to get relevant figures. Again, we found information on the segment as a whole. We had some success with smaller sites and marketing agencies. Here we located benchmark data on the segments we presented in our research. Finally, we searched for interviews and articles relating to the question. By using LinkedIn, we were able to find marketing executives, then search for any interviews they had given. We consulted Forbes, Fortune Business Insider, and WSJ, looking for any information pertaining to performance across the given parameters. The information we obtained was centered around the types of products sold or the portal's uniqueness.

At this point we attempted to triangulate the information by using SimilarWeb, technofaq.org, and guardianpays.com, to obtain total sales, visitors, and transaction failure rates. However, no such data for these relatively smaller players was available.

A paid report titled 'E-Commerce & Internet Industry Market Research' by Plunkett Research seemed fit for further deep-dive, as it included a separate segment on 'Benchmarks and Forecasts'.
Sources
Sources

From Part 01
Quotes
  • "Overall Conversion Rate is coming in at 1.85%. Average Order Value is coming in at €282. We’ve also included conversion rate by user which is coming in at 3.2%. "
  • "Interestingly, conversion rates in Europe (1.51%) are higher than those in the US (1.37%), but the UK is streets ahead of the pair of them on that score (1.78%)."
Quotes
  • "69.57% – average documented online shopping cart abandonment rate. This value is an average calculated based on these 41 different studies containing statistics on e-commerce shopping cart abandonment."
Quotes
  • "The Customer Acquisition Cost varies significantly depending on the company and product(s). A good reference point is to aim for the lifetime value of your customers (LTV) to be three times the cost of acquisition (i.e. have a 3:1 ratio). "
  • "A related metric to CAC is Cost Per Acquisition (CPA) which focuses on the total cost of acquiring a new customer via a specific channel or campaign."
Quotes
  • "In a study by RJMetrics, the top-performing businesses (as classified by producing more than $45 million in revenue in their first few years) had on average, five times higher customer lifetime values than other businesses."
Quotes
  • "Generation X (people born between 1966-1981) makes more online purchases than any other age group, averaging nearly 19 transactions per year."
Quotes
  • "Among the different age groups, Generation X consumers (born between 1966 and 1981) made more online purchases last year than any other age group, averaging nearly 19 transactions per year. "
Quotes
  • "Average basket size – or Average Order Value (AOV) – is a key performance indicator for any e-commerce site. Each time your buyers purchase something on your site, they spend a varying amount. The idea behind calculating AOV is to determine the average amount of an order made on your site."
Quotes
  • "According to the 2015 E-commerce Growth Benchmark Report – RJMetrics, for best-in-class e-commerce companies, the average customer lifetime value is $3,600. Across all companies, the CLV is about $1,300. To put things into perspective, Amazon Prime has a CLV of $2,500, while non-Prime stops at $1,000 with a CPA of $160."