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Business Deep Dive: Using the eCommerce equation for decision-making

Updated: Apr 19

eCommerce business analytics

Making decisions based on instincts and gut feelings can be risky, especially in eCommerce where customers have abundant choices. It becomes crucial for brands to rely on data-driven insights rather than assumptions, as one wrong decision is all it takes to lose customers. 

Data-driven decisions almost guarantee success — helps in efficient acquisition, and increase the chances of retention, which eventually makes the brand profitable. 

A BARC research found that companies using data to make decisions increased their profit by 8% and reduced their cost by 10. 

And it makes sense. 

When you launch a product, there are emotions attached to it. Your “gut feeling” might tell you that it’ll sell. But data will always tell you what’s true — discontinuing a product that customers don’t want can help you save inventory costs and create room for new products. 

In this blog, we discuss how Graas Business Deep Dive enables you to make these data-driven decisions to increase your sales and profitability. 

Recap: What is the eCommerce equation? 

The eCommerce equation simplifies the key metrics that drive the revenue of an eCommerce business. 

It breaks down revenue into three essential components: traffic, conversion rate, and average order value (AOV). The equation is represented as follows: 

Revenue = Traffic × Conversion Rate × AOV 

This equation provides a simple approach to analyze and optimize an eCommerce business's performance. 

Let's consider a hypothetical situation where an online clothing store wants to increase its revenue. By analyzing the eCommerce equation, the store can identify which component(s) need improvement. 

If the issue lies with traffic, the problem is brand awareness. The store could focus on driving more visitors to its website through targeted marketing campaigns, search engine optimization (SEO), or social media advertising. 

Alternatively, if the conversion rate is low, the store might need to enhance its website's user experience, product descriptions, or checkout process to convert more visitors into paying customers. 

What if the traffic and conversion rates are satisfactory, but the AOV is low? The store could implement strategies to encourage customers to spend more per order. To make them spend more, offer bundle deals, cross-selling complementary products, or providing incentives for reaching specific order value thresholds. 

By breaking down revenue into these three components, the eCommerce equation makes it easy to pinpoint areas for improvement and develop targeted strategies to improve performance and profitability. 

However, the variables of the eCommerce equation are different for every brand. Some brands consider revenue as a whole, while some might only want to consider revenue without cancelled/returned orders. This is where Business Deep Dive comes in—it helps you understand each of these variables based on your preference. 

How does Business Deep Dive help you analyze your eCommerce performance?

Running an analysis of eCommerce sales data based on the eCommerce equation is crucial for brands to identify areas for improvement. 

However, doing this the traditional way is not the ideal approach. 

The traditional method involves logging into multiple seller accounts, downloading sales reports, manually converting heterogeneous data into a homogeneous format, and then attempting to find insights. 

Not only is this process time-consuming, but it's also prone to errors, and time is one of the most essential components in eCommerce. With Business Deep Dive, this entire process can be automated. 

Here's how Graas Business Deep Dive helps you analyze your eCommerce sales data

1. Compare the metrics across channels, stores, and products 

With Graas Business Deep Dive, you can easily compare how your products are performing across different sales channels and stores. 

If a particular product is excelling in one channel but underperforming in others, you can increase your marketing efforts on the high-performing channel to capitalize on its success. 

Conversely, you can measure which channels or stores are delivering the best conversion rates or average order values (AOV) and adjust your strategies accordingly. 

Moreover, you can compare the performance of individual products to identify your best-selling and worst-selling items. 

For your top-selling products, you can run targeted campaigns to amplify demand further. For your underperforming products, you can initiate clearance sales to minimize inventory costs and make room for new product introductions.

2. Analyze how other metrics impact your revenue

Graas Business Deep Dive gives you a comprehensive understanding of your revenue flow. Since revenue is co-dependent on traffic, average order value (AOV), and conversion rate – Business Deep Dive illustrates how they impact your revenue.

eCommerce revenue analysis

Let's say you're generating good revenue, but it's primarily driven by high traffic volumes. However, your conversion rate and AOV are relatively low. Looking solely at the revenue metric might give you the impression that everything is going well, but low conversion rates and AOV could become problematic if your traffic dips.

eCommerce revenue analytics

With Business Deep Dive, you can identify potential vulnerabilities and take proactive measures to ensure your revenue doesn’t suffer. The platform lets you understand how tweaking traffic, conversion rate, or AOV can help you increase your overall revenue.

3. Get a detailed analysis of traffic, conversion, and average order value 

A detailed analysis of the traffic, conversion, and average order value (AOV) provides invaluable insights into your online business's performance. 

In Graas Business Deep Dive, each of these metrics is further broken down into 200+ granular metrics, enabling you to identify specific areas for optimization. 

