As with other areas of online retail, the apparel sector is coming to realize that e-business is, simply, business. To manage any business, whether brick-and-mortar, catalog, or on the Web, requires measuring what matters – your business processes. From these processes, one derives key metrics to measure and analyze the firm’s business performance. In the case of online apparel retailing, what are the key e-metrics to be used for evaluating business performance? These metrics stem from three primary sources:

1. Internal sales and revenue targets. Simply put, a retail site, like any other business, must make a profit. In the past eight months this notion has almost completely supplanted logic about the need to build one’s brand and market share.

2. Historic performance. The ability to compare a retail site’s present performance relative to its past performance provides valuable trend information. During this analysis, one must take into account influencing factors such as marketing campaigns, revenue, customer and visitor loyalty and visit-to-buy rates, all of which critical business information for determining the health of a retail site.

3. Sector performance. It is not enough to know your own business’ performance, it is also critical to know the performance of your competitors. Revenues may be less than expected, but if competitors have faired worse, it may change your interpretation of the situation. Your visit-to-buy ratio may have increased by 50% in the past month, but if your competitors have increased by 150%, this again may change your view of success. Online retailers also need to understand how their sector fits into trends in the B2C space in general.

Until recently, analysis of the online space has been performance and site drive; “intelligence” consisted of the number of page views, number of visits, most popular exit pages, etc. Overall, reporting and analysis tools have focused on measuring clicks rather than key business events. It is the difference between Clickstream and what we call Eventstream™, which entails the measurement of online business events. The findings described below lay the foundation for a new and powerful metrics system geared to online business processes.

The findings are drawn from a sample of five apparel firms over a period of one month. The firms represented follow a variety of business models – pure-play, catalog, brick-and-click – and sell a range of different merchandise – casual wear, men’s and women’s fashion, high fashion, footwear and outdoor wear.

Key Findings

Visit-to-Buy Ratio

The most important single e-metric for any retail site is the visit-to-buy (V2B) ratio, also known as the conversion rate. J. William Gurley, in the March 6 edition of Fortune magazine stated that “the conversion rate is a single metric –make that the single metric- that captures all… aspects of a high quality-quality Website.” Overall, our benchmark for apparel retail indicates that just 2.13% of all visits result in purchases.
As with most metrics, though, the straight V2B conversion ratio can be influenced by many factors.

Purchase History

The V2B ratio differed substantially depending on whether or not visitors had made a previous purchase on the site. Buyers without a prior purchase history who were making their first purchase had a V2B ratio of less than 1%. Once a visitor made an initial purchase, however, the V2B ratio escalated to nearly 21% (that is, one purchase for every five visits). To generalize, once visitors become customers the process of converting visits into buys becomes much more efficient.

Technology

The V2B ratio also varied with the technological capacity of visitors. Buystream segments visitors into three groups based upon measured technical characteristics. These technical characteristics include browser type, screen size, color depth, and the browser plug-ins enabled. These are the technical factors that determine visitors’ experience of a Web site. Buystream combines them to form three TechnoClusters™: low, medium, and high. Overall, we found a tendency for visitors in the High Technocluster™ to have better Visit-to-Buy rates (2.13%) than either the Medium (1.91%) or Low (1.95%).

Shopping Duration

An examination of checkout times, the time from when someone enters a site to when a purchase actually takes place on a single visit, suggests two types of buyers exist for apparel sites.

The first type of buyer is the visitor who enters a site, shops around, and spends up to half an hour, and sometimes up to an hour, browsing before making a final purchase. There is also evidence of a second type of buyer who comes to the apparel site knowing exactly what they want to purchase and go directly to the final checkout stage within a two-minute span.

Geography

Geography can be another factor affecting interpretation of V2B ratios. Considering that each of the five benchmark sites are American retailers, it is not surprising that North American visitors were most likely to become buyers. Note, however, that it is the West coast (Alaskan time zone) where visitors most readily become buyers.