Social media and digital marketing have fundamentally changed how we do business. While online shopping was once a niche alternative to brick-and-mortar commerce, it is increasingly becoming the preferred method of shopping for a growing segment of the population.
Almost 21% of retail purchases were made online in 2023, a figure anticipated to increase to 24% in the coming year[1]. Simply put, the eCommerce space is rife with opportunity and competition—largely dominated by eBay and Amazon—and in order to best capture and convert leads, businesses are prioritizing their eCommerce platforms to maximize sales.
Like any other crowded business channel, gaining an advantage over competitors is key to the success of SMBs in the eCommerce space. Putting your products in front of potential customers, making it easy for them to purchase, and turning them into repeat customers are all critical to eCommerce business success.
Yet our recent survey found that 80% of SMB eCommerce business leaders recognize that they’re leaving money on the table every month due to an insufficiently optimized eCommerce storefront.
In this report, we’ll dig into the numbers to discover more about SMB eCommerce performance, strategies, challenges, goals, and more.
4 out of 5 eCommerce business leaders feel that their sales would improve if their eCommerce storefront was better optimized
A combination of a crowded marketplace and the propensity of online consumers to comparison shop means that online shopping carts are abandoned regularly and sales volume can be difficult to predict. This means that business leaders are constantly looking for ways to improve their sales.
This focus on optimization isn’t dependent upon sales volume. According to our survey, businesses that do more than $10,000 in sales per month are just as likely to say their sales would improve with eCommerce storefront optimization as those that do less than $10,000 per month. So this concern over lost sales due to an unoptimized eCommerce storefront affects businesses of all means.
What do we mean by eCommerce optimization?
When we talk about business owners optimizing their eCommerce platforms, we’re referring to their efforts to improve website functionality and performance through a holistic approach in order to maximize the efficiency of lead conversion efforts.
Do you use analytics to hone in on your target customers?
Data should be the primary driver of decisions made on how to market your eCommerce platforms to the proper target audience. Using Google Analytics along with data acquired from paid advertising campaigns and social media, eCommerce businesses can identify gaps in their customer base and refocus their efforts properly.
Do you use strategic digital marketing campaigns to drive sales?
When optimizing your eCommerce-focused marketing, it’s important to focus on the digital channels that have the potential to return the most bang for your buck.
For example, does it make more sense to optimize your SEO for organic traffic to your eCommerce website, or should you focus your efforts on pay-per-click (PPC) advertising across social media? Understanding which strategies work best for your unique business will help to optimize your overall eCommerce strategy.
Is your eCommerce website optimized around consumer habits and behaviors to maximize sales?
Being bombarded with messaging and constantly driven to comparison shop online, consumer attention can be extremely fleeting. Many of the challenges that eCommerce site owners face revolve around the checkout process.
Optimizations should incorporate automated cart abandonment messages, chatbot assistance, and methods for streamlining the checkout process, as each of these changes to your eCommerce platform should effectively increase sales over time.
Almost 20% of SMB eCommerce businesses do not track their eCommerce analytics
Despite the importance of data as a business driver, our survey revealed that almost 20% of our SMB respondents were not tracking eCommerce-related analytics.
Businesses across industries are operating blind to the trends and behaviors of their customers, and as a result, are struggling with customer conversions.
The retail channels our respondents are operating within
Online retailers dominate the eCommerce industry, and there are four categories that our survey respondents primarily operate within.
- More than 40% of our respondents sell clothing, shoes, and jewelry online.
- Beauty and personal care (23%) and arts and crafts (23%) were the next most popular product lines for our respondents.
- The third most popular channel of retail amongst our respondents was electronics at (19%).
A significant percentage of respondents are not tracking eCommerce conversion rates
With 20% of our SMB survey respondents stating that they either don’t know or don’t track their conversion rates for visitors to their primary eCommerce marketplace, it may be a bit surprising to discover just how many organizations are flying blind from a strategic marketing perspective.
Digging deeper into the respondent data, we learned this was a behavior that concentrated in companies employing fewer than 100 employees. Within the cohort of organizations of this size—roughly two-thirds of the respondent pool—we found that:
- A majority of respondents at this size—almost 23%—do not track their conversion rates or do not know them.
- 24% of respondents of this size do not track eCommerce analytics at all.