For example, by analyzing the traffic metrics, such as visitor behavior, ad clicks, and bounce rates, you can assess the effectiveness of your marketing campaigns and overall brand awareness efforts. This insight enables you to make data-driven decisions to improve your customer acquisition strategies and drive more qualified traffic to your online store. 

eCommerce traffic analysis

The conversion metrics provide visibility into critical factors like ad conversions, order volumes, and buyer counts. By identifying bottlenecks in your conversion funnel, you can take proactive measures to enhance the customer experience, streamline the purchasing process, and ultimately increase sales.

eCommerce conversion rate analytics

Moving on to AOV, you can track metrics like revenue per buyer, sales per order, items per order, canceled order AOV, and returned order AOV. These metrics will provide information about your customer's purchasing behavior. With this information, you can implement strategies like bundle deals, cross-selling, or targeted promotions, increasing your average order values.

AOV Average Order Value Deep Dive

4. Compare current sales performance with past performances

Graas Business Deep Dive allows you to compare your current sales performance with past performances over different time periods. This feature is particularly valuable when evaluating the effectiveness of recurring campaigns or promotions.

For example, let's say you've been running a double-digit campaign for the past couple of years. With Business Deep Dive, you can easily track how much revenue your double-digit campaign generated this year compared to the previous year. You can also analyze how other metrics, such as traffic, conversion rate, and average order value (AOV), have fluctuated over time for this specific campaign. 

This feature to compare performance across different time frames for different channel/stores allows you to identify trends and spot anomalies.

5. Analyse your performance using different views

Graas Business Deep Dive offers various view options that enable you to analyze your performance data from different perspectives, providing you with a comprehensive understanding of the changes in eCommerce metrics. The ability to choose from four different views offers flexibility and allows you to run your analysis based on your specific needs.

  1. Difference View: By selecting the Difference view option, you can quickly identify the percentage difference in values between your primary column and secondary columns. This view is particularly useful for comparative analysis, allowing you to easily spot deviations or fluctuations in metrics across different segments or time periods. For example, if your primary column shows a revenue of $10,000 and the secondary column shows $8,000, the Difference view will display a -20% change. 

  1. Proportion View: This view is invaluable when you need to understand how secondary columns relate to your primary column. By expressing values as a percentage of the primary column, you can gain insights into the relative contribution or impact of different factors on your overall performance. For example, if your primary column shows 1,000 visitors and the secondary column shows 200 visitors, the Proportion view will display 20% for the secondary column. 

  1. Trend View: This view is particularly helpful for monitoring the effectiveness of campaigns, identifying seasonal patterns, or conducting year-over-year comparisons. By adjusting the time range, you can analyze trends over specific periods that are relevant to your business. For example, if your conversion rate for the current month is 5% and the previous month's conversion rate was 4%, the Trend view will show a 25% increase. 

  1. Currency View: This view allows you to analyze your performance data in local settlement currencies. This feature is helpful for businesses operating in multiple regions or those that need to report financial metrics in different currencies.  

6. Use the drawer functionality to get insights and recommendations

To get a comprehensive understanding of your eCommerce performance, Graas Business Deep Dive offers a powerful drawer functionality. This feature provides detailed insights and actionable recommendations for your specific business metrics, allowing you to identify opportunities for growth and address potential challenges proactively. 

By accessing this feature, you gain insights into factors driving your metrics, such as revenue, traffic, conversion rates, and average order values. These insights are derived from a deep analysis of your data, allowing you to understand the root causes behind performance trends and make informed decisions. 

Furthermore, the drawer functionality goes beyond merely presenting insights; it also provides tailored recommendations based on the identified trends and patterns. These recommendations suggest targeted strategies to improve specific areas of your business, such as optimizing marketing campaigns, enhancing product pages, or adjusting inventory management strategies. By executing these recommendations, you can effectively allocate resources and implement data-driven initiatives to drive growth and profitability. 

The drawer functionality eliminates the need for manual data analysis and interpretation, saving you valuable time and resources. With its user-friendly interface, you can quickly access the insights and recommendations relevant to your business, allowing you to stay ahead of the competition. 

eCommerce insights and recommendations

Analyze your sales with Graas Business Deep Dive 

With Graas Business Deep Dive, you can make data-driven decisions for your eCommerce business. This eCommerce analytics platform offers several key benefits: 

  1. Get a unified view of data: Graas Business Deep Dive consolidates your sales data from multiple sources, including Lazada, Shopee, Shopify, Tokopedia, Amazon, Salesforce, and Flipkart, providing you with a centralized view of your eCommerce performance. 

  1. Find the root cause of performance dips and spikes: By looking into the granular metrics and insights offered by Business Deep Dive, you can quickly identify the underlying causes behind fluctuations in your sales performance. For instance, if you notice a sudden dip in revenue, you can pinpoint whether it's due to a decline in traffic, a lower conversion rate, or a drop in average order value, allowing you to take targeted corrective actions. And you can even find out why the related metric dipped. 

  1. Derive actionable data: With its advanced eCommerce analytics capabilities, Business Deep Dive helps you identify hidden opportunities for growth, predict potential threats, and provide actionable recommendations to optimize your eCommerce strategies.

The best part of Graas Business Deep Dive is the flexibility and customization options it offers. You can add as many dashboards as needed, tailoring the platform to your specific business requirements. 

Additionally, you can analyze the granular data as deeply as you want, enabling you to pinpoint the reasons and find insights to make informed decisions. 


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