Product analytics play an ever-important role in the smooth development of your e-commerce shop. Along with breaking down your inventory & order performance and giving you crucial insight into your supply chain management, there are endless other ways tracking your product journey can help your business thrive.
On the other hand, since metrics and analytics have become such big buzzwords, webshop owners risk getting into the frenzy of mindless data tracking. What we are sometimes not told, is that excessive tracking can be time-consuming, expensive, and – in some cases – even counter-productive.
For this reason – whilst we emphasize the importance of remaining vigilant of most interactions affecting your online shop – we want to avoid the so-called “vanity metrics” – in other words, statistics that look great on paper but lack valuable hands-on applications.
The goal of this article is to help you make the best use of your product analytics without getting lost in unnecessary “fluff”. To this aim, we have gathered 6 key points that directly reflect on your product analytics strategy.
How to Calculate Total and Product Revenue?
It is all too easy to confuse product revenue with total revenue. In reality, these are two different values, which are calculated using two separate formulas.
- Revenue: the total revenue from your e-commerce transactions. Tax and/or shipping may or may not be included depending on your online shop’s setup.
- Product revenue: the revenue from each individual product sales.
As mentioned above, tax and additional costs may be detracted from the total revenue derived from an item sale. As a result, simply adding up the revenue from every single transaction isn’t likely to amount to the exact total revenue. Extrapolating the gross profit of a product is best done as follows:
- Sales – tax/shipment/fees = gross profit.
- Gross profit = gross profit margin.
- Item sales price / production costs = markup percentage.
2. What’s your Average Basket Size?
By Average Basket Size (ABS), we refer to the average number of items sold in a single transaction. These analytics are there to inform you of the increase or decrease of items bought in one go by individual customers. ABS can be leveraged to gather info on the average value of the items purchased on a single order – which can give you an insight into your buyer’s profile and their budget, along with helping you project the short and medium-term performance of your individual items.
Additionally, ABS can be leveraged to track the overall performance of your e-commerce, as well as help you pinpoint what products are more successful over a season or how well is a discount/sales campaign paying off.
3. How Many Items Have Been Sold?
Knowing how many items you are selling is a vital piece of information for the success of your e-commerce. Along with giving you data to track your total revenue, it also helps you gather information on how well an individual product is performing, in turn allowing you to make the best decisions regarding inventory, marketing strategy, and campaign sales. This brings us to the next point.
4. What Are your Top-performing Products?
Knowing your best-selling products can give you a sense of what your customer base wants, as well as provide you with valuable data to base your strategy on and drive more profit.
Product performance can be tracked by adding a tracking code to every individual item. While, in theory, this can be done manually, the reality is it’s best to rely on metrics & analytics tools specifically designed for the task. But with the built-in product analytics in Razzo, you can narrow down on specific products, without the need to add tracking code. Razzo built their analytics on purely sales data from your shop.
5. What Products Are Most Seen in the Abandoned Cart?
Most e-commerce platforms will allow buyers to mark their favorite items and save them for later. Similarly, products can be added to a cart to complete the purchase at a more convenient time.
The downside to this is that sometimes the items are left in the cart and the sale is never completed. This frustrating phenomenon is known as Shopping Cart Abandonment. The abandonment rate is calculated as follows:
- The total number of completed purchases is divided by the number of shopping carts generated. The result is then multiplied by 100.
As well as giving you an idea of the overall success of your e-commerce, knowing what items are most often left in a cart can suggest the need for a tweak in your marketing and sales strategy. It may be that a competitor offers a similar product at a more convenient cost, or the item has not-so-great reviews. Whatever the reason, it is worth investigating whether the item you are trying to sell needs to be improved or crossed off your list altogether.
6. How Many Products Have Been Added to Your Webshop?
Sales and marketing are the backbones of your webshop’s success and their accuracy will largely depend on the quality of the data you gather. Maintaining your product list fresh by cyclically adding and removing specific items based on their popularity/relevance can not only keep your current buyers interested, but also help your customer base grow.
Keeping track of the success of your latest product launch can inform the following steps to follow. It is important to keep your newly added items at the forefront of your metrics strategy as it allows you to make adjustments on the go.
The Bottom Line
Vanity metrics can give you a nice confidence boost, but if the data you are tracking doesn’t come with a side of useful information and actionable advice to help your e-commerce grow, you are probably misusing valuable resources.
For this reason, the tracking of product metrics and analytics is best left to industry professionals.
Lucky for you, Razzo can help. This e-commerce solution is specifically designed to help your Magento webshop grow. Its focus is on collecting high-value, actionable data that you can immediately leverage to make important business decisions.
Through a user-friendly and legible visual representation of real-time product performance data, Razzo sheds a light on your webshop’s strengths and areas of improvement – so that you can take action today.
If you would like to discover new ways to track only the most relevant metrics and analytics for the success of your e-commerce, do not hesitate to get in touch.