Very small businesses struggle with tracking conversion rates
As you might anticipate, especially if you yourself are a small business owner or entrepreneur with limited resources to get your business up and running, our survey found that extremely small businesses with limited staff tend to struggle the most to track their conversion rates.
In fact, almost 35% of businesses with five or fewer employees surveyed don’t know or don’t track their eCommerce conversion rates. Whether this is due to a lack of staff or a lack of expertise, not having visibility into what’s working and what isn’t with your eCommerce business makes it very difficult to improve your results.
Larger businesses do better with conversion tracking
Because larger organizations have both more funding and more staff with a wider array of skills and bandwidth, it shouldn’t be surprising that our survey found that organizations with more than 100 employees are more likely to track conversion rates and other eCommerce analytics.
- Less than 9% of businesses with 101 or more employees don’t know or don’t track conversion rates.
- Less than 4% of businesses with 101 or more employees say that they don’t track eCommerce analytics
Of course, this could be a bit of a chicken-and-egg situation. Do larger businesses track their eCommerce analytics simply because they have more resources to do so? Or are businesses that track analytics more successful, allowing them to grow and accumulate more resources?
Whatever the case, it’s generally better to have as much information as possible to help make informed, strategic business decisions. So whether your business is small or large, we strongly recommend tracking analytics if you want your business to grow and improve.
Respondent conversion rates are in line with average eCommerce conversion rates
On average, eCommerce retailers can generally anticipate conversion rates of between 2%-3%[2]. Our own survey mostly confirmed those findings, with some variation based on company size.
- 25% of our respondents estimate their conversion rate to be between 2.1%-3%.
- For larger organizations employing more than 100 employees, just under 40% reported conversion rates in this range.
- For smaller organizations employing fewer than 100 employees, conversion rates in this range fall to 19%.
More than half of our respondents use the tool built into their eCommerce tool to track analytics.
Tracking analytic data requires a diverse set of tools, as data can be sourced from multiple channels. For the most part, the small business owners in our survey preferred to use the analytics tools built into their eCommerce platforms, such as Shopify, Amazon, Squarespace, and Wix.
In fact, more than 50% of our respondents rely on these built-in tools at least in part to track their eCommerce analytics.
This makes it even more notable that almost 20% of businesses in our survey don’t track analytics at all, as the data is right there at their fingertips just waiting to be accessed through the eCommerce platform they use to run their business.
While there is a learning curve to any new tool, most modern eCommerce platforms include tutorials and other educational resources to get inexperienced users up to speed.
Larger organizations are more likely to rely on third-party analytics tools, with close to 51% of businesses with 101 or more employees reporting they use Google Analytics or some other platform to collate data along with, or instead of, a built-in tool.
20% of eCommerce businesses are unnecessarily flying blind without the help of data-backed insights
Search engine optimization is crucial for the performance of any website when it comes to organic search and search engine results pages (SERPs). You can’t optimize a website of any kind, especially an eCommerce website, without an understanding of the most important SEO metrics.
If you’re a small business owner on the fence about the need to invest in data analysis as a way to maximize lead conversion, the UpCity community of experts has weighed in on the importance of third-party data collection over platforms such as Google Analytics. We’ve also highlighted the benefits of leveraging the help of agencies and consultants in your strategic marketing planning.
Unfortunately, our survey also revealed that securing the assistance of a third-party agency or consultant was a challenge in itself for many smaller businesses.
Only 1 in 5 small businesses use an outside service provider (19%) or a freelancer/consultant (20%) that specializes in eCommerce analytics
Overall, our survey revealed that our respondent community was largely uninterested in bringing in third-party service providers or professional consultants and freelancers to handle their eCommerce data.
This seems like an obvious missed opportunity for smaller businesses that don’t have the resources or expertise to perform effective data analysis on their own. Why not just hire someone to analyze your data and derive actionable insights for you?
However, a deeper dive into the responses revealed that larger organizations with stronger revenue streams were more likely to bring in outside consultants, allowing their teams to focus on building and maintaining relationships with customers, executing strategy, and focusing on other high-value.
But if budget is the only thing holding you back from getting help with analytics, we recommend reaching out to an experienced eCommerce service provider. You may be surprised at how much money you can save in the long run through improved conversion rates and profit margins based on actionable data insights.
