September 28, 2010, 2:27 PM

Key profit indicators point up

Web sales, conversion rate and average order value are all up this year for online retailers, says a report released today by Forrester Research and Shop.org. And there is more e-retailers can do to boost results, the report says.

Lead Photo

Sucharita Mulpuru

Online retailers’ web sales, conversion rate and average order value are all up this year, says a report released today by Forrester Research Inc., a research and consulting firm, and Shop.org., the e-retailing arm of trade association National Retail Federation.

Here are some of the most important metrics from the survey of 87 retailers:

  • Average online conversion rate is 2.9%. 54% of respondents say their conversion rate is up this year, 29% down.
  • Shopping cart abandonment rate is 55%, with 17% saying it’s higher than last year and 31% lower.
  • Average order value is $132; 47% say it’s higher than last year and 27% lower.
  • Web sales increased on average by 12% in the first quarter and 15% in the second quarter year over year for the retailers responding.
  • 80% of retailers say their e-commerce business was profitable in 2009, and 70% say it was more profitable last year than in 2008.

Retailers have achieved these gains by addressing weak points, such as in-site performance and retaining good customers, say Forrester analysts Sucharita Mulpuru and Ben Zeidler, authors of the report, “The State Of Retailing Online 2010: Key Metrics And Multichannel And Global Strategies.”

They note that 35% of retailers responding to the survey say they have reduced site download times and 21% improved web site availability. 47% say their revenue from repeat shoppers improved in the past year.

They also note that improved recommendation technologies and cross-selling strategies has enabled 27% of retailers to increase the number of units sold per transaction and 47% to increase average order values.

Among the ways e-retailers can improve their results, the authors point to:

  • More efforts to retain good customers, with customized landing pages for repeat shoppers and a separate phone number for a retailer’s top customers.
  • Consider selling abroad. “Improvements in global shipping opportunities and the ability of shoppers to easily access foreign web sites highlight the latent demand for global online selling,” the report says. U.S. retailers that ship abroad say international sales account for 5% of revenue on average, the report says.
  • Better harmonize a retailer’s sales channels, including unifying inventory and merchandising systems across the web and bricks-and-mortar stores. “This capability will be even more of an imperative as mobile applications empower shoppers to receive information on the go.”
  • Survey customers about their cross-channel shopping patterns. “It is far easier and less expensive to proactively survey customers than to try to track them through a master database—and yet this tactic is employed by just one-quarter of retailers,” the report says.

This is the second of two parts of the annual State of Online Retailing study by Forrester and Shop.org. The first report, which focused on marketing and social media, was released this summer.

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