Many factors affect the conversion rate. Some are controllable, some are uncontrollable, and some lie between the two. Specifically, the factors that determine the conversion rate include: web content structure, product price, product brand, overall store product structure, online store credibility, customer recognition, logistics fees, promotion efforts, and the quality of online customer service. To improve the conversion rate of an online store, you first need to distinguish which factors are within your control, and then optimize and enhance these controllable factors.
What is the significance of the conversion rate? Why focus on the conversion rate when total revenue might seem more meaningful for an online store? Indeed, any online store needs overall revenue, and the conversion rate is just a ratio. However, knowing and accurately measuring this ratio is more significant than knowing the revenue alone. The conversion rate is the golden mean that reflects the efficiency of operations. For online store operators, ratios can reveal issues. For example, if the conversion rate drops, even though total revenue increases, the promotion costs paid by the store owner may have risen significantly. Conversely, if the conversion rate improves but traffic decreases, it indicates problems with store promotion, product structure, or website optimization.
What is a reasonable conversion rate? What are the ways to improve the conversion rate? Therefore, for an operator, it's not only important to pay attention to the transaction amount and traffic of the online store, but also to make statistics on the conversion rate and calculate the average conversion rate of the store over a year. This data can be used to predict future revenue or plan for the next year.
To define the conversion rate, it should first be considered as a ratio. But how do we determine the numerator and denominator of this ratio? When running an online store, you may encounter whether the store needs a statistical system. Generally, integrated e-commerce systems come with built-in statistics that can be activated. However, since it consumes server resources, many integrated e-commerce systems use third-party statistical systems. A statistical system is the eyes of an online store. It can show how many people visit the store each day, which pages they browse, thereby obtaining two basic data points: IP and PV. IP represents the number of visitors (third-party systems identify this through IP addresses or computer terminals), similar to foot traffic in a traditional store. The volume of transactions refers to the number of successful deals, usually measured by the number of successful shoppers. Therefore, the conversion rate = number of successful transactions / number of visitors = number of successful transactions / IP volume.
Most online stores earn from the price difference. Since profit comes from the price difference, naturally, the higher the sales volume, the more profit. Thus, the purpose of promotion for Taobao store owners is to increase sales volume. How to make an online store profitable and more profitable, essentially revolves around improving the store's conversion rate. In online stores, all data can be quantified and statistically analyzed, and every customer visit represents real demand. A smart store owner must fully understand all this and skillfully use the conversion rate as a tool.
What is a reasonable conversion rate? Many would say, of course, the higher the better, but in reality, that's impossible. Moreover, the goal of store owners is not just one numerical tool like the conversion rate. However, determining a reasonable constant can help store owners judge whether their store operations are reasonable and thus improve them. Generally, different online stores operate different products, with varying degrees of product scarcity or regional advantages, resulting in different conversion rates. Currently, no authoritative institution has provided the average conversion rate for online stores, but store owners can calculate the average conversion rate of their own store over a month and use this as a parameter to deduce the conversion rates of the top five best-selling stores. Finally, this helps determine if your store's conversion rate is reasonable. If it's significantly higher than theirs, it proves that the store's business direction is correct. If it's lower, it suggests the store needs improvement.