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Dropshipping KPIs You Need to Track for Your Store in 2022


The number of eCommerce marketing tools available at hand today and the possibilities they’re offering might be overwhelming for everyone who owns a dropshipping business, regardless of them being new or experienced in the field. Today’s business owners are provided with endless options and ways to measure their store’s traffic and track how their marketing efforts are performing. So, sometimes, it can be hard to pick out the most important dropshipping KPIs to focus on.

When it comes to measuring the health and progress of your dropshipping store, all of the data that’s collected on your store can be a treasure It can show how you get traffic on your website and how your customers are behaving when they visit your store. These details can enable you to make informed decisions on improving your store’s performance thus increasing your sales.

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To put it simply, if you aren’t tracking your performance based on the data that’s being collected on your dropshipping business, you can end up missing out on the opportunity to measure how well your strategies are working. Although most dropshipping business owners are utilizing the data they’re collecting, there are still some that are missing out on this valuable information. In fact, studies show that up to 73% of data that is collected by companies goes unused for analytics.

It’s important to know that, if you don’t read, understand, and apply the data you’ve collected properly, it can cost your business vast amounts in the long run. It can result in lower efficiency, lost business opportunities, and future issues when dealing with unhappy customers.

In this article, you’ll be introduced to the most essential dropshipping KPIs that you should be measuring, analyzing, and implementing in order to drive your store to success.

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What are KPIs in dropshipping?

KPIs, or Key Performance Indicators, are a set of quantifiable measurements used to measure and represent the business’ overall performance in the long run. They help determine the strategic and financial achievements and progress of your dropshipping business over time. KPIs can be viewed as milestones that help you identify and track the progress of your sales, marketing, or customer service goals. There are many types of dropshipping KPIs that you can measure, but they can be grouped into the following main categories:

  • Sales
  • Marketing
  • Customer service

What makes a good KPI?

When you’re using tools like Google Analytics, you’re flooded with a wide range of different metrics that you can track for your dropshipping business. However, it’s crucial to keep in mind that not all of these are equally important, and not always everything counts. First, you’ll have to identify which metrics bring you value. In order to do so, you need to look at the main characteristics a KPI needs in order to provide actionable insights for you. These characteristics are the following:

  • They should have an impact on your bottom line and help you achieve your end goals;
  • They can be measured accurately over time;
  • They can be accessed in a timely manner so you can track your progress in real-time;
  • They should result in actionable improvements that you can implement.

In the next section, the most vital dropshipping KPIs will be explained in detail to help you decide which ones you should be tracking and keeping an eye on during 2022.

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What are the most important dropshipping KPIs you need to track?

Now that you have an understanding of the nature of KPIs and the ways they can benefit your business, you’re surely wondering which are the ones you need to focus on.

Site traffic

Site traffic refers to the number of visitors your dropshipping store is capable of attracting. It’s helpful in measuring how appealing your website and business are to your potential customers. Naturally, the higher the number of visitors, the bigger your chances to turn them into paying customers and make a profit. For this reason, when you’re operating a dropshipping business, it’s highly important to work on improving your site traffic. The overall number of visitors might be a piece of crucial information, but it also holds other valuable clues, such as:

  • Traffic source – it refers to where your visitors are coming from to your website or how they find it. There’s a wide range of traffic sources that can drive visitors to your store’s website like direct and organic traffic. Additionally, there’s the traffic that comes through eCommerce email marketing, influencer marketing, and social media platforms.
  • Sales by traffic source – it serves as an indicator of how valuable a traffic source is for your business. It’ll allow you to reevaluate your marketing strategy while knowing which marketing channels and investments are bringing you the best results.

The most accurate tools for measuring and analyzing your store’s traffic are Google Search Console and Google Analytics. In these platforms, you can segment your sources of traffic into direct, paid, and organic categories or you can also segment by the type of device used to view your website. As mCommerce is becoming more and more relevant, it’s important to evaluate which device type drives the highest number of visitors and sales to your dropshipping store.

Conversion rate

Your conversion rate will show you the percentage of visitors that you manage to turn into paying customers on your website. Although knowing how much traffic you’re driving to your store’s website is an important dropshipping KPI, it’s also vital to monitor how many of these visits are resulting in actual sales. Calculating it is relatively easy, you’ll only have to divide the total number of visitors by the total number of buyers. If you’re using Google Analytics for tracking your dropshipping KPIs, the conversion rate will be automatically included in your report, and you can set up goals and events to measure it.

Tracking and monitoring are inevitable when it comes to understanding how your visitors are reacting to your dropshipping store and the products you’re selling. When you have a high number of visitors but a low conversion rate, it indicates that consumers are generally interested in what you have to offer but for some reason, they bounce and don’t make a purchase. Having data on your conversion rate over time will help you identify the reasons why you have a low number of sales despite the high number of visitors to your website.

