The Year-End Ecommerce Business Review Every Ecommerce Manager Should Do

Posted by James Dunford Wood 31 Dec 13

How did you perform in the past year? The Christmas season rush is over, the sales are in full swing. It’s time for a post mortem - were visitor numbers up this December from last? Did Average Order Value grow? Above all, what indicators are there for trading for next year?


As the year draws to a close, the work begins on assessing performance over the past twelve months and setting future growth targets. Every business will be doing some kind of business performance audit, but it is especially important for ecommerce managers in multichannel organisations to run an online audit of their own, and not simply be a few lines in a bigger picture. Because it’s not just about revenues, visitors, profit and margin, it’s more to do with some very specific metrics that will be critical for assessing where the opportunities lie in future months.

Indeed for ecommerce companies to thrive, they must manage a process of continuous improvement. It’s very different from managing growth in a traditional offline business - the difference between a slow, steady truck and an accelerating sports car, where even a small adjustment to the controls can have far reaching consequences. How you improved over the past year will set the baseline for improvement over the next.

So let’s look at four distinct areas. I have outlined the more significant metrics to track for each area - there will be others an ecommerce manager may want to look at, but if you do nothing else, the below will give you a good framework for managing growth next year.


Every business should start and end with its customers. This is no less true for online, where the health of your business can best be assessed by analysing customer acquisition and retention over the past year. Remember, anyone can acquire customers if they spend enough money or discount aggressively enough - what we need to know is how profitable they have been, and whether they come back for more,

The metrics you should track are:

  • How many new customers did you acquire over the past year? This should be broken down by month. Are there any seasonal anomalies that you can use to predict customer acquisition for next year?

  • What was your total of ‘hero customers’ at the end of the previous year, compared to now? By what percentage has this grown? How you define hero customer is up to you, but every online retailer should have a definition - typically, it may be those repeat customers who have a customer lifetime value in the top tenth percentile. Most online retailers will make 80% of their profits from the top 20% of their customers, so it’s critical that this metric is moving up - far more important than your overall customer base.

  • Don’t just look at revenue, look at profit. What was the total contribution to revenues and profit of your top 20% of customers? Has this grown in volume over the previous year, and is the percentage comparable?

  • Now look at your growth in repeat customers, and if you can, you should do some cohort analysis here. Typically, how long is it taking for your customers to become repeat customers, and how does this vary by source?

  • Looking more closely at sources, where have your best customers (repeat and hero) come from over the past year? And is there any seasonal anomaly you can identify? Again, this is critical intelligence that will drive your marketing plans for the future.

  • Beyond repeat and hero customers, what other segments can you identify, and how did these segments grow or decline over the year? For example are you acquiring more price sensitive customers - people incentivized by sales, or customers who typically purchase around specific times - festivals, birthdays, or other times of year? This is a very useful exercise, as you may discover new segments that will help you target your marketing activities more effectively.

  • Average Order Value - how has this fluctuated over the year? Are there any seasonal variations that you can use for planning?

  • Last, look at your customer service performance. How many complaints did you get, and how swiftly were they dealt with on average? If you use Net Promoter Score, how has that fluctuated throughout the year?

  • Review feedback, and look at how this was addressed.

  • Last, look at your Returns rate, month by month, and the overall cost to your business.


Analysing product performance is often an area that is left to the merchandisers in a multichannel organisation, with no regard to how they performed online. This is a huge mistake. Someone in the ecommerce team should have a full understanding of how products sold online in exactly the same way as a web-only business.

  • First, identify your best sellers. Any seasonal variations here? Cross reference with page views and marketing activity. You should also look at these figures when sold at full price as well as discounted, as sales activity can distort these figures.

  • Next, which were your most profitable items? Analysing alongside transaction volumes and marketing activity, were any opportunities missed? If so, what can you do to boost these products over the next year?

  • Which products proved to be dead ducks? If any are still on sale, consider clearing them out from your product inventory. However, before you do this, check on their visibility over the year - why were they not selling? Was it because of lack of marketing, incorrect pricing, poor imagery, incomplete descriptions? Don’t assume that because a particular product did not sell that it was necessarily down to a poor market fit.

  • Look at your cross-sells - which products typically sold alongside which other products?

