The Essential Key Metrics & KPIs to Track in Dropshipping

Running a successful dropshipping business requires keeping an eye on several key metrics and KPIs.

These essential metrics help you understand how well your store is performing, where you can improve, and how to make smarter business decisions.

Key Metrics & KPIs For A Dropshipping Business

If you want to crush it in the dropshipping game, you've got to keep an eye on some key metrics and KPIs.

Ever wondered why people are adding items to their carts but not checking out? Or why some customers keep coming back for more? Tracking things like cart abandonment rate and customer retention rate gives you insights into customer behavior and helps you create better shopping experiences.

Metrics like page load time and order accuracy rate might not sound exciting, but they’re crucial for keeping your store running smoothly and keeping customers happy.

So, whether you're just starting out or looking to take your store to the next level, keeping tabs on these key metrics will help you make informed decisions and grow your business. Let's dive in and check out the must-track metrics for every dropshipper!

1. Profit Margin:

Your profit margin is how much money you keep after covering all your costs. Imagine you sell a t-shirt for $20, but it costs you $10 to buy and ship it. Your profit margin is the $10 left over, which is 50%. A higher profit margin means you’re making more money on each sale.

2. Customer Acquisition Cost (CAC)

CAC is the amount of money you spend to get a new customer. This includes everything like ads, marketing campaigns, and promotions. If you spent $100 on ads and got 10 new customers, your CAC is $10. Knowing your CAC helps you make sure you’re not spending too much to get new buyers.

3. Average Order Value (AOV):

AOV tells you how much money, on average, each customer spends per order. If your store made $1,000 from 20 orders, your AOV is $50. A higher AOV means customers are buying more items or more expensive products each time they shop.

4. Return on Investment (ROI)

ROI shows how much profit you make from your investments, like ads or new tools. If you spent $50 on an ad and made $200 in sales, your ROI is 300%. This tells you which investments are really paying off and which might need some tweaking.

5. Customer Lifetime Value (CLV)

CLV is the total amount of money a customer is expected to spend in your store over their lifetime. If a customer spends $50 every month and sticks around for a year, their CLV is $600. This helps you understand how valuable each customer is and how much you can spend to keep them happy and coming back.

6. Conversion Rate (CVR)

Your conversion rate is the percentage of visitors to your online store who make a purchase. If 100 people visit your site and 5 of them buy something, your conversion rate is 5%. A higher conversion rate means more of your visitors are turning into paying customers.

7. Cart Abandonment Rate

This metric shows how many customers add items to their cart but leave your store without completing the purchase. If 50 people add items to their cart and 10 of them don’t finish the purchase, your cart abandonment rate is 20%. Reducing this rate means fewer lost sales and more happy customers.

8. Click-Through Rate (CTR)

CTR measures how many people click on your ads or links compared to how many see them. If 1,000 people see your ad and 50 click on it, your CTR is 5%. A higher CTR means your ad is catching people’s attention and getting them to take action.

9. Cost Per Click (CPC)

CPC is how much you pay each time someone clicks on your ad. If you spent $100 on ads and got 50 clicks, your CPC is $2. Keeping your CPC low means you’re getting more clicks for less money, which is great for your budget.

10. Return on Ad Spend (ROAS)

ROAS tells you how much revenue you make for every dollar spent on ads. If you spend $100 on ads and make $400 in sales, your ROAS is 4:1. A higher ROAS means your ads are working well and bringing in more money than you’re spending.

11. Revenue

Revenue is the total money your store makes from all your sales. It's like your store’s report card! If you sold $5,000 worth of products this month, your revenue is $5,000. Watching your revenue grow is a great way to see how well your store is doing.

12. Gross Profit

Gross profit is the money you have left after you subtract the cost of your products (COGS) from your revenue. So, if your revenue is $5,000 and your COGS is $3,000, your gross profit is $2,000. It shows how much you’re making before you pay for things like ads and shipping.

13. Net Profit

Net profit is what you actually keep after paying all your expenses, including COGS, marketing, and shipping. If your gross profit is $2,000 and your other expenses are $1,000, your net profit is $1,000. This tells you how much money you’re truly earning.

14. Total Sales

Total sales is simply the number of products you’ve sold. If you sold 200 items this month, your total sales is 200. It’s a simple way to see how much you’re selling and can help you spot trends.

15. Refund Rate

Refund rate is the percentage of orders that get returned or refunded. If you had 100 sales and 5 were refunded, your refund rate is 5%. A lower refund rate means happier customers, which is always a good sign for your business.

16. Customer Retention Rate

Customer retention rate shows how many customers come back to your store to buy again. If 50 out of 100 customers return for another purchase, your retention rate is 50%. Keeping this high means you’re doing a great job making customers happy and loyal.

17. Bounce Rate

Bounce rate is the percentage of visitors who leave your website after viewing just one page. If 100 people visit your site and 40 leave right away, your bounce rate is 40%. A lower bounce rate means visitors are finding what they’re looking for and sticking around longer.

