AOV vs CR vs RPV vs GMV in Ecommerce: Important Metrics You Should Know (2024)

Whether you’re an experienced ecommerce player or just entering the market, understanding and gauging the performance of your online store is vital for growth and profitability.

The four principal ecommerce metrics that can largely impact your revenue are the Average Order Value (AOV), Conversion Rate (CR), Revenue Per Visitor (RPV), and Gross Merchandise Value (GMV).

What are eCommerce Metrics?

Ecommerce metrics are measurements that help you understand how your online store is performing. They provide an overview of the overall business health and can help in decision making and strategic planning.

These four metrics are essential for evaluating the performance of your ecommerce store from various perspectives, revealing the financial health of your business, and forming effective growth strategies.

1. Average Order Value (AOV)

Average Order Value (AOV) representing the average total of each order placed by customers over a specific period of time.

The importance of AOV metric is it provides a glimpse into customer behavior indicating how much they’re prepared to spend each time they shop from your online store.

Using the ecommerce AOV metric is useful in measuring and evaluating your pricing strategy, promotional offers, and product selection. Morever, monitoring AOV enables insight into whether customers buy just one product or add multiple items to their cart every time they make a purchase. AOV can also reveal whether they’re purchasing high-value items or inexpensive products.

To calculate AOV, you simply divide your total revenue by the number of orders. For example, if your total revenue is $20,000 and you’ve had 400 orders, your AOV is $50.

What does high/low AOV in e-commerce means?

Higher AOV

Having a high Average Order Value (AOV) means that, on average, customers are spending a significant amount of money each time they place an order with your online store. This could indicate that they are purchasing multiple items or buying high-cost products.

A high AOV is generally seen as favorable as it increases revenues.

Lower AOV

On the other hand, a low AOV ecommerce metric suggests that customers are spending less money per transaction. This could mean they are only purchasing one or two low-cost items at a time.

A low AOV ecommerce isn't necessarily bad, but it might signal opportunities to up-sell or cross-sell to increase the total purchase amount of each order, and hence, increase the overall revenue.

2. Conversion Rate (CR)

The Conversion Rate (CR) stands as one of the vital heartbeat metrics to ecommerce business.

Conversion Rate signifies how successful your site is at funneling visitors to complete a conversion, usually a purchase. It’s a window into the effectiveness of your marketing initiatives, offering insights on customer behavior and your website’s usability.

Simply put, if you have a high site traffic volume but low sales figures, your conversion rate is low. A high conversion rate, conversely, indicates your ecommerce strategy is on the right track - your site design is user-friendly, your product offerings and prices are attractive, and your users find what they’re looking for on your site.

Calculating your conversion rate is reasonably straightforward. It’s the total number of conversions divided by your site’s total visitors within a set timeframe, multiplied by 100%. For example, if your site had 15,000 visitors in a month and made 1,500 sales, your conversion rate for that month would be (1500/15000) x 100% = 10%.

Remember, optimizing conversion rates shouldn’t be a one-time project, but an ongoing strategy. Keep testing and tweaking various site elements to continually improve the user experience and bolster sales.

What is a good conversion rate?

A "good" ecommerce Conversion Rate (CR) can vary greatly depending on the industry, region, and the type of goods being sold. However, across industries, a general benchmark is that a good ecommerce CR is typically around 2.5% to 3%.

This means that 2 to 3 out of every 100 visitors to your online store are making a purchase, keep in mind that even a small improvement in CR can significantly boost your revenue!

3. Revenue Per Visitor (RPV)

Revenue Per Visitor (RPV) is another vital ecommerce metric that tells you how much revenue each visitor to your site brings on average.

Ecommerce RPV is calculated by dividing your store’s total revenue by the number of visitors. This metric is beneficial in assessing the effectiveness of your online marketing strategies and ensuring they’re cost-effective.

It allows you to see whether your marketing and promotional efforts are truly paying off in terms of increased revenue.

Let’s say your online store makes $50,000 in one month and attracts 20,000 visitors. To calculate the RPV, you would divide the total revenue ($50,000) by the number of visitors (20,000). The result is $2.50 - so, on average, each visitor to your site that month generated $2.50 in revenue.

If your RPV is higher than the cost of acquiring (CAC) a visitor (through marketing or advertising costs), you’re in a profitable situation. But if it’s the other way round, it indicates that you are spending more to attract customers than they are bringing in as revenue.

4. Gross Merchandise Value (GMV)

Gross Merchandise Value (GMV), also known as Gross Merchandise Volume, gives insights into the overall volume of sales over a specific period. Technically, GMV refers to the total value of goods sold through an ecommerce platform before any deductions for fees, commissions, returns, or cancellations.

This metric helps you understand the raw sales volume, giving an immediate understanding of the business’s scope and size. Therefore, tracking GMV can help you gauge the growth rate of your business and determine if you’re reaching your sales targets.

It’s worth mentioning that while GMV can show impressive sales volumes, it’s NOT indicative of profit. Nevertheless, a steady increase in GMV signals a positive wave in attracting and selling to customers.

Calculating GMV can be quite straightforward; you multiply the price at which each product was sold by the number of those items sold within a given time period. For instance, if you sold 250 laptops at $300 each, your GMV for that particular product would be $75,000 in that specific time period.

Strategizing and focusing on optimizing GMV can help increase your user base and order volumes, and when paired with other vital ecommerce metrics like AOV, CR, RPV, you will have a comprehensive assessment of your business’s performance and profitability.

What is the difference between Revenue and GMV?

While GMV and Revenue are both important metrics for ecommerce businesses, they represent different aspects of your sales performance.

GMV, as mentioned earlier, is the total value of merchandise sold through your platform, without deducting any fees or expenses. It includes the total sales price of all products, including those sold by third-party sellers on your platform, if applicable.

Revenue, on the other hand, is the actual income your business generates from sales after deducting any fees, discounts, or expenses. For example, if you're selling products on behalf of third-party sellers, your revenue would be the commission or fees you earn from those sales, rather than the full GMV.

In summary, GMV represents the total sales volume, while Revenue represents the actual income your business earns from those sales. Both metrics are crucial for understanding your ecommerce business's performance and making informed decisions to drive growth.

Conclusion

Understanding and utilizing these four fundamental ecommerce metrics – AOV, CR, RPV, and GMV, can help businesses maximize their profitability and ecommerce success.

By tracking these metrics, you can spot trends, enhance customer experiences, streamline marketing efforts, and optimize your investment returns. As you set up your tracking and performance reporting, keep these four metrics at the top of your list.

Remember, data guides the best decisions, and harnessing these insights can set you apart from your competition.

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