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Return on Investment (ROI) in the context of e-commerce refers to the measure of profitability and efficiency in relation to the money invested in the business.

It indicates how much profit has been generated…

Here's how you can break down the components:

With a Real-time Ecommerce Dashboard, brands can keep an eye on the effect of end-to-end customer journey initiatives taken, in terms of ROI.

Stages involved in ROI analysis

Example taken: D2C Fashion Brand (in India)

1. Awareness Stage:

Investment: ₹50,000 in social media ads and influencer collaborations to increase brand awareness.

ROI Calculation: After the campaign, track the increase in website visits and brand mentions. Let's say it results in 10,000 new visitors.

If the revenue from new visitors is ₹100,000, then the ROI would be:

ROI = (₹100,000 - ₹50,000) / ₹50,000 x 100 = 100%

2. Consideration Stage:

Investment: ₹30,000 in email marketing and retargeting ads to engage potential customers.

ROI Calculation: Measure the conversion rate of these engaged customers. If 500 of them make a purchase with an average order value of ₹500, the revenue generated is ₹250,000.

ROI = (₹250,000 - ₹30,000) / ₹30,000 x 100 = 733.33%

3. Conversion Stage:

Investment: ₹20,000 in optimising product pages and checkout process for better conversion rates.

ROI Calculation: Compare the increased conversion rate and revenue post-optimization. If the conversion rate increases from 2% to 3% and generates ₹200,000 in revenue, the ROI would be:

ROI = (₹200,000 - ₹20,000) / ₹20,000 x 100 = 900%

4. Post-Purchase Stage:

Investment: ₹10,000 in post-purchase emails and loyalty programs to encourage repeat purchases.

ROI Calculation: Monitor the increase in repeat purchases and customer loyalty. If the revenue from repeat purchases is ₹50,000, the ROI would be:

ROI = (₹50,000 - ₹10,000) / ₹10,000 x 100 = 400%

5. Advocacy Stage:

Investment: ₹15,000 in a referral program to encourage customers to refer others.

ROI Calculation: Measure the number of referred customers and their resulting purchases. If the referral program generates ₹30,000 in revenue, the ROI would be:

ROI = (₹30,000 - ₹15,000) / ₹15,000 x 100 = 100%

Overall ROI Analysis:

Add up the ROI percentages from each stage and divide by the number of stages to get an overall ROI for the customer journey.

In this example, the D2C fashion brand's overall ROI across the customer journey is approximately 447%.

This means that for every rupee invested, they generated about ₹4.47 in return across all stages of the customer journey.

This comprehensive analysis helps the brand optimise its marketing strategies and resource allocation to enhance profitability in the Indian e-commerce market.

Where does the Data come from to calculate ROI?

From Logistics and other Services of course!

1. Shipping and Delivery:

Calculate ROI based on the cost of shipping and delivery services compared to the revenue generated from shipping fees.

Consider the impact of offering different shipping options (standard, express, same-day) on customer satisfaction and overall sales.

2. Fulfilment Efficiency:

Analyse the ROI of streamlining order fulfilment processes to reduce operational costs and improve order accuracy.

Evaluate how automation, warehouse management systems, and inventory optimization contribute to ROI.

3. Packaging Optimisation:

Assess the ROI of using efficient and cost-effective packaging materials that provide product protection while minimising waste.

Consider the impact of packaging on shipping costs, customer experience, and brand perception.

4. Returns Management:

Calculate the ROI of an effective returns process, considering costs associated with returns handling, restocking, and customer retention efforts.

Evaluate the impact of a seamless returns experience on customer loyalty.

5. Technology Investments:

Analyse the ROI of adopting technology solutions such as tracking systems, route optimization, and real-time inventory management.

Consider the reduction in errors, increased efficiency, and improved customer experience.

6. Third-Party Partnerships:

Calculate the ROI of outsourcing logistics and services to third-party providers versus handling them in-house.

Consider costs, efficiency gains, and the potential for scalability.

7. Data Analytics and Insights:

Evaluate the ROI of data analytics tools in improving demand forecasting, inventory management, and customer behaviour analysis.

Consider how data-driven insights impact cost savings and revenue growth.

8. Sustainability Initiatives:

Assess the ROI of adopting sustainable practices in packaging, transportation, and operations.

Consider the potential for cost savings, positive brand perception, and meeting consumer preferences.

9. Cross-Selling and Upselling:

Calculate the ROI of offering additional services during the checkout process, such as gift wrapping, personalised messages, or complementary products.

Evaluate how these add-ons impact average order value and customer satisfaction.

10. Loyalty Programs:

Assess the ROI of loyalty programs offering exclusive benefits like free shipping, early access, or rewards points.

Calculate the impact on customer retention and lifetime value.

To Wrap it Up

1. Data can be gathered from any stage/service

2. Then automation can be put in place for easy view on you ecommerce dashboard

3. Which in turn will help you track your ROI (Return on Investment)

And that’s how brands master ROI for Ecommerce!

That’s the end of our talk on “Monitoring ROI for Ecommerce Brands”...

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