18. Page Load Time

Page load time is how long it takes for your website to load. Faster load times make for happier visitors and can boost your sales. If your site takes too long to load, people might leave before they even see your products.

19. Organic Traffic

Organic traffic is the number of visitors who come to your store through search engines like Google, without you paying for ads. More organic traffic means your SEO (Search Engine Optimization) efforts are paying off and people are finding you naturally.

20. Paid Traffic

Paid traffic is the number of visitors who come to your store through paid ads. It shows how well your advertising is working. If you’re getting a lot of paid traffic, your ads are doing their job of bringing people to your store.

21. Email Open Rate

Email open rate is the percentage of people who open the emails you send. If you send 100 emails and 20 get opened, your open rate is 20%. A higher open rate means your subject lines are catching people’s attention and they’re interested in what you have to say.

22. Email Click Rate

Email click rate is the percentage of people who click on links in your emails. If 10 out of 100 recipients click a link in your email, your click rate is 10%. This shows how effective your emails are at getting people to take action and visit your store.

23. Time on Site

Time on site measures how long visitors stay on your website. The longer they stay, the more engaged they are. If people are spending a lot of time on your site, it means they’re finding your content interesting and might be more likely to make a purchase.

24. Repeat Purchase Rate

Repeat purchase rate is the percentage of customers who come back and buy again. If 20 out of 100 customers make another purchase, your repeat purchase rate is 20%. A higher rate shows that customers love your products and keep coming back for more.

25. Units Per Transaction (UPT)

Units per transaction is the average number of items customers buy in a single order. If you sold 100 items in 50 orders, your UPT is 2. Increasing your UPT means customers are buying more items each time they shop, which can boost your sales.

26. First-Time Customer Rate

This metric shows the percentage of your sales that come from new customers. If 30 out of 100 sales are from first-time buyers, your first-time customer rate is 30%. Keeping an eye on this helps you see how well you’re attracting new shoppers to your store.

27. Churn Rate

Churn rate tells you how many customers stop buying from you over a certain period. If you had 100 customers last month but only 80 returned this month, your churn rate is 20%. Lowering your churn rate means more customers are sticking around and staying loyal to your brand.

28. Shipping Cost

This is how much you spend to ship products to your customers. Keeping shipping costs low while maintaining fast delivery is key to keeping both your customers and your budget happy. Comparing different shipping options can help you save money and improve efficiency.

29. Inventory Turnover

Inventory turnover measures how quickly you sell through your stock. If you sell out of a product and restock it twice in a month, your turnover rate is 2. Higher turnover means you’re selling products quickly, which is great for cash flow and reducing storage costs.

30. Supplier Lead Time

Supplier lead time is the amount of time it takes for your suppliers to deliver products after you place an order. Shorter lead times mean you can restock faster and keep your customers happy with quick delivery. Always aim to work with suppliers who offer reliable and speedy lead times.

31. Fulfillment Time

Fulfillment time measures how long it takes to process an order from the moment it’s placed to when it’s shipped. Faster fulfillment times mean happier customers who get their orders quickly. Streamlining your fulfillment process can boost customer satisfaction.

32. Order Accuracy Rate

This metric shows how often orders are correctly picked, packed, and shipped. If you fulfill 100 orders and 98 are accurate, your accuracy rate is 98%. Higher accuracy means fewer returns and more happy customers.

33. Product Return Rate

Product return rate is the percentage of orders that customers return. If you had 100 sales and 5 returns, your return rate is 5%. A lower return rate means customers are satisfied with their purchases, which is great for your reputation and bottom line.

34. Customer Support Response Time

This measures how quickly your customer support team responds to inquiries. Faster response times lead to happier customers and can help resolve issues before they escalate. Aim for quick and helpful replies to keep your customers satisfied.

35. Average Profit Per Customer

This is the average amount of profit you make from each customer. If you made $1,000 in profit from 50 customers, your average profit per customer is $20. Knowing this helps you understand the value each customer brings to your business.

36. Average Session Duration

This metric shows how long visitors spend on your website during a single visit. Longer sessions mean visitors are more engaged and likely to explore your products. Improving your website’s content and usability can help increase session duration.

37. Product Page Views

Product page views track how many times your product pages are viewed. More views can indicate higher interest in your products. If a product page gets a lot of views but few sales, you might need to tweak your descriptions or images.

38. Cost Per Acquisition (CPA)

CPA measures the cost to acquire a new customer. If you spent $500 on marketing and got 50 new customers, your CPA is $10. Keeping your CPA low means you’re getting more customers for less money, which is great for growth.

39. Lifetime Customer Spend

This is the total amount a customer spends in your store over their lifetime. Knowing this helps you identify your most valuable customers and tailor your marketing efforts to keep them coming back.