Stronger revenue streams open doors to service providers
One-third of our survey respondents employ more than 100 employees, and within that cohort of respondents, a strong majority are leveraging outside services in addition to built-in analytics tools and third-party platforms.
- Approximately 29% of businesses that do more than $10,0000 in sales per month reported using an outside eCommerce service provider in the form of an agency or freelancer/consultant.
- Only around 13% of businesses generating less than $10,000 per month are turning to outside service providers.
In other words, eCommerce businesses that drive more revenue are doing so with more outside help compared to businesses with fewer resources who are trying to fend for themselves.
Company size also impacts the willingness to leverage outside service providers
Revenue wasn’t the only indicator that our respondents were open to securing the assistance of outside assistance. Our survey findings revealed that the larger the organization, the more likely they were to outsource.
- Around 30% of businesses with 101 or more employees use an outside service provider and/or freelancer/consultant to help track their eCommerce analytics.
- Smaller businesses responding to our survey were less likely to reach out to an outside service provider, with only around 15% of businesses with 100 or fewer employees turning to either an agency or a freelancer/consultant to help gather and analyze eCommerce data.
Small business marketing teams should emulate larger organizations in securing third-party help
An unwillingness by small business owners to prioritize data analytics in their budget may be limiting their ability to grow and improve their eCommerce performance.
Leveraging the assistance of performance-based marketing agencies that are focused on data-driven results can help eCommerce site owners of all sizes realize the benefits of informed marketing campaigns designed to maximize lead conversion.
Larger businesses are already taking advantage of service providers to boost the performance of their eCommerce marketing funnels, which could widen the gap between the haves and have-nots in the eCommerce marketplace.
Bringing in outside help can help small teams with limited skills or bandwidth to better collect, track, and understand the data surfaced by their eCommerce platforms in order to properly plan marketing campaigns and structure inbound funnels.
Efforts to increase eCommerce sales come with a number of challenges
In the wake of the pandemic, there was significant growth in eCommerce sales, largely due to quarantine measures forcing businesses to pivot their business models toward online sales. Because many businesses weren’t experienced enough or equipped to support eCommerce, the effort to track and increase visitor conversions has been an ongoing focus for many organizations.
29% of our respondents point to both increasing conversion rates and identifying the right target customers as their biggest challenges in increasing sales
Our survey revealed that increasing conversion rates was a leading challenge cited by SMB owners when it came to growing their eCommerce sales. As sales conversions are ultimately tied to the ability to target the proper customer in marketing and advertising efforts, it follows that our respondents also considered finding the right target audience as equally challenging.
Other challenges in eCommerce tied to challenges in driving sales growth
Managing and maintaining an eCommerce website can be a complex undertaking, and our respondents pointed to a number of challenges related to building sales.
Respondents struggle to build repeat business
Troubles in converting leads and targeting the proper customer base can cause related challenges for eCommerce site owners. For example, if you’re not targeting the proper customer base, it makes sense that 26% of respondents pointed to increasing repeat customers as a significant challenge.
Balancing costs is also a challenge for eCommerce businesses
Building and maintaining an eCommerce platform can be a costly undertaking, especially for inexperienced teams. Proper consumer targeting and the struggle to generate repeat customers will in turn lead to a struggle to achieve an acceptable profit margin, a challenge that almost 20% of respondents cited as a top concern.
Consumer online behaviors combine to limit profitability
Respondents to our survey pointed to two very distinct online consumer behaviors that prevent them from increasing sales. First, because consumers are shopping online, 17% of SMB eCommerce site owners surveyed stated that a high frequency of returns and refund requests limited their ability to build sales.
Fielding customer queries and requests; processing returns, replacements, and refunds; and the potential loss of inventory all can combine to erode already thin profit margins.
Because consumers are often shopping on multiple platforms and comparing multiple listings in addition to yours, abandoned carts have long been a problem for eCommerce businesses. Even with features designed to minimize these lost sales, close to 15% of respondents pointed to this phenomenon as a significant challenge.
Analytics tools are a mixed blessing for eCommerce website owners
As with any other modern business process, the SaaS tools used to support and augment the efforts to build eCommerce sales by small business owners come with a range of challenges that are offset by all of the benefits that come along with such software tools.
Deriving actionable insights was cited as the biggest challenge (28%) that eCommerce business leaders faced with their analytics tool
Drawing meaning from the massive flow of data generated by eCommerce sites and the streams of data collected by the various digital channels in your inbound marketing funnel can be challenging for even the most experienced marketing experts.
