An eCommerce marketplace is a platform that connects buyers and sellers. The marketplace model has grown in popularity for two reasons: It allows companies to tap into new markets outside of their traditional reach and reduces some costs associated with operating an online store.
However, running an eCommerce marketplace involves more than just setting up a platform for others to sell on; online marketplace metrics matter if you want to stay ahead of the competition.
In this post, we will look at some of the most critical KPIs every eCommerce marketplace operator should evaluate (along with their definitions) so you can start tracking your performance against these metrics over time.
We’ll also explain why they matter so much—and what impact they can have on your company’s overall success or failure.
Online marketplace metrics
Organic traffic is the number of visitors that visit your site through search engines. Measuring this metric is essential because it indicates how well you’re getting people to find and click on your listing in search results.
An excellent organic traffic number should be much higher than the other metrics because it doesn’t rely on paid ads or other external sources. If your organic traffic numbers are low, there are a few things you can do:
- Increase the number of keywords in each category (for example, if you sell shoes, try adding “women’s sneakers” or “men’s sneakers”). This will help increase relevance for those searches and improve ranking over time as more sites add these terms to their content
Paid traffic is an excellent way to test your marketing strategy. You can use it to target new customers, existing customers, and specific keywords or products.
Paid search is an easy way to find new customers interested in your product or service, but you’ll need to be careful not to run afoul of Google’s guidelines for paid ads.
When you’re targeting existing customers with paid search ads, make sure there’s a clear benefit for them in clicking through–and that this benefit isn’t available elsewhere on the site (like free shipping).
The buyer-seller ratio is the number of buyers who visit your marketplace relative to the number of sellers who sell on it. This can be calculated using this formula:
- [Buyers] / [Sellers] = BSR
For example, if you have 100,000 unique visitors per month and 2,500 active sellers on your marketplace, your BSR will be 0.025 (or 2%). A good BSR is between 1% and 3%.
Conversion rate is the percentage of visitors who complete a desired action on your site. It’s calculated by dividing the number of conversions by the total number of visits, and it can be used as a benchmark for measuring the effectiveness of your website.
For example, if you have 100 visitors and 20 completed orders, your conversion rate would be 20%.
Conversion rates vary depending on industry and product category but are generally between 2% and 5%.
The fill rate is the percentage of orders that were filled. It’s a measure of how well a marketplace performs and can be calculated for each product category or market. For example, if you have a 10% fill rate and 10 orders are placed, only one charge will go unfilled (9/10 = 0.9).
A high fill rate indicates enough sellers to fill all orders; conversely, low fill rates suggest there aren’t enough sellers or products available to meet demand (or both).
If your business has an exceptionally high number of unfilled orders relative to total sales volume–say 15%-20%–you may want to consider adding more specific filters so potential buyers can find what they’re looking for faster or increasing inventory on popular items being sold by vendors who aren’t meeting demand quickly enough.
The take rate is a good indicator of how many products are being sold on your marketplace. It measures the percentage of orders accepted by sellers and can be used to compare different marketplaces. A higher take rate means more sellers are interested in selling their products on your site, and therefore more people buy them.
“Take rates” depend on several factors: quality of products offered (better products tend to have higher take rates), seller reputation (good sellers have better chances at earning higher take rates), marketing efforts made by both sides (if you promote your marketplace through ads or email campaigns then you’ll attract more new customers who will eventually become buyers).
Customer acquisition cost
Customer acquisition cost (CAC) is the total cost of acquiring a customer, including marketing and acquisition costs. The CAC can be calculated as follows:
- Average Cost Per Acquisition (CPA): The average amount spent to acquire each new customer. This metric helps compare different marketing strategies or channels. For example, if one campaign costs $10 to generate 10 leads while another generates 20 leads at a lower cost of $5 per lead, then you should use that second campaign because its higher CPA means it delivers more value than the first campaign with its lower CPA.
Average cart size
Average cart size is the average value of items in a customer’s shopping cart. It’s a good indicator of how much a customer is willing to spend, and it can be used to evaluate how well you are converting customers to buyers.
- How do I calculate the average cart size?
To calculate the average cart value, divide the total value of all orders by the number of active shoppers:
- (Total Value of Orders/Active Shoppers) = Average Cart Value
Average order value
The average order value (AOV) is the average amount spent per order. It’s a good indicator of the health of your business and a metric to track over time.
If you have an online store, this can be calculated by dividing total orders by the number of customers who made purchases during that period.
Customer lifetime value (CLTV)
Customer lifetime value (CLTV) is the estimated value of a customer over their lifetime. It’s calculated by multiplying the average order value (AOV) by the number of orders per year, which allows you to understand how much revenue you can expect from each customer.
For instance: If your average order value is $100 and your customers place two orders yearly, CLTV would be $200 ([100 x 2]/12).
Online Marketplace metrics can take a lot of work, but these KPIs can help you evaluate eCommerce marketplace metrics.
The most important thing to remember is that only some KPIs will work for some businesses.
For example, if you’re selling a physical product and your customers can try it on before they buy it, then the speed of delivery is likely essential.
If your products are digital or intangible (like an ebook), then speed may not matter as much because the customer isn’t waiting for anything.
So don’t just blindly copy these KPIs from another company; instead, use them to create a list of metrics that makes sense for your business.
With this post, our goal was to help you better understand the metrics that matter most in your eCommerce marketplace business. We’ve identified KPIs that will help you evaluate your platform’s performance and ensure it’s on track for success.
These KPIs can be used as benchmarks against competitors or other marketplace platforms to see where they stand in growth or decline over time. Using these metrics, we hope you’ll identify trends sooner than later and take proactive measures as needed.