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E-commerce ROI Calculator
What is E-commerce ROI?
E-commerce ROI (Return on Investment) measures the profitability of your online store compared to the costs involved. Calculating this metric allows you to evaluate how effectively your resources are utilized to generate revenue and make data-driven decisions for future improvements.
Relevant channels: Shopify, WooCommerce, Amazon, eBay, Magento, Etsy
How to use this E-commerce ROI calculator
To calculate your E-commerce ROI, simply fill in the following inputs:
- Number of Orders
- Average Order Value (AOV)
- Ad Spend
- Marketing Costs
- Website/Platform Costs
- Fulfillment and Shipping Costs
- Operational Costs
Based on these inputs, the tool will instantly calculate your ROI, giving you insights into the performance of your e-commerce business.
E-commerce ROI formula
E-commerce ROI = [(Revenue Generated - Cost of Investment) / Cost of Investment] × 100
Here,
Revenue Generated = Number of Orders × Average Order Value (AOV)
Total Cost = Ad Spend + Marketing Costs + Website/Platform Costs + Fulfillment and Shipping Costs + Operational Costs
Understanding the E-commerce ROI result
The ideal e-commerce ROI will depend on factors such as your industry, e-commerce platform, products, scale of business, etc. Generally,
A positive e-commerce ROI indicates that your online store is efficiently managed and you are gaining a profit.
A low e-commerce ROI suggests that your store is not generating adequate profit and that you may need to optimize the store's ad strategy, cost efficiency, or other operational aspects. If the value is negative, your store may require a major overhaul.
When to calculate E-commerce ROI
- After major marketing campaigns to evaluate their effectiveness
- During quarterly reviews to understand overall business health
- When planning future investments or scaling operations
- Before launching new product lines to estimate profitability
How to calculate E-commerce ROI (with example)
Let’s say you ran an E-commerce campaign that resulted in 1,000 orders, with an average order value of $50. Your total ad spend was $5,000, marketing costs were $2,000, platform fees were $1,000, shipping costs were $1,500, and operational costs were $3,500. Here’s how to calculate your ROI:
E-commerce ROI = [(Revenue Generated - Cost of Investment) / Cost of Investment] × 100
Revenue Generated = 1,000 orders × $50 = $50,000
Total Cost = $5,000 + $2,000 + $1,000 + $1,500 + $3,500 = $13,000
E-commerce ROI = [($50,000 - $13,000) / $13,000] × 100 = 284.62%
This means your campaign generated a 284.62% ROI, indicating a profitable return.
How to improve your E-commerce ROI
- Optimize your product detail pages for better conversion rates
- Use targeted ads to reach the most relevant audience
- Streamline your fulfillment process to reduce shipping costs
- Lower operational costs by automating certain tasks
- Experiment with discounts or bundles to increase average order value
- Practice proper data management and analyze marketing performance regularly to refine strategies
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