  • Analyse category trends, and see how these were affected by seasons or marketing activity. Look at which product categories show growth, and factor into your plans for next year.

  • Look at your on-site search terms - what terms were being most searched for but not found, that might influence your product mix? Can you identify any trends or patterns, for example as a result of any press or external influences? For example soon after the publication of ‘50 Shades of Grey’, there was a large upsurge in searches for eye-masks. Yes, seriously! Predictable in hindsight. Retailers that were able to capitalise on this quickly did extremely well. This kind of analysis should of course be conducted on a regular basis throughout the year, as you often need to move fast to capitalise on time sensitive trends - but a year end review will enable you to assess how you did here.

  • Looking at your customer segments, how fluid were the purchasing patterns between products and categories? If you have certain customer segments than only buy certain types of products (whether category or price driven), do you need to devise strategies to upsell and cross-sell to these segments?

  • Last, take a look at your competitors - what are they selling that you are not selling? What are their price points? This can prove invaluable for planning your product mix for the next year. You should also take a look at Google Trends.

Sales and Marketing

Sales and above all marketing analysis is an area which is often done the best in an ecommerce operation, as marketing is such an integral part of customer acquisition - and where big money is spent, it needs to be accounted for. So doubtless the digital marketing manager will have this all in hand. However, this should still be considered as part of your overall year-end review, because it’s only when you have a joined-up view of all your online performance metrics that you can start to make meaningful projections and plans for the following year.

  • So, start by taking a look at the customer acquisition from each of your sales channels - telephone, online only, by device, and if you are a multichannel retailer, look at how much offline promotions drove online sales. Split into new customers, repeat customers and hero customers, alongside CLV.

  • Check out how your best customers prefer to shop, and are you doing everything to make their preferred sales channel as seamless as possible?

  • Next, look at customer acquisition by marketing channel. If you already do some kind of attribution modelling, that’s great, but if not, at the very least you should be doing some first source analysis of customer acquisition for each channel to correctly assess its overall impact on the growth of your business. Again, break down into new customers, repeat customers and hero customers, alongside CLV.

  • Turning to ROI, which was your most profitable marketing channel, taking into account CLV? How does this stack up with the marketing goals you set yourself at the beginning of the year?

  • Analyse trends - did marketing costs or ROI fluctuate throughout the year?

  • Identify where your best customers came from, and make a plan of how to get more of them from these channels, and use any seasonal variations to plan activity over the next 12 months.

  • Last, did you meet your sales goals? Using all of the above, set your goals for the next year, with a detailed breakdown of marketing channels that will get you there, based on marketing performance and learnings from the previous year.

Site Performance and Infrastructure

Finally, you should review your overall website performance and make plans for improvements over the next year. Doubtless you will already have a roadmap in place, but it is still worth reviewing this to make sure you are on track and to identify areas you may have missed.

  • Start with a detailed funnel analysis - look at your ecommerce shopping funnel by channel and device, and see where the anomalies occurred over the year. Were there any performance issues, and what caused them?

  • Thoroughly review the demographics of your traffic to see if there are any trends or opportunities you can leverage over the next year. Are you getting more visitors from certain countries that you need to service better? Should you consider foreign language messaging, or alter shipping policies?

  • Review performance by device - how well has your mobile site performed, and identify any trends towards different shopping patterns - for example is tablet traffic growing?

  • Cross referencing with your product analysis, can you identify any issues with the product pages or check out process that may have affected sales?

  • Look at how your site speed fluctuated throughout the year. Could you be doing more to optimise the site? Will you need extra server capacity over the next 12 months?

  • Finally, each year you should also have a good hard look at your ecommerce platform. Is it still fit for purpose? How has it performed over the past year, and are there any issues or fixes you need to prioritise in the near future, or extensions you need to consider to boost performance? For example - analytics. Do you have the right data analysis tools in place, and do you need to speak to us here at Ometria about a free trial of our platform? If you are struggling to track some of the metrics outlined here, talk to us about how to do it next year!

  • Above all, If you grow as you expect to grow in the next year, and then some, will your shopping platform be able to scale? As you know, it can take a year or more to re-platform, so you need to be prepared well in advance for any major changes you need to make.

Have a great year ahead!

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