According to Invespcro, digital grocery sales are expected to reach a whopping $59.5 billion by 2023 in the US alone. This means that we’re looking at a $35.6 billion rise from 2018, when the market was valued at $23.9 million. Given these numbers, it’s clear as day that we’re entering a golden era for eGrocery apps!
So, how to make sure that your business becomes part of this statistic? One of the steps is making sure that you measure the right retail KPIs and success metrics.
We’ve reached out to eGrocery owners and eCommerce experts to hear about their top recommendations for eGrocery KPIs worth tracking. Read on to learn about the recommended key performance indicators in retail, and why they matter for eGrocery apps:
Meaghan Thomas, Co-Owner & President at PinchSpiceMarket.com
“I own an online organic spice company. Here are the most important retail KPIs we look at:
Repeat purchase rate (Are more first-time customers coming back and making a second purchase within the first 4 months of their purchase?)
It's a strong "love level" metric, and tells us how much people are ‘digging’ our product and company. Someone coming back a second time to shop with us is one of the biggest compliments we can receive.
If we see any dip in this eGrocery KPI or it's not growing at the same rate it has been, we can re-examine our consumer relationship management program, and re-tool emails and direct mail campaigns to reach them more effectively (i.e., change their content or the frequency of sends).
Customer Referral Program Payouts (How many customers are getting rewards for sharing our company with their friends and family?)
If customers trust and like us enough to take the time to recommend us to their loved ones, we're doing something right!
If numbers are low, we can look at simplifying the rewards program or offering greater incentives to spread the word about our online organic and fair trade spice company”.
Sean Scully, Content & Communications Manager at DataImpact
Sean Scully of DataImpact, CPG brand digital accelerator platform, shares his top three recommendations:
“3 KPIs essential for any grocery brand sold online are search, out of stock, and ratings and reviews. The increasing importance of tracking all three of these metrics points to the explosive growth of grocery eCommerce since the beginning of the pandemic. No CPG brand can stay competitive if they’re not monitoring their product’s performance on these three KPIs.
Search ranking performance is basically product SEO within a retailer’s site or app. The first three products that appear in the results when a shopper searches for a product get 80% of the sales within that category!
Out of stocks are also playing a pivotal role during the pandemic. If brands don’t track their inventory daily at SKU level, they risk going out of stock which leads to poor search result performance, competitor product trial, and, consequently, decreased brand loyalty. The consequences of being out of stock are far-reaching.
Ratings and reviews are an increasingly significant factor in product selection. Shoppers trust user-generated content more than advertising. This content is valuable for brands as it gives them insight into shopper desires, trends, and opportunities. Brands can engage with customers more deeply if they listen and respond to their customers constantly.
Linda Lee, Head of Business Development at Farmstead
“One of the KPI retail examples worth mentioning is contribution margin as it’s key in tracking per order profitability and assessing whether a grocer's online grocery order and delivery offering is sustainable in the long run. Grocers can focus on the metrics that may need improvement, whether cost of goods, picking costs or delivery costs, and determine how to fine tune each component to drive overall profitability.
Another eGrocery KPI worth measuring is food waste levels. They are extremely important in evaluating the bottom line and operations efficiency. Grocers face an ongoing challenge when it comes to quality of products, especially perishables, and how much inventory to order, and when, to be able to meet customer demand. Grocers can look more specifically at ways to improve their QA processes, demand forecasting and procurement to minimize that food waste level.
As our platform helps reduce the costs of picking and delivery, and cysts food waste through machine-learning technology, these are all areas which we’ve been closely focusing on and monitoring since our inception in 2016”.
Vanina Delobelle, Digital Transformation Office at VDInnovation
There are two key performance indicators in retail which I think should be highlighted:
Return frequency - This measures how often a given customer is coming back to the e-store. The more a customer comes back the better it is. It shows an affinity to the grocery brand so it means that the business is fulfilling the customer's needs. The e-grocer can improve this KPI by improving their overall customer experience.
Average basket size - how much does a given customer buy on average on the e-store. The higher the basket value, the better. This shows how upsells, promotions, and inventory offered impact the order value.
Katherine Brown, Founder & Marketing Director at Spyic
Return on Ad Spend
This metric will help you determine the amount of revenue generated from your ad campaigns compared to what you spend on advertising. Put in simple terms; it answers the question, "how much did you earn in revenue for every dollar invested in advertising?" The good thing is that you can see the specific details on every product, giving you an idea of the products generating more income and those costing the company. You can choose to maximize advertising for the top performing products to increase revenue.
Cart Abandonment Rate
This metric shows you the percentage at which customers add products to a shopping cart but fail to make a purchase. Typically, if you have a high cart abandonment rate, it may result from issues with your shopping cart design or the overall functionality of your e-grocery store. It means that you need to optimize for better results since these are customers interested in your products.
Dr. Elizabeth Lombardo, Keynote speaker
One of the most important retail KPIs is the Customer Acquisition Cost. This is basically the difference between the marketing and promotional budget and the operational budget. It is not a cheap investment to do things well online. Grocers must spend in both above- and below-the-line marketing, as well as the creation of digital content.
Nicole Graham, Lifestyle/Relationship Coach at Womenio
The turnover (revenue) you generate is also one of the key performance indicators in retail worth tracking. If you notice a decrease in turnover despite an increase in visits, you can interpret this KPI as follows: Check to see if the conversion rate is consistent. If it isn't, your incremental visits aren't as good as your normal point-of-reference visits. Verify which traffic sources, referrer sites, and campaigns are bringing you this low-quality traffic.
Are there any other key performance indicators in retail that you’d add to this list? Or maybe you’re looking for industry consultants and a technological partner who’ll help you make the most of your eGrocery app?
At New Gravity, we’ve helped tens of businesses emerge in the eCommerce space – we’d love to discuss how we can assist yours. Reach out!
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