With small business owners coming from a variety of backgrounds, it follows that 28% of our survey respondents struggle to discern actionable insight from these tools. This also underscores the need for experienced service providers to help those who struggle to make sense of the powerful data at their disposal.
Analytics tools can be cost-prohibitive, which impacts their ROI
The market for eCommerce-focused software is just as crowded as many other business categories[3]. The cost to incorporate such tools into a software stack can be prohibitive, as evidenced by the 27% of professionals who pointed at cost as one of their most difficult challenges when it comes to leveraging these tools.
Because of the high costs associated with some analytics tools, and uncertainty in the value they offer, close to 27% of respondents point to uncertainty in the ROI they provide as a factor in their adoption of analytics tools. These costs eating into already volatile profit margins are cited by 27% of our respondents as another challenge they face that impacts the perceived value of analytics tools
Employee bandwidth to manage analytics tools is limited
Small business owners structure their organizations around the skills and abilities of their team, and oftentimes employees are required to wear a number of professional hats. For startups and small businesses, the focus is often on customer engagement.
This can mean that incorporating new technologies can be challenging, regardless of the skill of the team, which is why close to 25% of respondents point to learning to use an analytics tool as a leading challenge.
Experienced service providers mitigate the challenges of incorporating analytics software
Experts from the UpCity community have weighed in in the past about the expanding role outsourcing is playing for many organizations.
Partnering with an agency, freelancer, or consultant allows your team to hand difficult tasks off to experienced experts who understand and execute eCommerce-focused campaigns regularly for their clients. These experts can easily navigate the flow of data, and help your leadership craft marketing strategies designed to maximize performance and drive conversions.
Because agencies are often using these tools at volume, they enjoy the benefits of lower-cost access. And as they are working with these tools regularly with multiple clients, they typically know the tools inside and out, and are able to maximize their value and translate the output into actionable insights and well-crafted campaigns.
Top benefits of eCommerce analytics tools
Expert service providers use eCommerce analytics tools for the benefits that they provide marketing teams in the management and oversight of eCommerce marketing campaigns.
Improved customer targeting was cited as a leading benefit by 30% of respondents
With customer targeting cited as a leading challenge, it follows that 30% of our respondents would also laud analytics tools for facilitating improvements to consumer targeting and audience segmentation.
Proper audience targeting is one of the most important factors in establishing a well-structured marketing strategy, and can go a long way toward increasing eCommerce sales over time.
Less than 10% cited fewer abandoned carts as a primary benefit of their analytics tool
While cart abandonment poses a serious problem in building and maintaining sales, only a small contingent of business owners responding to our survey claimed that analytics tools helped to prevent these “almost” sales.
This is likely due to the fact that many of the tools are built around increasing customer traffic and sales volume. While analytics tools provide data about abandoned carts, other tools are used to actually send out emails and reminders to shoppers.
In other words, eCommerce analytics tools may be able to describe the symptoms that lead to abandoned carts—such as an overly laborious checkout process, lack of chatbot assistance, or high shipping costs—but they’re not really equipped to prescribe a cure.
Profitable companies point to analytics tools as a driver of their success
Companies that use eCommerce analytics tools to help structure their marketing strategies do seem to draw a connection between these tools and their success.
For companies that report a profit margin of at least 51 percent:
- More than 37% say that “better profit margins” are one of the biggest benefits of their eCommerce analytics tool
- 27% report having more repeat customers due to the software
Tools and strategies for increasing eCommerce sales
Folding analytics tools into your overall marketing strategy can clearly help to improve the performance of your eCommerce storefront. Our survey dug deeper into the tactics being used across different platforms, as we wanted to provide our readers with insight into what strategies are providing the most value to businesses.
Strategic customer-focused tactics
Data gathered from the analytics tools being used by our respondents leads them to leverage a number of different tactics.
Social commerce adds additional sales channels
Half of our respondents (50%) use social media in an effort to increase sales. Social commerce across social media platforms such as Facebook and Instagram allows brands to sell their products directly and streamlines the overall shopping experience. It allows for eCommerce to occur within the social media app and provides additional revenue with minimal additional effort.