By going deeper into measuring your eCommerce conversion rate, you can not only set events that’ll look at the total numbers but you can also set ones that’ll allow you to calculate your conversion rate for each traffic source you have. Try to compare different sources of traffic not only based on the number of visitors they’re driving to your dropshipping store but also based on how likely these visitors are to convert.

Formula for Conversion Rate:

  • Conversion Rate = Total number of visitors / Total number of buyers

Customer Acquisition Cost (CAC)

Customer Acquisition Cost shows how much money it costs to turn a visitor into a customer. Oftentimes, acquiring a customer isn’t free as you have to spend time and money on your marketing strategies, whether they’re organic or paid. This is yet another dropshipping KPI that you’ll need to keep your eye on as it shows you how effective your marketing campaigns are.

Similarly to the conversion rate, CAC can be calculated not only for your overall marketing spend but also for your spending on each channel you’re using. This way, you can reveal the cheapest and most effective marketing channels that you can use to win customers.

Formula for Customer Acquisition Cost (CAC):

  • CAC = Total cost of marketing / Total number of customers

Total sales

Your total sales refer to the number of sales you’re making during a given time period. This is simply the number of units sold multiplied by the sale price of each product. The total sales amount is an important metric as it’ll serve as an indicator of the overall performance and growth of your dropshipping business.

Also, it’s important to keep track of the periods when you’re experiencing spikes and drops in your total sales. Understanding the reasons behind these can highlight opportunities you can exploit by concentrating on improving your marketing strategies during times when your store’s performance drops.

Formula for Total Sales:

  • Total Sales = Units sold * Product sale price

Cart abandonment rate

Cart abandonment refers to situations when shoppers add items to a cart but don’t go through with the purchase. It’s a natural consequence of how people are browsing and shopping online, allowing them to compare products and prices. Cart abandonment is an important dropshipping KPI to track for every dropshipper as it directly affects the profits one is making with their store. Therefore, you can easily calculate your dropshipping cart abandonment by using the formula below.

Formula for Cart Abandonment Rate:

  • Cart Abandonment Rate = (Number of paying customers / Number of customers who added items to the shopping cart) * 100%

Average Order Value

The Average Order Value (AOV) is a metric that tracks the average spend per transaction performed in your store. When tracking your AOV, you’ll be able to see how much value each converted customer is bringing to your business. This will allow you to set reasonable goals regarding the future growth of your business. Also, when thinking about ways to increase your revenue and dropshipping sales, you have to consider ways to increase your AOV instead of increasing the number of paying customers.

Formula for Average Order Value:

  • AOV = Total Revenue / Number of Orders

Customer Lifetime Value

Customer Lifetime Value (CLV) shows you how much revenue you can expect from your customers throughout the relationship you’re having with them. Your CLV will depend on the length of the relationship and the repetitiveness of the purchases a customer makes in your dropshipping store. Measuring and averaging the CLV of each customer is beneficial in understanding if you can rely on returning customers, or if they’re more likely to purchase a single time.

Formula for Customer Lifetime Value:

  • Customer Lifetime Value = Average Order Value * Average Frequency of Purchase

Gross profit margin

The gross profit margin represents the percentage you’re making on your sales. With every business’s end goal being to generate profit, this is a key dropshipping KPI that you don’t want to lose sight of. Having a high gross profit margin isn’t only important for your income stream but it also gives you the opportunity to reinvest and grow your business further. When your gross profit margin is low, you’re likely to end up with cash flow problems that can result in shutting your business down.

Formula for Gross Profit Margin:

  • GPM = (Net Sales – Cost of Goods Sold) / Net Sales

Customer demographics

Understanding your customers’ demographics is a key KPI for your future marketing strategy. Most advanced traffic tracking tools will allow you to collect several kinds of data about your visitors, such as their geolocation, age range, sex, and so on. This information will help you create or reevaluate the buyer persona you’ll be using as an example. Having the right buyer persona defined can help you easily put yourself in the shoes of your prospective customers and think about ways your marketing efforts can attract them.

To conclude

At first sight, KPIs might seem confusing and time-consuming to keep track of but be sure that the time and energy invested will pay off in the long run. Now you know which dropshipping KPIs are the most important, so you can easily start tracking them. Learning about the above-mentioned KPIs will help you better understand your business and customers, so you can make more informed decisions in the future. They’ll also help you measure your store’s success and provide you with actionable steps to continue your growth.

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About the Author

Lilla Stefanovszky

Fashion marketing professional turned digital marketer. My name is Lilla and I have been working in the fashion industry for 5 years. Currently working at BrandsGateway and helping with the development of the marketing strategy and on occasions writing articles for our audience. When away form the computer, I enjoy outdoors and running with my dogs.

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