Actionable Metrics for Growing E-Commerce Companies
Little is more important in e-commerce than understanding the overall financial health of your business. Actionable data for e-commerce companies offers a clear insight into where your business is now, where you have been and how you can move forward…and grow. Data gives direction on what new products to add, when to transition to a new sales channel, when to hire additional employees, and other critical business decisions.
But, if you’re like many e-commerce business owners, you probably don’t have easy access to all numbers, maybe you have trouble understanding how to apply the data to grow your business and there’s even a possibility you’re unsure if the financial information you pulled last month is accurate at all.
Stats show us that 53% of retail businesses and 97% of e-commerce companies end up failing within the first four years due to a variety of reasons such as lack of business planning, no knowledge of how to apply financial data, no experience in record keeping, emotional pricing and failing to pay taxes.
It doesn’t have to be that way.
Are you ready to take action? It’s critical to take the time to understand what is making your business work; continual measuring, testing and ongoing improvements are key to a successful business.
How do you know if business is working? Think about it. What if you had to go on Shark Tank tomorrow morning, stand in the spotlight and handle interrogations about your e-commerce business.
Would you be able to confidently answer questions like these?
1. Is your business profitable?
2. Are you growing? At what rate?
3. What are your top 10 products by margin? Your worst 10?
4. What is your cost to acquire a new customer?
5. If you were to invest $ “X” in inventory, how much profit could you potentially have in a month, a quarter, six months, a year?
6. What is your average order value?
7. How much cash do you have right now to purchase new inventory?
8. What have you collected in sales tax? When is it due?
9. What is your campaign profitability? Return on ad spend?
10. How much did you charge for shipping? What did you spend?
Knowing the numbers and having the right financial insight will enable you to have the answers to these kinds of questions when you need it.
8 Metrics You Need to Know to Grow
If you’ve only been looking at the balance in your checking account at the end of the month, it’s time to dig (a lot) deeper. Here are some of the top data for e-commerce companies to watch:
1. Gross Sales
3. Gross Margin by Product
4. Net Income
5. Return on Ad Spend
6. Product Profitability
7. Customer Acquisition Cost
8. Inventory Value by product
Data for E-Commerce Companies: Where to Find It
One of the great things about being in e-commerce is that you have no shortage of measurable data at your fingertips. The challenge is how to harness all that data, make it meaningful and use it to manage your business. Finding the right accounting solution is a critical component to capture data and understand your financial health.
At Lumiola, our team of in-house accountants provide all the data you need in real-time (not just once a month). We specialize in e-commerce companies and will help you understand the numbers you need for important business decisions. Entirely cloud-based, our top-of-the-line technology is reliable, secure and available 24/7 on any device.