THE RETAIL BULLETIN - The home of retail news
Lest we forget
HOME
RETAIL NEWS
RETAIL EVENTS
Fashion
Department Stores
Shopping Centres & Retail Parks
Home & DIY
Electricals
Health & Beauty
General Merchandise
Entertainment
Sports & Leisure
Retail Solutions
Food & Drink
Interviews
RETAIL INSIGHTS
RETAIL SOLUTIONS
ABOUT US
CONTACT US
SUBSCRIBE FOR FREE
New report unveils inconsistent measurement of ecommerce profitability across the board

The latest Trading Intelligence Quarterly (TIQ) research report has been launched today by eCommera.

OMNICHANNEL

New report unveils inconsistent measurement of ecommerce profitability across the board

The latest Trading Intelligence Quarterly (TIQ) research report has been launched today by eCommera.

The report, which surveys 101 UK ecommerce directors, has revealed that online retailers are very inconsistent with metrics for analysing profitability online – from their web site to specific products, customers and marketing activities.

“The purpose of this research was to understand how retailers are measuring their profitability online. What we’ve discovered is that the online retail industry is still too immature to know what good looks like. However, it is clear that higher performing online retailers are more sophisticated and focused in their measurement of profitability,” said Michael Ross, Director, eCommera.

The key findings found that almost half of respondents are growing at a rate of less than 20 percent. 
Just 18 percent of respondents measure website profitability daily or once a week (taking into account margin, marketing and delivery cost/revenue).  42 percent evaluate it on a monthly basis, 22 percent quarterly and 12 percent annually. Staggeringly six percent never measure it at all. 

Only 37 percent of respondents measure profitability of individual customers.  32 percent look at profit by recency-frequency-monetary (RFM) segments, 13 percent by non recency-frequency-monetary (RFM) segment and four percent use another (unspecified) metric.  15 percent don’t look at this measurement at all.

When measuring marketing channel profitability, only four percent of respondents are able to look at fully allocated spend.  25 percent analyse return on advertising spend, 40 percent review cost per customer acquisition and 19 percent measure cost per order. Eight percent don’t analyse this metric at all.

Understanding and measuring product profitability is a key challenge for respondents and is a better understood metric.  Here 46 percent measure gross margin return on inventory, 30 percent look at gross margin achieved and 16 percent look at a fully allocated profit per product.  Two percent use an alternative metric.  Six percent don’t measure product profitability.

In terms of measuring customer satisfaction, 16 percent of respondents don’t analyse for this metric at all. Fortunately others fair better with 20 percent requesting feedback after every interaction, 16 percent running regular post purchase surveys to measure end to end customer experience and 48 percent said they carry out regular onsite surveys to measure onsite visitor experiences.

Peter Fitzgerald, Industry Director at Google UK commented: "It is clear from the findings that retailers who measure and value profitability measurement are doing well. The key is to focus efforts on the metrics that really matter. However, across the board there appears to be a blurring of indicators about what exactly should be measured and what the best indicators of online profitability actually are."

Email this article to a friend

You need to be logged in to use this feature.

Please log in here

Subscribe For Retail News

RETAIL EVENTS

The Retail Design Seminar 2018
The Retail Design Seminar 2018
14 November 2018
The Cavendish Conference Centre
The Retail Design Seminar 2018
Omnichannel Futures Conference 2019
Omnichannel Futures Conference 2019
6 February 2019
Cavendish Conference Centre, London WG1 9DT
A truly omnichannel offering requires an understanding of customer behaviour across all shopping channels and how this should impact your overall business strategy
Customer Engagement Conference 2019
Customer Engagement Conference 2019
5 June 2019
Cavendish Conference Centre, London W1
The 10th Annual Retail Customer Engagement Summit
AI in Retail Conference 2019
AI in Retail Conference 2019
18 September 2019
Cavendish Conference Center, 22 Duchess Mews, London W1G 9DT
Retail marketing is changing pace rapidly by making communication across all platforms personalised, relevant, efficient, and helpful. AI not only helps shoppers find a perfect product but also pre-empts the shopping behaviour and speeds up payment.
The HR Summit 2019
The HR Summit 2019
Tuesday 8 October 2019
The Cavendish Conference Centre, London W1
The 11th HR Summit 2019, The Cavendish Conference Centre, London W1, 8 October 2019
Fix The Dinosaur Roundtable 2018
Fix The Dinosaur Roundtable 2018
19 October 2018
The Euston Suite, The Hallam, 44 Hallam St, London W1W 6JJ
A Masterclass in IBMi Legacy Issues