How do you understand whether your store’s performance is up to the mark? How do you evaluate the data of your e-commerce store? Understanding and analyzing the key metrics and data can be time-taking, particularly in the case when there are no specific industry standards or comparative data. For example, consider, if the conversion rate of your online store is 5 percent, is that fine? How to compare it with other stores in the same industry? Will any investment in boosting the conversion rate be worth your effort? Here enters the Benchmarks, which let you compare data to stores that are similar to yours.
Informing about the same, Shopify wrote on Twitter, “This is how you can make better decisions on how to level up your business: meet Benchmarks. you can now see how your store’s performance stacks up against those similar to yours, for metrics like online conversion rate or average order value”.
this is how you can make better decisions on how to level up your business:
— Shopify (@Shopify) May 10, 2023
meet Benchmarks.
you can now see how your store’s performance stacks up against those similar to yours, for metrics like online conversion rate or average order value. pic.twitter.com/Qpxb7aSQsM
What Are Benchmarks
Benchmarks are industry-specific data and metrics that help you set standard performance for your online business. Allowing you to gain insights into the performance of your online store, it helps you make informed decisions regarding the investment of your efforts, resources and money. As Shopify has millions of different merchants on its platform, it can easily compare merchants against similar merchants to surface benchmark data. Such data comparison provides your store with a competitive advantage over other stores available in the same industry.
In Shopify, Benchmarks are based on a group of stores similar to yours. The cohorts of stores depend on the primary market, product categories, and order volume sold during the last 30 days. However, Benchmarks data might not be available for your store if enough similar stores are not available in the market. Shopify’s Benchmarks data are available at a median, 25th percentile and 75th percentile level.
These three numbers for each benchmark metric give you a view of your relative performance so that you can make better decisions. You can check numbers that are available at the aggregate level and at a daily time grain. This means you can check your overall online conversion but not conversion through a particular channel or any other dimension. Only customer retention rate is provided at a weekly, monthly and even quarterly grain.
The median value shows the midpoint of stores that are similar to yours. It means 50 percent of stores have a higher value than the median and the other 50 percent have a lower value. 25th percentile means 25 percent of stores are similar to yours and 75 percent of online stores have a higher value than yours. Similarly, the 75th percentile is the value representing that 75 percent of stores are similar to you and only 25 percent of stores have a higher value than your store.
Hence, if your store is in a narrow range for conversion between the median and 75th percentile, it means the store requires little effort to create a significant impact on the conversion rate. You can instead focus on other tasks like average basket size.
These values are also an indication of how far or close your store is from achieving its top performance. If there is a small difference between the median and 75th percentile, even a little improvement in conversion rate can boost your store’s performance and bring it to the level of other stores at the 75th percentile.
What Key Performance Indicators Are Benchmarks Available For?
Merchants can compare data of their stores against benchmarks for particular metrics within Reports. Benchmark comparisons are available only in data charts, not in data tables. First, you need to select a Report with the benchmark and then choose the Compare option. Now finally select Benchmarks.
In Shopify, benchmarks data is available for the metrics below:
- Online store conversion
- Average order value
- Customer retention rate
- Time to fulfill
- Time to ship
- Time to deliver
These metrics can be accessed with the help of relevant reports in Shopify.
1. Online Store Conversion
An online conversion rate is the percentage of visitors to your website who buy your product. You can check the online store conversion report in Shopify to evaluate the conversion rate of your store as compared to other similar stores over a period of time. At present, the online store conversion benchmark is not available in Europe. Merchants with access to the basic plan and above can compare online conversion rates.
2. Average Order Value
Average order value is the average expenditure by a customer on a transaction for a particular period of time on your online store. With the help of the Average order value over time report, you can make a comparison of the average value of an order placed on your e-commerce store against other similar stores. Merchants with a Shopify plan and above have access to it.
3. Retention Rate
Retention rate means the percentage of customers who return to your store to buy again. Check your Customer Cohort Analysis report to see the retention rate for your e-commerce store and make a comparison against stores available in the same industry.
4. Time To Fulfill, Ship, And Deliver
For an online store, time to fulfill indicates the average time taken to start processing an order soon after it is placed. Time to ship simply means the average time taken for the shipment of an order after it has been processed. At last, time to deliver means the average time taken for the delivery of an order after it has been shipped. You can evaluate your performance in fulfilment, shipping and delivery metrics with the help of reports in Shopify
Advantages Of Benchmarks
With the help of Benchmarks, you can stay on top of the game as it offers you deep insights to help you boost your performance and make wise decisions. Benchmarks help you get a realistic view of your key performance indicators and allow you to make a comparison against others in a similar industry. The comparison enables you to spot areas where improvement is needed. You can even check the areas where your investment and effort are yielding results.
Benchmark data is late by 2 days. For instance, if you are checking data on December 30th, you will see data only till December 27th. Also, the cohort of stores gets refreshed every month. Hence, you might see a slight difference in your relative performance every month as your store is being compared to a different group of stores in the new month.
Does Your Store Qualify For Benchmarks?
Merchants will be able to see benchmark metrics for their stores only after the following conditions have been fulfilled:
At least 1 product has been sold from your store with an assigned product category in the last 30 days. Product category is used as input to decide the benchmark cohort.
Enough similar stores in the same industry should be available in your benchmark cohort. You might not get to see a benchmark if a sufficient number of similar stores are not available.
These above conditions are applicable to every benchmark metric. Every store might not be able to see all benchmark metrics. You can see a subset of benchmarks.
