Ecommerce Metrics Explained: The Numbers That Help You Run Your Store

A useful metric helps you make a decision. It should tell you something about demand, the shopping experience, economics, or the customer's relationship with your store. A dashboard full of numbers becomes less useful when nobody can explain what changes in those numbers mean.

Begin with consistent definitions. Record the time period, currency, revenue basis, data source, and denominator. Net merchandise revenue commonly excludes taxes and shipping collected and accounts for discounts and returns; a platform's built-in AOV or sales report may use a different basis. Label your own calculations and read the report definition before comparing them.

Traffic and conversion

Sessions are visits as defined by your analytics tool. A person can have several sessions. Sessions, users, clicks, and orders are not interchangeable.

Purchase conversion rate (CVR) is purchasing sessions divided by eligible sessions when using a session-based definition. If 100 of 5,000 sessions include a purchase, CVR is 2%. Orders divided by sessions is a different calculation when a session can produce more than one order.

Add-to-cart rate is sessions with a cart addition divided by the specified session population. State whether that denominator is all store sessions or only product-view sessions. Use it to investigate product interest and uncertainty, not as a final success measure.

Checkout completion rate is purchasing sessions divided by checkout-start sessions in a consistently defined funnel. If 100 of 200 checkout sessions purchase, completion is 50%. Event-count ratios may differ from session-based ratios.

Cart abandonment rate is the share of relevant carts or cart sessions that do not result in purchase within the defined journey or window. State which unit and window you use. It is not simply one minus whole-store conversion.

Bounce rate in GA4 is the percentage of sessions that were not engaged. Google defines an engaged session by duration, a key event, or multiple page/screen views; it is not merely “someone only viewed one page.” [Source: Google Analytics engagement guidance.]

Revenue per session (RPS) is revenue divided by sessions. $6,000 divided by 5,000 sessions is $1.20. It connects conversion and basket value, but still does not account for costs.

Basket size and acquisition

Average order value (AOV) is revenue divided by orders using a declared revenue basis. $6,000 from 100 orders produces a $60 AOV. Monitor it with contribution and conversion: a larger basket is not always a more profitable one.

Units per transaction (UPT) is units sold divided by orders. It helps distinguish selling more items from increasing price. State whether returned units are excluded.

Customer acquisition cost (CAC) is acquisition cost divided by new customers acquired. $2,000 of relevant acquisition spending and 50 new customers produces a $40 CAC. Include allocated creative, labor, agency, and software costs where appropriate, and distinguish fully loaded CAC from media-only acquisition cost.

Cost per acquisition/action (CPA) uses the chosen action in its denominator. An ad platform's purchase CPA may include returning customers. It therefore may not equal new-customer CAC.

Return on ad spend (ROAS) is ad-attributed revenue divided by ad spend. $4,000 divided by $1,000 is 4×. The numerator depends on the platform's attribution rules. ROAS does not deduct products, fulfillment, returns, or overhead.

Marketing efficiency ratio (MER) commonly means total revenue divided by total ad spend. Some teams use broader marketing spending. Either can be useful if labeled; do not compare the two versions as if they were identical.

Click-through rate (CTR) is clicks divided by impressions. 100 clicks from 10,000 impressions is 1%. Cost per click (CPC) is spend divided by clicks. Cost per thousand impressions (CPM) is spend divided by impressions, multiplied by 1,000. These describe delivery and response, not profitability.

Product economics

Cost of goods sold (COGS) is the accounting cost associated with the products sold. Work with your accounting policy on treatment of inbound freight and related costs; avoid counting the same expense again elsewhere.

Gross profit is net revenue minus COGS. Gross margin is gross profit divided by net revenue. With $60 net revenue and $24 COGS, gross profit is $36 and gross margin is 60%.

Markup is different: gross profit divided by cost. The same example has a 150% markup because $36 divided by $24 equals 1.5. Confusing margin and markup can lead to incorrect pricing.

Contribution before acquisition subtracts defined variable costs from revenue: product cost, fulfillment, shipping subsidy, payment fees, and return-related allowances where appropriate. The remaining amount is available for acquisition, overhead, and profit.

Contribution after acquisition also subtracts allocated acquisition spending. State what is included. A business can show positive contribution and still have a net loss after salaries, rent, software, and other fixed costs.

Break-even ROAS before fixed overhead equals 1 divided by the pre-ad contribution margin, with consistent revenue and cost scope. A 40% margin gives 2.5×. If the margin is zero or negative, no finite ROAS fixes the underlying per-order economics.

Net profit includes the broader business expenses under your accounting approach. Cash flow measures movement of cash. Profit and cash available in the bank can diverge because inventory, payouts, and bills occur at different times.

Customer value and retention

Repeat purchase rate is the share of a defined customer group that makes another purchase in a stated observation window. For example, 30 of 100 first-time buyers repurchasing within 90 days is a 30% 90-day repeat rate. Give every cohort the same opportunity to repurchase.

Customer lifetime value (LTV or CLV) estimates value over a customer relationship. Revenue LTV and contribution LTV answer different questions. For practical early analysis, calculate observed 90- or 180-day contribution by acquisition cohort before projecting an uncertain lifetime.

CAC payback period is the time required for cumulative customer contribution to recover CAC. If acquisition costs $40 and the first order contributes $22, another $18 is needed before acquisition has been recovered. Future revenue alone is not the payback amount.

Return rate can describe returned orders or units. Refund rate can describe refunded revenue. Choose the denominator that matches the question and include the relevant time lag.

Churn measures loss from a defined customer or recurring-revenue population. For ordinary retail purchases, inactivity over an arbitrary short period does not necessarily mean a customer has permanently left. Subscription churn has a clearer event and belongs in a separate subscription dashboard.

Inventory and operating measures

Sell-through rate measures units sold against units available over a defined period. State whether availability includes opening stock plus receipts. Inventory turnover is commonly COGS divided by average inventory value for the period. Compare businesses with similar inventory and accounting practices.

Stockout rate, on-time dispatch, support contacts per order, and chargeback rate can reveal issues that revenue hides. Chargeback calculations vary by provider and reporting program; use the processor's definition when monitoring account performance.

Build a small weekly dashboard

Start with net revenue, orders, purchasing sessions, conversion, AOV, new customers, acquisition spending, contribution, returns, and cash commitments. Add a customer cohort view monthly. Shopify's acquisition guidance also emphasizes evaluating CAC alongside contribution, retention, and payback. [Source: Shopify acquisition guide.]

Write one sentence beside each material change: what happened, what might explain it, and what you will check next. Metrics are a navigation aid, not a substitute for customer evidence or accounting reconciliation.