What is eCommerce Conversion Rate and Why Is It Important?

What is eCommerce conversion rate?

eCommerce conversion rate is calculated as the number of people who made a purchase on the website, divided by the total number of website visitors and is represented as a percentage: 

eCommerce Conversion Rate  =  Number Of Online Purchases  /  Total Web Visitors 

We're Digital Marketers... Not Mathematicians!

For example, if 1 in 100 people who visit your website make a purchase your eCommerce conversion rate is 1%. 

Here's a visual diagram of a 1% conversion rate. If instead there were 2 purchases from the 100 web visitors, the conversion rate would be 2%. 

What is the average eCommerce conversion rate?

It's the golden question! It varies industry-to-industry but for online retailers the average eCommerce Conversion Rate is 2% (2 purchasers out of every 100 visitors). For trades and services businesses, we find 5% is the average eCommcerce Conversion Rate. 

Why is eCommerce conversion rate important?

As a business owner, what you prefer:

  • Spend $100 to drive 100 website visitors and convert 1 person (1% conversion rate); or
  • Spend $50 to drive 50 website visitors and convert 1 person (2% conversion rate)

The answer is obvious - you want to spend less to convert the same number of people. But not enough online retail businesses look at eCommerce conversion rate in this simple way. 

One of my favourite sayings to online retail clients is, 

"We can always spend more money to drive more traffic to a website... but an increase in traffic won't fix a conversion problem". 

Let's look at it another way - would you rather double your marketing spend this month to double your sales this month, or double your eCommerce conversion rate this month to double your sales forever? 

You see, somewhere along the line you're paying for the traffic that visits your website. 

SEO, AdWords, Social Media, Content Marketing, building Affiliate Relationships, Email Database growth strategies and Email Marketing strategies... These are all investments of time, resources and money in some way. 

Focusing on improving your eCommerce Conversion Rate will increase your profitability, now and in the long-run.