In e-commerce, the ultimate goal for brands and retailers is to convert website visitors into paying customers. This process is measured by the conversion rate, which is a critical metric for driving revenue growth. This is the percentage of website visitors who complete a desired action such as making a purchase, and so a deep understanding of conversion rates is critical for brands and retailers.
Improvements in conversion rates can have a significant impact on a brand and retailer’s bottom line. By increasing their conversion rates, retailers can drive more revenue without increasing their advertising spend, which ultimately leads to higher profitability.
This article will cover the following:
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What is a retail conversion rate?
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Factors affecting retail conversion rate
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Industry benchmarks for retail conversion rates
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Comparison of conversion rates between online and in-store retail
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How to improve e-commerce retail conversion rates
What is a retail conversion rate?
A retail conversion rate is the percentage of visitors to a retail website or physical store who make a purchase or complete a desired action, such as filling out a form or signing up for a newsletter. To calculate the conversion rate, simply divide the number of conversions (these can be purchases or desired actions) by the total number of visitors and multiply by 100.
For example: if 100 people visited a website and 10 of them made a purchase, then the conversion rate would be 10%.
Importance of retail conversion rates
Reliability
Conversion rates are a more reliable indicator of success than website traffic; it measures the percentage of visitors who actually convert into customers. A high traffic volume alone is not necessarily indicative of a successful e-commerce business.
Assess effectiveness
Brands and retailers can assess the effectiveness of their website design, pricing strategies, and marketing efforts with retail conversion rates. They can then determine which aspects of their website are working and which ones need improvement.
Stay competitive in the market
Brands and retailers who neglect their conversion rates risk losing market share to competitors who are optimising their conversion rates using advanced techniques and tools.
Optimised to improve customer experience
A well-optimised website with a high conversion rate is often indicative of a positive customer experience. By focusing on improving the conversion rate, brands and retailers can also improve their customers’ overall shopping experience, leading to higher customer loyalty and retention rates.
Factors affecting retail conversion rate
The factors affecting retail conversion rates differ depending on whether it is online or in-store.
Online Factors
For online brands and retailers, the design and usability of the website are critical to driving higher conversion rates. A well-designed website with an easy-to-use checkout process and clear calls-to-action can help retain customers and result in a greater user experience. Factors that influence this include: page load speed, ease of navigation, mobile friendliness, and overall aesthetic of the site.
Pricing strategies also differ online in comparison to in-store retail. Many online shoppers compare prices across multiple websites before making a purchase, so brands and retailers must ensure their prices remain competitive. To impact their conversion rates, retailers may use strategies such as pop-up discounts, bundle deals, or email incentives to encourage online visitors to convert into shoppers.
Online product reviews and rates can also affect conversion rates. Naturally, positive ones can instil trust in customers and increase the likelihood of purchase, and therefore increase the conversion rate. Negative reviews can often be concerning for creating a bad reputation for a brand; they should not be feared. In fact, they can build credibility as chances are they will not be fake. Whether positive or negative, brands and retailers should encourage their customers to leave reviews to actively manage and respond to them.
Read more on why online customer reviews matter for your e-commerce site.
Targeted digital marketing campaigns can also be used by online brands and retailers to drive traffic to their website and improve conversion rate; this can include social media, email marketing, and paid traffic.
Physical Retail Factors
Similar to website design, the physical layout and design of a store can impact customer experience, hence forth increasing or decreasing conversion rates. A well-designed store with attractive displays that is easy to navigate is bound to increase customer engagement and turn in-store shoppers into browsers. This will result in more loyal customers, driving even higher conversion rates.
Much like online reviews affect conversion rates, word-of-mouth recommendations can also determine customer loyalty and retention rates. Providing an exceptional customer service in-store can lead to repeat business beyond the visiting customer. According to Hiver, “companies are 40% more likely to convert customers who have already purchased from them than they are to convert new customers, and existing customers likely make up 65% of your business”.
Brands and retailers should also ensure that their products are available and displayed in an attractive and accessible manner. Out-of-stock items or poorly displayed products can result in lost sales which can not only lower the conversion rate, but also the reputation of a brand.
Industry benchmarks for retail conversion rates
Average conversion rates for online retail can vary depending on the industry and specific website. Below is the average e-commerce conversion rate according to the industry:
Source: Oberlo
Retail conversion rates can vary for a number of reasons. For example, some may be lower due to longer decision-making processes and higher price points.
Comparison of conversion rates between online and in-store retail
Typically, the average conversion rate for retail websites is around 2-3%, whereas Shopify reports that the average conversion rate for brick-and-mortar stores is around 20-40%. There are a number of reasons for this:
Online
- Online conversion rates tend to be lower on the grounds that it’s simpler for individuals to window shop. In a matter of seconds, potential customers can begin and complete their shopping experience; a single irritating pop-up can cause people to close their browsers.
- Shopping cart abandonment is one of the biggest challenges for conversion rates in online retail. This can happen for a variety of reasons, such as unexpected shipping costs, a complicated checkout process, or simply a change of heart from the consumer.
In-store
- In-store customers have a more direct experience. Brick-and-mortar stores account for 78% of all impulse purchases because customers can talk to store employees, touch products, and see products they’re considering buying in person.
- In-store purchases provide immediate gratification and the option to inspect the product before buying, which can increase the likelihood of a purchase and more customers to convert.
How to improve e-commerce conversion rates
Live one-to-one video shopping
Live one-to-one video shopping encompasses the inventory check, personalisation techniques, and ease of navigation that the in-store shopping experience provides customers, as well as the high conversion rate in comparison to regular e-commerce. Confer With’s live one-to-one video shopping platform is seeing conversion rates of 20% and above, in line with bricks-and-mortar conversion rates. Find out more about how live one-to-one video shopping works, and how it can replicate the in-store shopping experience on your website.
A/B testing
Online brands and retailers can use A/B testing to optimise their websites for higher conversion rates. This process involves comparing two versions to a webpage or marketing campaign to determine which one performs better. By testing different variations, brands and retailers can identify where customer’s purchasing journey ends to then optimise their page accordingly.
Reviews
Customer reviews can help to build trust and credibility with potential customers; in fact, according to GlobeNewswire, 95% of consumers read reviews before they buy a product. Online retailers can use reviews and ratings on product pages to provide social proof that can increase the likelihood of a purchase, and in turn the conversion rate. Reviews can also provide valuable feedback that can be used to improve the quality of products and services over time, as well as helping to boost the reputation of a brand and build its customer loyalty.
Key Takeaways
- Conversion rate is a critical metric for driving revenue growth – this is the percentage of website visitors who complete a desired action
- Conversion rates differ depending on whether the customer purchases online or in a physical store
- E-commerce sites can use live one-to-one video shopping, A/B testing, and customer reviews to increase their online conversion rates
