Future-Proofing eCommerce Sites Means Rethinking Metrics That Matter

By: Ted Rogers
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Amid heightened economic anxiety, future-proofing your eCommerce site can be a tightrope walk.

Just as retailers that stocked up in 2021 during supply chain shortages were future-proofing, few would say that went as expected. In the absence of clairvoyance, traits like agility and flexibility and the creation of alternatives and options work well.

“We often say we’re in unprecedented times, but I don’t know of a time that’s been precedented relative to what we’ve been seeing in the last couple of years,” Digital River Chief Revenue Officer Ted Rogers told PYMNTS, half-jokingly. Behind his quip is the seriousness of the situation.

The convergence of a global pandemic, inflation, recession, war and a half-dozen other troubles have companies scrambling to navigate 2023, which could be as bad, or worse.

“For a lot of the companies that we spend time with and talk to, merchants are looking for the ability to have flexibility in how they react to the market,” he said. “They want to be able to step on the gas when things are great, they want to be able to manage expenses when things aren’t great.”

To achieve that state of agile readiness, Rogers said eCommerce merchants must consider fallbacks like outsourcing the digital back office “to create variability in their expenses” and optimize growth without incurring new fixed costs.

Digital River provides this by handling “the most complex tasks in eCommerce. Payments, tax, fraud, compliance, global back office,” he said. “That’s why a lot of companies will leverage a company like ours to be able to outsource that responsibility, rather than trying to build it as a strategic asset within their own business.”

Timing is opportune for this kind of thinking, as Rogers said for 2023, “Everybody’s thinking about where’s their top-line revenue going to come from. Consumer spending is at risk of being able to continue to grow at the rates that we’ve seen in the past with these headwinds.”

See also: It May Be the End of the Road for Basic Plug-and-Play eCommerce Systems

What’s Your Conversion Rate?

A strategy to future-proof planning for expansion and growth on the precipice of an unpredictable year is rethinking metrics and key performance indicators (KPIs) that matter to profitable eCommerce.

Take conversion rate.

“Conversion rate, generally, is what visitors do you have and how many of them actually transact,” Rogers said. “But there are different components of that. There’s the add-to-cart conversion rate, there’s the checkout conversion rate, and rates can vary.”

As a guideline, he said a visitor-to-transaction conversion rate in the 2.5% to 3% range is “generally regarded as pretty good, pretty average. Anything north of that is really good.”

While there’s often a focus on add-to-cart behavior as a key indicator, Rogers said he prefers to watch checkout conversion.

“You want to have a checkout conversion rate that’s north of 60%,” he said. “Once they’ve put a product in the cart, you want that north of 60%. The higher, the better. But cart abandonment is a real problem.”

He said keeping abandonment in check “really comes down to providing a customer experience that is what the consumer expects. They want to be able to transact in their local currency, they want to be able to transact with local payment methods, they want the experience obviously to be in their own language, and they want overall transparency.”

With cross-border eCommerce scaling in a big way, conversion rates and the reverse logistics of managing returns become crucial. That factors into his definition of transparency.

“Conversion rates can drop by 25% or more when you don’t have the proper payment methods or currency,” he said.

“There’s more choice than ever for consumers as they’re looking for a specific brand’s products,” he added. “A brand being able to own and control its direct-to-consumer relationship gives them greater control over that overall customer experience. They can control and manage that themselves. I think more brands should be looking at [D2C] as a primary channel.”

Read also: Digital River Adds Global Expansion Flexibility With commercetools Software Partnership

Mastering the Pivot

In the harsh commercial winds of winter 2022-2023, companies need to strategize around different scenarios — good or bad — and have the systems and people in place to pivot.

That means being able to support higher demand in one area while managing drop-offs in others.

“It also means being able to take advantage of new opportunities quickly,” he said. “We were just talking about being able to open new markets. Future-proofing is being able to react more than anything so that you don’t falter as a company.”

Going back to his remarks on creating more variable expenses — scaling up or down in response to sudden shifts — that fits nicely into his definition of future-proofing as well.

“It’s setting yourself up for being able to scale and be flexible in reaction to market changes, market demands or market contractions,” Rogers said. “We believe being able to open and react to new market opportunities is one way. Lowering the concentration and diversifying your customer base allows you to be able to future-proof” against these uncertainties.