E-commerce logistics: which KPIs to track for performance?

E-commerce logistics: which KPIs to track for performance?

Every online seller knows that today, the success of an e-shop can make or break a company's success. Far from being a subsidiary task, its management constitutes a major stake in the efficiency of your supply chain.

Which programs should you use to boost your sales and build customer loyalty? Of course, Google Analytics can help some e-merchants and is a good base, but the exhaustive analysis of performance indicators, or KPIs, requires a more advanced methodology. The e-commerce performance indicator is the essential tool for the successful analysis of your reporting strategy.

E-commerce performance indicators: understanding KPIs

What are KPIs?

This acronym means "Key Performance Indicators". In France, this term is generally translated by KPIs, which means "Key Performance Indicators". These are the compasses that allow your company to optimize its monitoring. 

The objective? To guide or reorient your strategic decisions.

A thorough understanding of the KPI figures is an essential part of your business strategy. Once you have determined your strategy, you can use it via a variety of channels. And as quickly as possible, with maximum impact.

The more diversified your e-commerce offer is, the more important the role of your KPI strategy management is. This is why such a strategy is particularly, but not only, appreciated by companies that sell their products via a multitude of channels: online stores, but also social networks or marketplaces.

What are the main KPIs of an e-commerce site?

The first step in setting up your e-commerce logistics KPI strategy is to identify the main indicators. Once this step is done, you will have the possibility to group them in a monitoring table, or to rent the services of a service provider who will take care of their optimization on behalf of your company.

This first step consists in identifying which KPIs concern the supply chain of your e-commerce. This identification provides e-merchants with a better overview of their different projects. Through their follow-up, you keep an optimal control on the evolution of your sales, but also on the influence and the profitability of your marketing decisions.

Among the various quality indicators to be taken into account, we will focus on the interest of the main ones, namelyResults

  • Acquisition

  • Conversion

  • Retention

  • Transport

  • Inventory management

  • The after-sales service

The e-commerce KPIs

1. The results

Whatever the activity of your company, it can only have two goals.  The first is to offer products or services that meet the needs of a clientele.  The second is to make a profit from the sale of these products or services. Not surprisingly, the first indicators to study are related to your company's results in these two areas.

With regard to these results, there are six types of key indicators to consider. The first and most important is naturally the evolution of your turnover. Then there are :

  • The number of orders, 

  • The sales margin,

  • The cost of acquisition, 

  • The operating cost,

  • Operating income.

To transform the analysis of these results into an efficient organization, many companies opt for a logistics service provider.

2. Acquisition

Another important indicator in the reporting phase is the acquisition KPIs. These relate to the customers who arrive for the first time on your platform(s). This is due to the success of your e-marketing strategy: attractive promotions, appropriate posts on your social networks, etc. 

As for the results indicators, the acquisition indicators are divided into several categories:  How many new visitors are reaching your platform?  What are the sources of this traffic?  Is it possible to multiply the impact of the source that generates the most visits?  How much would you spend to acquire these new customers? 

Answering these questions will allow you to identify the most useful e-commerce performance indicator to optimize your offers. This is a good opportunity to quantify the cost of operations and to set up your loyalty strategy.

3. Conversion

Conversion indicators are directly linked to acquisition indicators. While the latter provide you with valuable information about the profiles of your site's visitors, the former give you information about its consumers. In other words: the conversion KPIs concern the visitors who become customers by consuming on your platform.

The conversion rate is the main indicator. It determines the percentage of visitors who become customers. A good e-commerce report studies this conversion rate globally, but also per channel. Once again, this is to determine which channels boost your acquisition rate, and which ones benefit your conversion rate.

Another conversion KPI is the bounce rate, which concerns "converts" who have not become customers. It helps you to determine the possible improvements to be made to your sales platform or to your communication. The cart abandonment rate and the click-through rate are also useful conversion indicators.

4. Retention

The loyalty indicators measure the number of first-time customers who have repeated the consumption experience on your site. These customers are of course essential, as they represent your core target. You build a relationship with them. You build loyalty. They like your brand, and are therefore a key performance indicator.

Here, you measure the ratio between old and new customers, which allows you to answer a number of questions: 

  • Which ones generate the largest share of your revenue? 

  • What is the purchase frequency per customer? 

  • What is your return rate? 

  • Do you have a good satisfaction index? 

This last indicator is obtained by asking the customer's opinion after ordering and receiving a product manufactured and/or delivered by your company.

Logistics KPIs

If it is essential to follow the e-commerce indicators to succeed and improve the performance of your e-commerce site, it is advisable not to neglect the logistic aspect, an important factor of customer satisfaction and thus of loyalty.

1. The transport

The intervention of the carrier is a crucial step in your strategy. The figures that measure its impact are the logistics KPIs. Which carrier do you use? Are the packages delivered on time? To what extent and how often does your carrier respect the promised deadlines? 

Every e-commerce business must analyze them or, if necessary, have them analyzed, whether you are organized internally for your logistics, or whether you use an external logistics management solution. 

The names of these logistics indicators speak for themselves: 

  • Cost of deliveries,

  • Time between orders and deliveries,

  • Error rate in order picking,

  • Cost of returns,

  • Share of delivery costs in your turnover.

Good indicators will allow you to retain your customers and boost your acquisition rate, while KPIs in the red indicate that it is time to review your logistics strategy or to consider a change of provider.

2. Inventory management

Logistics and inventory management are closely linked. The indicators of your good inventory management are one of the most important elements of your reporting strategy. For an optimal management of your stocks, a certain number of e-commerce performance indicators are to be taken into account. What is your total inventory? What is your incoming inventory? What is your outgoing stock?

Other measurable elements: 

  • Real time inventory of products in stock

  • The inventory turnover rate, i.e. the frequency with which you renew your inventory, is calculated by dividing your turnover by the average volume of your inventory. 

  • The cost of storage, itself correlated to the average time a product spends in your inventory before being sold.

These combinations optimize your inventory management.

3. The Customer Service

Because a loyal customer is a satisfied customer, the analysis of the reliability of your after-sales service is also an important performance indicator. Today more than ever, companies know that the period following the purchase is as important as the one preceding it.

The indicators related to your CS take into account, among other things, the return rate: 

  • On average, how many customers return your products after purchase? 

  • Does your customer support have a good ranking in search engines? 

  • How many of your customers ask for a refund? 

  • What is the average amount of these refunds? 

These are all questions to consider when analyzing customer service KPIs.

In a nutshell

From lead acquisition to lead conversion, from lead conversion to lead retention, from delivery to after-sales service, and from key data analysis to revenue analysis, KPIs analysis allows you to guide your sales strategy down to the smallest detail. Since they are correlated to your real activity, these e-commerce performance indicators provide you with invaluable information. It would be unfortunate not to pay attention to them and, above all, not to use them sufficiently.

Partnering with Cubyn offers you the guarantee of a precise and real-time analysis of your KPIs, thanks to a personal tracking interface integrated to your e-commerce platform (CMS, marketplace or API), allowing you to monitor your logistics remotely: stock tracking, real-time inventory, package tracking, and so on.

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