At SearchGuru, we manage the SEO and SEM campaigns for several online stores, ranging from small home-based businesses to much bigger setups – in both Singapore and Malaysia. I’d like to share some of my observations here, which I think will be useful for those involved in E-commerce, especially on where to spend your marketing dollars.
The question that I get asked often is about conversion rates. So, here you go:
The chart above shows the conversion rates by common E-commerce traffic sources for 3 clients with 12,800 transactions worth S$1.3 million over 3 months.
Visitors that arrived via internal newsletters had a conversion rate as high as over 9%. This really isn’t suprising, since most of these visitors are already existing customers. So if you don’t already have a weekly or monthly newsletter for your online store, it’s high time you started one – Mailchimp is one of the most popular provider. The next biggest conversion rates came from organic traffic – as high as 5%. AdWords and Facebook had almost similar conversion rates. On average, you can expect a conversion rate of about 3%.
The chart above shows the transactions and revenue by common traffic sources. I’ve broken down organic traffic further to branded (e.g. keywords that included your company name) and unbranded keywords (i.e. generic keywords like “shoes”).
Organic traffic, from both branded and unbranded keywords respectively, brought the most transactions and revenues. Even Google AdWords, despite its bigger coverage, better targeting and richer ads, is no competition. Is it because the users trust Google’s recommendations more than the ads? One thing that’s certain is that you need to SEO your website.
This last chart shows the average sale and per visit value by common traffic sources. Do not pay too much attention to the values because it would obviously depend on your industry and average prices. Instead, use the numbers in relative terms to compare the traffic sources.
Now, although newsletters had a higher average conversion rate, organic traffic converted with a higher sale value. And between the two, organic traffic from branded keywords had a far more superior per visit value.
There can be two reasons for these – returning clients googling the company name instead of going direct; and new clients who saw/heard about the company elsewhere, e.g. even offline in print ads or billboards. This suggests the importance of branding your online store and spending money on building that brand to establish the trust with prospective customers.
At the end of the day, the online store that will succeed is the one with a bigger and more trusted brand, has a wider product range, sells at cheaper prices and provides better services.
In summary, these are the conclusions we can draw from the charts above:
– newsletters are an important marketing tool for E-commerce.
– the average conversion rate for online store purchases is about 3%.
– everything considered, organic traffic is very much superior, hence, the need for SEO.
– people seem to trust the organic search results more than sponsored ads.
– it’s important that you brand your store and spend time/money building that brand.