What are the essential elements for a successful e-commerce site? Explaining the sales formula
One of the challenges faced by people who operate e-commerce sites is increasing sales. A wide range of factors are involved in boosting e-commerce sales. In this article, we will organize the key elements needed to increase sales on an e-commerce site and explain each point in detail.
Japan's E-commerce Market Size
According to the Ministry of Economy, Trade and Industry, the BtoC e-commerce market size in Japan was 20.7 trillion yen in 2021, expanding significantly by 7.35% year over year. In 2020, the market size of the services segment shrank because demand for travel services contracted due to people refraining from going out amid the COVID-19 pandemic, but the merchandise segment continued to grow significantly as online purchasing became established due to stay-at-home demand.
Amazon, in First Place, Pulls Away from Second Place and Below
According to "Commerce News", the top sales of companies engaged in online retail in 2021 were 7.0144 trillion yen. The top 10 companies are as follows.
Rank | Company Name | EC Sales (million yen) |
1 | Amazon Japan | 2,535,500 |
2 | Yodobashi Camera | 213,659 |
3 | ZOZO | 166,199 |
4 | Bic Camera | 156,400 |
5 | Yamada Holdings | 144,500 |
What Is the Sales Equation in E-commerce?
If you break down sales into factors, in a typical business it becomes Sales = Unit Price × Quantity. In e-commerce, on the other hand, the equation is as follows.
Sales = Number of Visitors × Conversion Rate × Average Purchase Amount (Average Spend per Customer)
The number of visitors refers to the number of users who visit the e-commerce site. The conversion rate refers to the proportion of users who visit the e-commerce site and purchase a product. The average purchase amount refers to the amount paid on average for each purchase on the e-commerce site.
Based on this equation, there are three levers for increasing e-commerce site sales: increasing the number of visitors, improving the conversion rate, and increasing the average purchase amount, and each requires measures to improve it.
Actions That Drive Sales Growth
Let's think about the actions needed to improve the effectiveness of each measure.
Actions to Increase the Number of Visitors
Implement measures such as search engine optimization (SEO) and search engine advertising (SEA) to increase exposure for the e-commerce site
Use content such as blogs and social media to disseminate information that increases visitors
Run promotions such as campaigns and sales to increase visitors
Actions to Improve the Conversion Rate
Work on improving user interface (UX) to make the e-commerce site easier to use
Enhance product page content, images, reviews, and more to convey the appeal of the product
Analyze user behavior data to identify improvement points and implement measures
Actions to Increase the Average Purchase Amount (Average Spend per Customer)
Increase the number of products users can purchase, and increase cross-sell and upsell opportunities
Increase the number of users who purchase multiple products at once by offering bundle sales and discount coupons
Implement measures to encourage repeat purchases and improve user loyalty
One topic we are often asked about is, "We want to increase the number of listed products." This falls into the categories of "Actions to increase the number of visitors" and "Actions to increase the average purchase amount (average spend per customer)."
Of course, even if you increase the number of products, it is meaningless if customers have no opportunity to discover them. It is also important to proceed behind the scenes with organizing the information needed to improve UX.
Because the optimal measures and actions differ depending on the e-commerce site, it is important to deeply understand user needs and behavior in order to choose the right measures.
To Deeply Understand User Needs and Behavior
To deeply understand user needs and behavior,
Market analysis of what kinds of products users are looking for
Analysis of user behavior on the e-commerce site
Analysis of word-of-mouth and reviews, such as evaluations of products actually purchased and how they are used
by doing so, you can derive insights. However, not only is it necessary to collect these data, but data organization is essential in order to make the data analyzable.
At our company, we support the collection and organization of your foundational data from the perspective of product information. With "Lazuli PDP", you can organize product information that is essential for increasing sales on e-commerce sites, so if you're interested, please take a look at our service site as well.
Lazuli PDP service site: https://corporate.lazuli.ninja/