Having started up in ecommerce, I feel that it is a very complex business which requires a lot of effort, resources and patience to become sustainable.
The business is a lot about tracking key metrics and how they evolve with the growth of the business.
Customer Acquisition Cost – The CAC is a key metric to check whether the business is spending more on acquiring customers than what it is making from them. This involves minimizing the cost of acquiring website traffic and optimizing conversion rates.
Ticket Size – Since most ecommerce businesses lose money on smaller orders, increasing ticket size is a strategy used by most ecommerce players to become profitable.
Operating Profit – This is the key metric which is tracked to see when and how the business will become profitable and sustainable. Ecommerce in India has matured from an Industry which is focused on growth to one which is now focused on sustainable growth.