+7 votes
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asked in Metrics by (559 points)
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5 Answers

+4 votes

Luxury Goods e-commerce

I would tell the assumptions I am making and check for the website
Assumptions
The website sells directly to end customers.
It is like Amazon for luxury items.
It sells legal stuff.

Metrics
Acquistion

  • New users per day/week/month
  • % change in CAC per user on day/week/month
  • % change in source of traffic such as organic vs paid, Google Adv vs Facebook Adv

Activation

  • % change in users who do first time add to cart on week/month time
  • avg time taken for first time add to cart
  • % change in avg time taken for first time add to cart
  • % change in users who buy for first time on week/month time

Retention

  • % users who come back on weekly/monthly basis
  • % users who buy on weekly/monthly basis

Revenue

  • % change in Grorss Merchandise Value (GMV)
  • Absolute $ value of GMV on daily basis
  • Number of items sold on daily/weekly/monthly basis
  • Avg order size

Engagement

  • avg number of pages visited per user
  • avg time spent by a user on the website
  • avg support chats per user
  • avg number of images viewed per product
  • avg number of ratings and reviews per product
answered by (24 points)
+2
Great list of metrics. I would also add ‘Number of visitors who sign up for newsletter / emails about new products’. And in source of traffic, I would also add ‘Visitors who come from email campaigns or newsletter’
+2
I would also add Mobile App as Key Metrics
1) % of user downloaded the Mobile App
2) % of User Bought via Mobile App
etc…
+1
Unless I am missing it,

Conversion rate. (orders/sessions) is probably in the top 5 key metrics for any e-commerce business.
# of orders weekly/monthly/yearly
Orders per buyer weekly/monthly/yearly
$ per buyer weekly/monthly/yearly

If there is a free shipping threshold

# of orders for which shipping is paid vs not.

Given this is e-commerce, returns are super important to track.

% of items returned.
Total $ value of items return
AUP (average unit price) of items returned.
0
Another few I’d add:
* Average Order Value (can fluctuate quite a bit based off what you’re selling, but for a luxury goods business this should hold relatively steady if they are not discounting)
* Revenue per session (total revenue generated in sales/all sessions)

Diagnostically it can help to evaluate:
* Browse/Search > Product Detail conversion (of those who browse assortments, what % actually look in more detail)
* Add to Bag conversion (of those who viewed a product, what % added an item to bag)
+3 votes

1. Understanding the product
The product is e-commerce website for luxury goods. When we talk about luxury goods, the understanding is that the product prices are catering to people on the wealthier side. Apart from, the target audience and the price range of the product the features of the e-commerce website are assumed to be similar to that of a normal -commerce website.

2. Goal of the website
I assume that since it is luxury goods market wherein the cost of acquisition of products is high, and therefore the main goal is conversion. So let the primary goal of the website be of conversion, leading to generation of revenue.

3. Walking through the customer journey
->customer lands on the home page
-> either the customer finds a product interesting on the home page and clicks on it/has landed on the product from an ad/ searches for a particular product and then clicks on it/ or through reference
->customer reviews the details of the product, sees the cost of the product, reviews the feedback of the people, sees the page
->customer either abandons or selects the product for buying
->customers fills the shipping the details
->customer pays the cost
->customer confirms the buy

4. Mapping the user behavior to the customer journey

Awareness : Since it is a luxury goods website. My end target is to drive home the customers that can afford the luxury goods. And therefore, I need to ensure there is awareness in that group. It is highly likely the traffic can also be from people who are doing window shopping, but will never be buying or most unlikely to buy.
Therefore, based on previous source of information of customers, I will perform a cohort analysis of the traffic to identify the % of traffic from the ideal TG. Monitoring this will ensure whether I have the right group to approach for conversion.
I will also capture the keyword searches among the social network to understand the awareness.

Acquisition/Activation : From the identified TG, I would then measure:
% of users signing up for the website and completing it
% of growth in number of new users

It is only those users that become a part of the community that we can have targeted channels to capture, and thus have the client profile and becomes a good candidate for conversion.

