PxL: Transforming eCommerce P&Ls (Part 3)


Let’s begin by taking a look at the eCommerce funnel and where the profit killing and loss creation points are.

Smart Insights has this funnel view:

ChatGPT offered this overview:

  • Website or App Traffic: This is the total number of visitors that arrive at your site or app. The success of this stage is often measured in terms of growth in absolute numbers, as well as the sources of traffic (organic, direct, referral, paid, etc.).
  • Bounce Rate: This is the percentage of visitors who leave your site after viewing only one page. A typical benchmark for bounce rate is between 20% to 45%. Higher rates might indicate issues with your landing pages, while lower rates suggest that visitors are engaging more deeply with your site.
  • Product Page Views: A common benchmark for the percentage of website visitors who actually view a product page is 60-80%.
  • Add to Cart Rate: This is the percentage of visitors who add a product to their shopping cart. Average benchmarks for this stage can range anywhere from 5% to 15%.
  • Cart Abandonment Rate: This is the percentage of visitors who add a product to their cart but do not complete the purchase. On average, this rate is quite high, often around 60% to 75%.
  • Conversion Rate: This is the percentage of visitors who complete a purchase. Average eCommerce conversion rates typically range from 1% to 3%. However, it can go as high as 5-7% for well-optimized sites or specific industries.

The numbers are quite similar to the Smart Insights funnel.

Now, let’s add an additional layer. How do people come to the website (or app)? They can come on their own (branding), via search engines or social media (organic or paid), or via push messages (email, SMS, push notifications, WhatsApp). For existing customers, email is one of the most important channels to drive traffic. (In app-heavy markets like India, push notifications also work very well as long as they are not blocked.)

Of the emails sent, open rates are about 10-20% and clickthrough rates are typically 10% of the opens, which means CTRs are 1-2%. Also, brands send emails to the more engaged consumers on their list to not negatively impact their domain reputation, leaving about 60-70% of the list untouched. Putting it in easy-to-understand numbers:

  • Let’s say a brand has a list of 10,000 email IDs
  • Assume 70% is dormant (inactive)
  • So, they send emails to 3,000 email IDs
  • Of these, 10% open – about 300
  • Of these, 10% clickthrough – about 30
  • Of these 30 site visitors, about 15% will add an item to cart – so about 4
  • Of these, 3% buy – which makes it 1

So, 1 person buys from a list of 10,000 email IDs (from a single email campaign).

eCommerce brands do multiple email campaigns in a month, visitors also come through other methods (memory, SEO, SEM, SMS, and so on). From conversations with US customers, what I have gathered is that email accounts for over 20% of revenues. ChatGPT: “As of my last training cut-off in September 2021, it was common to hear that email marketing could contribute anywhere from 10% to 30% of a company’s total online sales.” Bard: “According to a study by Epsilon, email marketing generates an average of $38 for every $1 spent. This means that email campaigns can account for a significant portion of revenue for ecommerce companies. In fact, some companies report that email marketing accounts for up to 50% of their revenue.”

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.