What is a reasonable conversion rate? Many people would say, of course, the higher the better. But in reality, this is impossible. Moreover, what store owners pursue is not just the profit of online store operation but also the conversion rate as a single numerical tool. However, determining a reasonable constant can help store owners judge whether the operation of their online store is reasonable or not, and thus improve their store. Generally speaking, different online stores operate different products with varying degrees of product scarcity or regional advantages, which lead to different conversion rates. Currently, there is no authoritative institution that has given the average conversion rate for online stores. However, store owners can calculate the average conversion rate of their own store for a month and use it as a parameter to derive the conversion rates of the top five best-selling stores, and finally determine whether their store's conversion rate is reasonable. If it is significantly higher than theirs, it proves that the operating direction of your store is correct. If it is lower, it indicates that the online store needs improvement.
Most online store owners earn from the price difference. Since they make money from the price difference, naturally, the higher the sales volume, the more they earn. Therefore, the purpose of promotion for Taobao store owners is to increase sales volume.
There are many factors that determine the conversion rate, some of which are controllable, some uncontrollable, and some lie between the two. Specifically, the factors that determine the conversion rate include: web page content structure, product price, product brand, overall store product structure, online store credibility, customer recognition, logistics fees, promotional efforts, and the quality of online customer service. To increase the conversion rate of an online store, one must first distinguish which of the above factors are controllable and then optimize and enhance them accordingly.
What are the ways to increase the conversion rate? What is a reasonable conversion rate? How to make an online store profitable and more profitable essentially revolves around how to increase the store's conversion rate. When opening an online store, all kinds of data can be quantified and statistically analyzed, and each customer visit represents a real existing demand. A smart store owner must be fully aware of all this and should flexibly grasp the tool of conversion rate.
Regarding how to define the conversion rate, first, the conversion rate should be a ratio. But for this ratio, how do we determine the numerator and denominator when running an online store? You will encounter whether the store needs to install a statistical system. Generally, integrated e-commerce systems come with built-in statistics, just activate it yourself. However, due to the consumption of website server resources, many integrated e-commerce systems also rely on third-party statistical systems. The statistical system is the eyes of the online store, showing how many people visit the store each day, which pages they browse, and providing two basic data points: IP and PV. IP represents the number of visitors (third-party systems identify through IP address or computer terminal), and IP volume is similar to the foot traffic of a traditional store. Sales volume refers to how many transactions have been made, usually measured by how many people successfully shop. Therefore, the conversion rate = number of successful transactions / number of visitors = number of successful transactions / IP volume.
What is the significance of the conversion rate?
Therefore, for an operator, it is not only necessary to always pay attention to the store's transaction amount and visitor volume but also to make statistics on the conversion rate and calculate the average conversion rate of your store for a year. This can be used to predict future revenue or plan next year's work.
Why do we need the conversion rate? Isn't discussing the turnover of an online store more meaningful? Yes, any online store needs overall turnover, and the conversion rate is just a ratio. However, knowing and accurately measuring this ratio is more meaningful than knowing the turnover alone. The conversion rate is the golden mean of how good or bad the operating efficiency is. For online store operators, the ratio can explain some issues, for example: if the conversion rate drops, even though the total revenue increases, the promotional costs paid by the store owner may have increased significantly. Conversely, if the conversion rate rises but the traffic decreases, it indicates problems with store promotion, or issues with product structure or webpage optimization.