Michael Ross, co-founder and a director of eCommera, said traditional physical retailers reviewed stock and sales weekly and the key management skills
and information, such as like-forlike sale performance, was well understood.
This is not the case in e-commerce, he added, after carrying out a survey of 100 e-commerce directors in the UK.
Almost two-thirds of respondents said their online sales were growing by 20% or less or had fallen in the past year.
Ross said reporting lines were important in e-commerce growth rates, with those reporting lower rates often having an e-commerce director reporting to the chief marketing or information officers rather than to the chief executive as did those with rapid expansion rates.
But Ross said most important was understanding what droveonline sales; measuring the important data points and acting on them.
More than half of companies measure their website’s profitability only monthly or even less frequently if at all, while few track "missed opportunities" – products not being viewed or that remain unsold after being looked at.
Ross said while it was still too early to know what were really the most important data points to follow, the fundamental requirement in deciding what to trace was whether it drove profit and could then be acted on.
He said the five key performance indicators in e-commerce were:
1. Number of orders placed on the website, and how online browsing affects offline purchases.
2. Profit per order – the trade-off between order volume and the profit made on each item sold.
3. Lost profit per order – the difference between net sales and the number of orders after cancellations, refusals, fraud, returns or lack of availability are taken into consideration.
4. Return on inventory, or where best to hold stock in the supply chain from manufacturer to shipment.
5. Customer satisfaction, such as "delivery on promise" – getting the ordered goods to the customer before, after or as promised.
Ross said the biggest online sales company, US-listed Amazon, which he called the "grandmaster of e-commerce" focused on customer satisfaction.
In his letter to shareholders in April, Jeff Bezos, chief executive
of Amazon, said: "Focusing our energy on the controllable inputs to our business is the most effective way to maximise financial outputs over time…
"For 2010, we have 452 detailed goals with owners, deliverables and targeted completion dates … 360 of the 452 goals will have a direct impact on customer experience.
The word revenue is used eight times [and] net income, gross profit or margin and operating profit are not used once."
Amazon posts annual sales of $24.5bn (€20bn), or 19.4% of the total by the 500 biggest e-commerce websites.