As soon as we talk about e-commerce and the performance, you won´t need to wait too long until the term conversion rate comes. Within the content of social media postings and podcasts, e-commerce leaders are almost praising the weight of this KPI.
Understanding Conversion Rate
However, what does conversion rate mean? As simple as the word itself, the conversion rate itself describes how well your online store is converting. In simple words: the number of placed orders compared to the number of traffic that came in.
Apparently, conversion rate as an intensively approached topic in e-commerce discussions will never get out of style. Whereas the typical conversion rate in retail stores starts at 25% and increases up to 98%1, in e-commerce you can dream of such high numbers regarding conversion rates. Here the latest survey² and studies in 2022 show that average conversion rates in 2022 are around 3.65%.
Essential aspect to this comparison is the trend, that e-commerce conversion rates increased by a fifth from 2021 to 2022. So it´s not a big deal to argue why the optimization of conversion rates is well established under the spotlight.
So what´s the difference from retail to e-commerce and why is there such a big difference?
Retail customer acquisition can be challenging, while e-commerce traffic can be boosted through advertising on Google or social media. This global reach and 24/7 accessibility of online stores make e-commerce a versatile and convenient option for consumers.
Test It and Improve your Conversion Rate
Testing of changes becomes more and more essential today, as times of guesses are over. Optimizing conversions means creating real insights based on data collected, looking for the root of problems a webshop operator faces with.³ As an entrepreneur you may have much traffic on your webshop and won´t know why the conversion rate is so low. Is it because of bad webdesign, because of missing products, colours and sizes, or because the payment methods available are not suiting the needs of the customer. Paid advertisements that perform innefectively are just one bad thing that can happen. In the end all parts and details of your online shop and its products should help you to secure planning reliability.
A/B testing as an instrument to find the best solutions for each element seems to be very effective in terms of conversion rate optimization. Whereas in retail you won´t be able to measure every step a customer does in your store for example how long does the customer look at a specific product, or does she/he go directly to the kids area? How long does the costumer stay there? In e-commerce you are able to track every single move of the visitor. How long does the visitor stay on a specific product page, does she/he add the product to the cart and which products lead to a higher bounce rate. All these precise information is available and just here for you to make the best out of it.
A/B Testing
Regarding A/B testing you are willing to prove either a detail-change of element in your webshop is good or not, let us see the example of customer reviews. Should these be positioned at the bottom of the landing page or in the middle? Should customer reviews be part of every product page and if yes, where should they be positioned? Here you won´t know until you tested both and proved that either this or the other options performs better.
1) https://www.forbes.com/sites/patfitzpatrick/2020/07/23/retail-conversion-rate-secrets-you-never-knew/?sh=824b275fbaa0
2) https://www.invespcro.com/blog/the-average-website-conversion-rate-by-industry/
3) https://www.abtasty.com/conversion-rate-optimization/