Preventing issues by prioritizing the customer experience
Consumers are looking for a seamless shopping experience that makes online shopping as affordable as going to a brick-and-mortar retailer. As online shopping platforms have evolved, large retailers such as Amazon have set the baseline for affordable shipping, leading 44% of our respondents to provide some form of free or discounted shipping as a way to remain competitive.
The customer experience is further prioritized by 34% of respondents through an established customer-friendly return policy. Removing the barriers around ensuring customers are receiving the right products for their needs in a timely and affordable way, with minimal barriers to address issues, is a surefire way to maximize repeat sales and draw in new customers.
Data-driven site optimization for maximizing SERP performance
The most important data you can gain through analytics tools is understanding consumer behaviors, how they arrived at your eCommerce site, and what products they are interacting with.
When considered as a whole, this combination of data comes together to help 34% of our responding eCommerce site owners to optimize product descriptions and other page elements for search performance.
Features respondents prioritize in building their eCommerce storefront
The data gathered from analytics tools can also inform business owners on what features are being utilized by customers and what features should be prioritized over others in order to build traffic and maximize the customer experience.
Most popular eCommerce site features
- 38% of our respondents offer order tracking as a feature on their eCommerce storefront, helping to assure customers the status of their orders and allow them to plan around deliveries as necessary.
- Reviews are powerful tools that can be used to attract consumers and influence their purchasing habits, and 38% of experts surveyed pointed at reviews as a feature they prioritize in building out their eCommerce pages to boost product sales.
- Respondents were very focused on the checkout process in terms of both the customer experience in the way they focused on streamlining the checkout process (37%) and providing a secure checkout experience (37%) as prioritized features.
Less popular features being prioritized by respondents
On the other end of the spectrum, less than a quarter of our respondents reported using a number of features that are often popular and leveraged in other types of websites. Many of these features are targeted at customer engagement and could therefore be considered as parts of an overall strategy of maximizing the customer experience.
- Frequently asked questions, or FAQ pages, were cited by 23% of our respondents as a tool they use to engage customers and provide answers as needed
- 22% of the eCommerce site owners responding to the survey are leveraging chatbots in customer engagement, ensuring customers can get the answers to questions around the clock without the costs of added staff.
- Only 21% of our respondents leverage automated cart abandonment messages to build sales on their storefront.
- Enhancing the visual customer experience was prioritized by 19% of respondents through the leveraging of embedded videos and 18% using a featured product carousel. With content marketing proving the value and impact of video content, it follows that eCommerce would lean into more visual elements.
- Most importantly, data-driven analytics tools allow businesses to perform A/B testing in their eCommerce pages to determine which types of descriptions and other eCommerce page elements provide the best results. While it might seem strange that only 13% of respondents are leveraging this type of testing, AI-driven insights from the analytics tools on the market are much better at providing the perfect solution from the start, negating the need for constant testing.
A marketing expert can help you to optimize your eCommerce platform in ways only an expert can
Small businesses and startups are necessarily streamlined and nimble. Business owners often build their teams around their employees’ strengths and their own skill sets. While these teams typically prioritize customer engagement and sales-focused activities, eCommerce requires a wide array of skills that span across sales, IT, and marketing business processes.
Throughout our survey, we discovered that while business leaders understand the important role that eCommerce platforms play in their success, a large majority recognize that their sales would improve if their eCommerce storefront was better optimized through the marketing strategies and website features we’ve discussed above.
While they understand this need for improvement, close to 20% of these businesses do not even track their eCommerce analytics. Many feel ill-equipped to do so, due to either a lack of staffing or expertise. Among our respondents who are using analytics tools, roughly 28% struggled to discern what the data insights mean and how best to act upon the data.
While only one in five small businesses in our survey use an outside service provider (19%) or a freelancer/consultant (20%) that specializes in eCommerce analytics, the benefits of doing so were clearly illustrated by the benefits respondents enumerated in our survey.
As a small business owner, if you’re struggling to grow your eCommerce revenue, our respondents have shown how partnering with an eCommerce marketing expert can ensure that your team has the support and expertise necessary to navigate the complexities of eCommerce data and optimize the performance of your eCommerce storefront.
Sources
UpCity’s Survey Method
This survey was conducted in August of 2023 among 300 U.S. small business leaders who sell products online via eCommerce marketplaces to learn about their results, strategies, tools, and challenges. Respondents were screened for their role overseeing small business eCommerce functions.