E-commerce KPIs You Should Track: Formulas and Examples

E-commerce KPIs are a short list of numbers that tell you whether your store actually makes money and where it leaks: attracting visitors, persuading them to buy, or keeping them as customers. Revenue alone is not enough; sales can rise while profit shrinks because ads got more expensive or returns piled up. This guide covers seven core metrics, each with a definition, a formula, a worked example and what to do when it weakens. They are part of the operating system described in the complete guide to starting an online store.

Before the numbers: define your data once

Most mistakes in reading KPIs come from shifting definitions, not bad arithmetic. Before building any dashboard, decide:

• Time period: a week, a month or a season, and always compare like with like.
• Which revenue: before or after discounts? Including shipping and VAT? The clearest choice is net product revenue after discounts, excluding tax and shipping, applied consistently in every report.
• Which orders count: in cash-on-delivery stores, a placed order is not a completed one. Calculate financial KPIs on delivered orders and track the gap between placed and delivered as a separate metric.
• Data sources: your store platform for orders and revenue, an analytics tool such as Google Analytics for sessions and traffic sources, your ads manager for spend, and courier reports for deliveries and refusals.

All examples below are illustrative, for one store over one month, in UAE dirhams, purely to show the calculation: 12,000 sessions, 600 carts, 200 orders shipped of which 180 were delivered, AED 27,000 net revenue, AED 9,000 marketing spend and 120 new customers.

Conversion rate

• Definition: the share of sessions that end in an order.
• Formula: orders ÷ sessions × 100.
• Example: 180 orders from 12,000 sessions = 1.5%.

The overall number hides a lot, so split it by device (mobile versus desktop), source (search, ads, social, email) and customer type (new or returning). If mobile converts far below desktop, the problem is usually the checkout experience on small screens, not the product. Don't benchmark against published averages from industries unlike yours; compare against your own history. When conversion weakens, check page speed, clarity of price and shipping, the number of checkout steps and whether local payment methods are available.

Average order value (AOV)

• Definition: the average amount a customer spends per order.
• Formula: revenue ÷ number of orders.
• Example: AED 27,000 ÷ 180 = AED 150.

The levers are well known: bundles, complementary product suggestions on product and cart pages, quantity discounts, and a free-shipping threshold set just above your current average. Be careful, though: pushing AOV up with heavy discounts can lower profit even as the number rises. Always read AOV alongside gross margin. Pricing strategies for e-commerce works through the effect of discounts and bundles on margin.

Customer acquisition cost (CAC)

• Definition: what you spend, on average, to win one new customer.
• Formula: total marketing costs in the period ÷ new customers in the period.
• Example: AED 9,000 ÷ 120 = AED 75 per new customer.

Decide what goes into costs and stick to it: ads, influencer fees, the value of discount codes given to first-time buyers, and campaign management fees if you want the full picture. CAC is not the same as the cost per purchase your ad platforms report. Each platform credits itself with conversions according to its own attribution model, whereas CAC uses your actual new customers across all channels. Measuring campaign results and ROAS explains the difference in detail.

Compare CAC with the profit on a first order. With a AED 150 average order and a 40% gross margin, the first order earns AED 60, less than the AED 75 it cost to acquire the customer. That is not necessarily a loss, but it means all the profit depends on the customer coming back, which is where the next two metrics come in.

Repeat purchase rate

• Definition: the share of customers who bought more than once in a set period.
• Formula: customers with two or more orders ÷ total customers in the period × 100.
• Example: 400 of 2,000 customers over a year = 20%.

Pick the period to match your product's natural buying cycle. Coffee and skincare are bought every few weeks; furniture may not be bought again for years, so the same window won't fit both. The rate improves with a good post-purchase experience, timely reorder reminders, simple loyalty rewards, and WhatsApp or email follow-ups with customers who agreed to hear from you.

Customer lifetime value (CLV)

• Definition: the total profit you expect from a customer over the whole relationship.
• Simple formula: AOV × purchases per year × years retained × gross margin.
• Example: 150 × 1.3 × 2 × 40% = AED 156 gross profit.

Calculate it in profit, not revenue, then set it next to CAC. Each new customer costs AED 75 and brings about AED 156 of gross profit over the relationship; the gap has to cover salaries, rent, platform fees and, finally, net profit. If CLV approaches or falls below CAC, every extra dirham of ad spend deepens the loss. In a new store without enough history, estimate conservatively and update every quarter. Compare cohorts by the month they were acquired, because customers won during a sale season may behave differently from the rest.

Cart abandonment rate

• Definition: the share of carts created that never became orders.
• Formula: (1 − completed orders ÷ carts created) × 100.
• Example: 600 carts and 180 orders: (1 − 0.3) × 100 = 70%.

The overall figure tells you the size of the problem; its location appears when you measure each step: cart, shipping details, payment, confirmation. The step with the biggest drop is the first thing to fix. Common causes and recovery tactics are covered in cart abandonment and how to win shoppers back.

Return rate and refused-delivery rate

• Definition: the share of delivered orders that were returned in whole or in part.
• Formula: returned orders ÷ delivered orders × 100, or by units instead of orders.
• Example: 9 returns out of 180 delivered orders = 5%.

Log a reason for every return and calculate the rate per product. An item with frequent returns usually points to a misleading photo, a thin description or an inaccurate size chart. In cash-on-delivery stores, add a refused-delivery rate: refused orders ÷ COD orders shipped. In our example 200 were shipped and 20 refused, or 10%, and each refusal costs two-way delivery with no revenue. Controls for both are in shipping, delivery and returns.

Summary table of the seven KPIs

Building a dashboard you will actually use

You don't need complex software; a well-organized spreadsheet is enough at the start. What matters is that each number has a review rhythm, an owner and a defined action when it drifts from target:

• Weekly: conversion rate, AOV, orders against ad spend, refused-delivery rate.
• Monthly: CAC, returns and their reasons, abandonment by checkout step, gross margin.
• Quarterly: repeat purchase rate and lifetime value by customer cohort.

Account for seasons. Compare Ramadan, Eid and White Friday with the same season last year, not with the month before, or you will read a normal seasonal lift as the success of a particular campaign. For planning those peaks, see planning seasonal campaigns.

Common mistakes

• Celebrating numbers that don't connect to sales, such as followers and likes.
• Mixing gross and net revenue, or calculating on placed orders rather than delivered ones.
• Judging a site change after a few days or a handful of orders.
• Relying only on ad platform figures to work out what a customer really costs.
• Tracking twenty metrics without any of them driving a decision.

Next steps

1. Write one definition each for revenue, order and new customer, and use it in every report.
2. Calculate all seven KPIs for last month using the formulas above.
3. Split each one by device, source and customer type before drawing conclusions.
4. Pick the weakest metric against your goals and focus on it for a full month, one clear change at a time.
5. Check the relationship between CAC and lifetime value before raising your ad budget.