Ecommerce metrics glossary

Average Order Value is the mean dollar amount spent each time a customer places an order on your store. It is calculated by dividing total revenue by the number of orders over a given period. AOV is one of the simplest yet most impactful levers for growing revenue without acquiring new customers.

Customer Lifetime Value is the total revenue a business can expect from a single customer account over the entire duration of their relationship. It combines purchase frequency, average order value, and customer lifespan into one forward-looking metric. CLV helps you understand the long-term worth of acquiring and retaining each customer.

Customer Acquisition Cost is the total amount of money spent on marketing and sales to acquire a single new customer. It includes all advertising spend, marketing salaries, tools, and overhead divided by the number of new customers gained during that period. CAC is one of the most important unit economics for any ecommerce business.

Return on Ad Spend measures the revenue generated for every dollar spent on advertising. It is a ratio that tells you how effectively your ad campaigns are turning spend into sales. A ROAS of 4x means you earn $4 in revenue for every $1 you spend on ads.

Ecommerce Conversion Rate is the percentage of website visitors who complete a purchase. It is calculated by dividing the number of sessions that result in an order by the total number of sessions. Conversion rate is a core indicator of how well your store turns traffic into paying customers.

Repeat Purchase Rate is the percentage of customers who have made more than one purchase from your store. It is calculated by dividing the number of customers with multiple orders by your total customer count. This metric reflects how well your business retains customers and drives loyalty over time.

Ecommerce Profit Margin is the percentage of revenue that remains as profit after subtracting all costs including cost of goods sold, shipping, platform fees, advertising, and operating expenses. It tells you how much of every dollar in sales your business actually keeps. Profit margin is the ultimate measure of business efficiency.

Cost Per Mille is the cost an advertiser pays for one thousand ad impressions. The word mille comes from Latin meaning thousand. CPM is the standard pricing model for brand awareness and display advertising campaigns across platforms like Meta and Google.

Customer Churn Rate is the percentage of customers who stop purchasing from your store over a given period. It is calculated by dividing the number of customers lost during a period by the number of customers at the start of that period. Churn rate is the inverse of retention and a key signal of customer satisfaction.

The LTV to CAC Ratio compares the lifetime value of a customer to the cost of acquiring that customer. It is calculated by dividing Customer Lifetime Value by Customer Acquisition Cost. This ratio is one of the most important indicators of business sustainability and growth efficiency.

Revenue Per Session is the average amount of revenue generated by each visitor session on your store. It is calculated by dividing total revenue by total sessions. Unlike conversion rate, this metric accounts for both the likelihood of a purchase and the value of that purchase.

Refund Rate is the percentage of orders that result in a full or partial refund. It is calculated by dividing the number of refunded orders by the total number of orders. A high refund rate can indicate product quality issues, misleading product descriptions, or fulfillment problems.

Cart Abandonment Rate is the percentage of shoppers who add items to their cart but leave without completing the purchase. It is calculated by dividing the difference between carts created and carts completed by the total carts created. This metric reveals how much potential revenue is slipping through the cracks at checkout.

Cost Per Acquisition is the total advertising cost required to generate one conversion, whether that is a purchase, a lead, or another defined action. It is calculated by dividing total ad spend by total conversions. CPA is the advertising-specific cousin of CAC and focuses specifically on paid channel efficiency.

Average Revenue Per User is the total revenue divided by the total number of unique customers over a given period. It measures how much revenue each customer generates on average and provides a snapshot of per-customer monetization. ARPU differs from AOV in that it accounts for all purchases a customer makes, not just a single order.

Inventory Turnover measures how many times a business sells and replaces its inventory over a given period. It is calculated by dividing cost of goods sold by the average inventory value. A higher turnover means you are efficiently converting inventory into sales.

Click-Through Rate is the percentage of people who click on a link, ad, or call-to-action after seeing it. It is calculated by dividing the number of clicks by the number of impressions. CTR is a fundamental metric for measuring the relevance and appeal of your ads, emails, and search listings.

Gross Sales is the total revenue from all sales before any deductions for discounts, returns, or allowances. It represents the full value of everything your store has sold at sticker price. Gross sales is the starting point for understanding your top-line performance before costs erode it.

Cost Per Click is the average amount you pay each time someone clicks on one of your ads. It is calculated by dividing total ad spend by the number of clicks received. CPC is the most granular measure of how efficiently your ads drive traffic to your store.

Customer Retention Rate is the percentage of existing customers who continue to purchase from your store over a given period. It is calculated by subtracting new customers from end-period customers, dividing by start-period customers, then multiplying by 100. Retention rate is the positive inverse of churn and directly measures your ability to keep customers coming back.

Sell-Through Rate is the percentage of inventory that is sold during a given period compared to the amount of inventory received. It is calculated by dividing units sold by units received and multiplying by 100. This metric tells you how quickly your products move off the shelves.

Marketing Efficiency Ratio is the total revenue generated divided by total marketing spend across all channels. Unlike ROAS which measures individual channel performance, MER captures blended marketing efficiency across your entire business. It answers the fundamental question of how much revenue each marketing dollar produces.

Add to Cart Rate is the percentage of website sessions in which a visitor adds at least one item to their shopping cart. It is calculated by dividing the number of sessions with an add-to-cart action by the total number of sessions. This metric measures the effectiveness of your product pages at generating purchase intent.

Break-Even ROAS is the minimum return on ad spend required to cover all your costs and avoid losing money on advertising. It is calculated by dividing 1 by your profit margin as a decimal. Any ROAS above your break-even point means your ads are generating actual profit.

Gross Margin is the percentage of revenue retained after subtracting the direct cost of goods sold. It is calculated by subtracting COGS from revenue, dividing by revenue, and multiplying by 100. Gross margin shows how efficiently a business produces or sources its products before accounting for operating expenses.

Cost of Goods Sold is the total direct cost of producing or purchasing the products a business sells during a specific period. It includes raw materials, manufacturing labor, and any other costs directly tied to production. COGS is subtracted from revenue to calculate gross profit and is a fundamental component of every profitability metric.

Net Revenue is the total income a business earns from sales after deducting returns, refunds, discounts, and allowances from gross revenue. It represents the actual money your business takes in from customers and is the most accurate measure of top-line performance. Net revenue is what hits your bank account after all customer-facing adjustments.

Net Sales is the total revenue from goods sold minus sales returns, sales allowances, and sales discounts. It is the standard measure of a company's actual sales performance as reported on income statements. Net sales is often used interchangeably with net revenue, though it specifically focuses on the sales of goods rather than all revenue streams.

Gross Merchandise Value is the total value of merchandise sold through a marketplace or ecommerce platform over a given period before any deductions. It includes the full sale price of every item sold, regardless of returns, discounts, or fees. GMV is commonly used to measure the overall scale and transaction volume of an ecommerce business or marketplace.

Checkout Conversion Rate is the percentage of shoppers who begin the checkout process and successfully complete their purchase. It is calculated by dividing completed checkouts by initiated checkouts. This metric isolates the effectiveness of your checkout flow from broader site conversion, helping you pinpoint friction in the final step of the buying journey.