40. Profit Per Order

This metric shows how much profit you make on each order. If you made $1,000 in profit from 100 orders, your profit per order is $10. Tracking this helps you understand the profitability of individual sales and adjust your pricing strategies.

41. Customer Reviews and Ratings

Customer reviews and ratings are feedback left by customers about their purchase experience and product satisfaction. Positive reviews can boost your store’s credibility and attract more buyers. Encourage happy customers to leave reviews to build trust with new visitors.

42. Landing Page Conversion Rate

This metric measures the percentage of visitors who take a desired action on your landing page, such as making a purchase or signing up for a newsletter. If 100 people visit your landing page and 10 make a purchase, your conversion rate is 10%. Improving this rate can lead to more sales and sign-ups.

43. Mobile Traffic

Mobile traffic tracks the number of visitors who access your store from a mobile device. With more people shopping on their phones, ensuring your site is mobile-friendly can enhance user experience and increase sales.

44. Desktop Traffic

Desktop traffic measures the number of visitors who access your store from a desktop computer. Understanding how your customers shop can help you optimize your site for different devices, ensuring a smooth experience for all users.

45. Customer Feedback

Customer feedback includes all the comments and suggestions you receive from your customers. This valuable information can help you improve your products, services, and overall customer experience. Actively seek feedback to understand what’s working and what needs improvement.

46. Gross Merchandise Value (GMV)

GMV is the total sales dollar value for merchandise sold through your store over a certain period. It gives you a big-picture view of your sales performance and helps you track growth over time.

47. Break-Even Point

The break-even point is when your total revenue equals your total costs, meaning you’re not making a profit but not losing money either. Knowing this helps you set sales goals and understand how much you need to sell to start making a profit.

48. Customer Purchase Frequency

This metric shows how often customers make a purchase from your store. Higher purchase frequency indicates that customers are coming back regularly, which is great for business stability and growth.

49. Advertising Spend

Advertising spend is the total amount of money you spend on ads to promote your store. Keeping track of this helps you manage your budget and measure the effectiveness of your advertising campaigns.

50. Revenue Per Visitor

Revenue per visitor measures the average amount of money you make from each visitor to your store. If you make $1,000 from 200 visitors, your revenue per visitor is $5. Increasing this metric can help boost your overall revenue.

Frequently Asked Questions

Let's look at some of the most asked questions.

What's a Good Profit Margin for Dropshipping?

You might be wondering, what's a good profit margin? Well, aiming for a net profit margin of around 20-30% is a solid goal. This means after you’ve covered all your costs, including product expenses, shipping, and any Shopify store fees, you should be pocketing at least 20-30% of your revenue.

Keeping an eye on this through your dashboard ensures you’re on the right track and helps you make quick adjustments if needed.

Is Dropshipping a Scalable Business?

You bet it is! Dropshipping is incredibly scalable, making it an awesome choice for anyone looking to grow their business. Since you don’t have to worry about inventory and warehousing, you can easily add new products to your Shopify store without much hassle.

By tracking key metrics like customer acquisition cost and conversion rate, you can strategically ramp up your efforts and reach a larger audience. Scaling up means more sales and higher profits, so regularly check your dashboard to monitor your growth and make sure you’re hitting your targets.

How Much Should You Mark Up Dropshipping Products?

So, how much should you mark up your dropshipping products? A good rule of thumb is to mark them up by at least three times their cost. This helps you cover all your expenses and still maintain a healthy profit margin.

For example, if a product costs you $10, selling it for at least $30 ensures you’re making a good profit. Keeping track of your markups and sales through your Shopify store’s dashboard will allow you to adjust prices as needed to stay competitive and profitable.

What Are the Statistics for Dropshipping?

Did you know that the global dropshipping market is expected to reach a whopping $557.9 billion by 2025? That’s right! This booming industry is growing fast, and it’s packed with opportunities for entrepreneurs like you.

Platform for Dropshippers?

Absolutely! Shopify is hands-down the most popular platform for dropshippers, and for good reason. It’s user-friendly, packed with powerful features, and offers tons of integrations that make running a dropshipping store a breeze.

Plus, Shopify’s robust analytics and reporting tools help you track all the essential metrics that you need to succeed, like conversion rates and gross profit margins. Whether you’re just starting out or scaling up, Shopify provides the flexibility and support to grow your ecommerce business effectively. So, if you’re looking for a platform to kickstart your dropshipping journey, Shopify is definitely a good choice!

Closing Thoughts

Alright, dropshippers, let’s wrap this up! Tracking your key metrics is crucial to running a successful dropshipping business. Whether it's keeping an eye on your dropshipping profit margin, finding ways to increase your dropshipping efforts, or knowing the right markups for your products, these insights are game-changers. Using your Shopify store’s dashboard to monitor these important metrics will help you make informed decisions and optimize your business. By staying on top of these numbers, you’re setting yourself up for success and growth. Happy dropshipping!