eCommerce Equation Overview

The eCommerce equation simplifies metrics into a powerful framework. 

Revenue = Traffic × Conversion Rate × AOV

Understand the equation better

Let’s say the Revenue drops or you want it to increase, you can either look at Traffic, Conversion Rate or AOV and different strategies can be put into correcting or improving them.

If revenue drops, check if it is traffic, conversion rate or AOV causing it? If it's traffic then is it organic or paid traffic, if it's the paid traffic then is it because of Off-platform or On-platform? If it's from Off-platform, which campaign is not doing well? Then once the root cause is identified, it can be corrected. 

In terms of strategy, improving traffic can be simply running better ads or increasing budget, improving conversion can be by improving store design or product page so when people land on my page, they will convert. To improve AOV, you can employ vouchers or promo mechanics that will encourage buyers to purchase more in a single order. 

The eCommerce Equation is a proven way many eCommerce and Marketing Managers have been unknowingly using to either identify problems or improve the performance.

Now, every business looks at these metrics differently. That's where Business Deep Dive comes in—it helps you understand each part better, providing a comprehensive understanding of your eCommerce business.

The Business Deep Dive helps to collect, process and organize these metrics and sub-metrics, presenting it in a simple form so you can build your very own analysis. Here’s how you can build a dashboard to compare metrics and get the insights and recommendations related to your metric. 

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