Engagement: % of people viewing the products
% of people viewing the reviews
% of people that are on the product page for more than 10 sec – this helps us further analyze or target as these are the people who might be interested in the product
% of people scrolling the images – again indicates interest
% of people that came via search and left the page within 10 sec – these are the people that probably did not find the product they were looking for and hence can indicate a pain point that we need to tap

Retention
evaluate the cohort analysis to understand the retention over a month
% of active users who repurchase
% of active users who come back to leave reviews
product return rates

Revenue
average spending per active user
% growth in the average size of transaction
frequency of transaction

Referral
In case of luxury good referral is essential as it works as a certificate of trust
% of users sending referrel
% of converted referrels

5. Evaluating the metrics
Based on the product of luxury goods,
it is essential that the right TG is identified and then we have a constant loyal customer base developed with the customer group, that will ensure that our reach continues to grow based on their feedback to the people they know

Therefore, the main metrics are from Acquisition, retention and referral and also % growth in revenue and average revenue per user

answered by (19 points)
0 votes

Understanding the product:

I am assuming website selling luxury goods directly to the consumers. Categories including designers clothes for men and women, watches, apparels, high-end furniture etc. A high-income group is a target customer base.

Goal:

Options could be:

  • To increase its gross merchandising value(GMV) or gross revenue. 
  • To increase its net profits 
  • To increase the customer base irrespective of the profits 
  • To increase customer retention
I assume GMV doesn't make much sense in this case because its already dealing in high items and less quantity could also make a more GMV. Money won't be an issue for high end customers. Hence, I would assume to focus on increasing customer retention and expand its user base.
Awareness:
  • # impressions on display ads, search ads, and print ads.
  • # views on content marketing blogs, posts on elite clubs pages, etc.
Acquisition
  •  # visitors increased on the website during and after the marketing campaigns
  • # repeated visitors after the campaign
Conversion
  • #people adding products in the basket
  • #people reaching till payment stage
  • #people checking out and actually buying
Retention
  • # users repeatedly buying per week and per month
  • #returns per month per category 
Referral
  •  # referral code has been sent per week by the users to their friends
  •  # referrals have been used per week
  • # increase in users through referral codes
Summary
The goal of an e-commerce company is to increase revenue by expanding the user base and increase customer loyalty.
I identified the user flow and through the process found some metrics to measure progress at each stage of interaction with the website right from landing to exiting the website.

answered by (26 points)
0 votes

As a 1st step, I will try to understand whether the PM is responsible for growth or revenue. Let's say this case is about a PM who is not worried about acquisition. Since this a luxury goods portal, I expect following about consumer behavior and revenue model:

  1. Avg users will not make frequent purchases (Reasons: less # of affluent people, more competition, aspirational users will make less frequent purchases.)
  2. Average margin per sale will be higher
I would recommend that we should try to optimize the product experience, efforts and time available for improving following two metrics:
  1. % change in active shoppers per quarter
  2.  % change in # of transactions per user per quarter
* We should log all, measure few and chase only that matter.
* I made assumption that type of goods available are of following categories: Art work, Wines, Jewellery, Watches, Furniture etc
answered by (17 points)
–1 vote

Let´s assume that we are selling expensive watches.
Things to consider in general:
– Average customer income is high. Customer is used to personalized treatment
– Trust is important, given the high price of the products
Important metrics are in two domains:
Web analytics
How easy it is for my website to be found?
Sales Funnel – is there anything problematic with my checkout process?
From where are my customers coming? How and where should I direct my marketing efforts?
What device do my top customers use? I will use this information to prioritize between Android and iOS app development, for example.
Business
• Average basket size
• Percentage of returning customers versus new customers
• Percentage of returns – are people sending stuff back?
• Customer segmentation – how is my current customer base is segmented and what is the Customer Lifetime value for each individual segment and each individual customer
• Churn analysis
• Sales forecasting – overall and product specific. It will make sure that I have the right products at the right time.
• Profit margin overall and for individual products. What products are performing poorly? Which ones are the top revenue generation (high margins)?
• Satisfaction – and product reviews.

answered by (15 points)

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