Interview with Evgenii Kuralov: Which Metrics to Use in E-commerce and How Product Card Content Affects Sales
Time to read: 20 minutes
Our CEO, Jane Vyshnova, interviewed Evgenii Kuralov, one of the leading e-commerce experts, to find out the best metrics e-commerce businesses need to track, how COVID-19 changed the industry, what lies ahead for e-commerce, and how to create good product cards.
Evgenii, where are your strengths in e-commerce, and what is the most interesting thing you could highlight from your experience?
Frankly speaking, I never thought I would do this kind of job. Initially, I used to work in classical retail. It was a company that sells household appliances. When I moved to Chisinau, the capital of Moldova, I got a job in the Ukrainian company Foxmart as a sales assistant. Although I already had managerial experience, it was hard to start as a manager. Still, this position has been my first impulse for me.
After about half a year of work at Foxmart in Moldova, I passed an internal contest and was appointed to the position of manager in the online store. In spite, I had absolutely no background and hadn't been involved in e-commerce before, my curiosity about technology, development in general, and my knowledge about e-commerce helped me to get that position. On top of that, I got a great team of guys from Kyiv who helped me to improve my skills and gain experience, which opened doors to the e-commerce world.
Having realized that I like working in this field, I decided to pursue this career. The market was just beginning to develop actively and rapidly at that time. So, in Moldova, in 2010, this niche was non-competitive. When I was in my sales director position at Foxmart, I performed a market analysis and found only 8 target home appliances online stores and additionally 4 stores that were indirectly related to the sales of home appliances. Six months later, I did a follow-up re-survey and found 36 target competitor stores that were focused on the appliance market. The market was just forming then, and it was very interesting, because we didn't rely on any Western canons, but did everything solely based on our own experience.
After I quit my job as an online store manager at Foxmart, I returned to retail. I was working in some IT companies as a product and project manager. All this experience gave me an excellent background, which helped to become a pretty strong and qualified specialist. I understood e-commerce basics while dealing with all sorts of contractors. I also studied marketing in parallel as it is an integral part of the existence and implementation of a successful online store.
One of the most interesting cases in terms of management competence was related to the experience I gained working in the real estate sector. Great attention in the project was paid to the interaction of clients with the online portal and real estate applications, which the company was actively developing independently. I have organizational psychology education and working in the position of managing director, I managed to improve my skills as a psychologist.
Such a broad set of competencies lets me manage projects. The e-commerce market is so wide now that it's hard to manage it just by having superficial competence and general knowledge of digital marketing. A diverse understanding of all e-commerce market management aspects allows me to understand what will happen to this sector in the future and where it will move to.
You mentioned Foxmart as the first store you worked at. Can you tell more about the e-commerce projects you encountered and how you witnessed them evolve after that time?
After I quit my work as an online sales director at Foxmart, I was invited to another Moldovan e-commerce project, which was smaller and suited my experience. Here I had some difficulties because before that I worked in a big, powerful company where all the logistics, procurement processes, and other things were already set up. But here, I started in a company with only 10 people, and it was a pure e-commerce project with no offline stores. This was my first case where an online store existed without being connected to a big business. This experience showed me how working on a small project and budget, but big ambitions can be fruitful and successful. After I left, the project existed for about 3 more years.
After that, I worked in different companies on e-commerce projects. I was working as a marketer and tried to find ways how to improve website conversion and direct more quality traffic through marketing channels.
When I was working as marketing director with my Ukrainian colleagues on a chain of household appliance stores project, I got an offer from Azerbaijan. Initially, the contractors were looking for someone who would manage the sales process remotely on the updated front end in terms of improving the user experience. They needed to work on the UI/UX component of the site and relaunch it. Then I realized that their sales and the whole online store issue wouldn't be resolved just by restarting the front-end part. It required a comprehensive management approach. At that time team didn't have enough knowledge for good expertise. For a while, I was taking over the digital marketer position using my knowledge and previous work experience in e-commerce.
When a retailer starts to get serious about its digital channel, what metrics would you advise paying attention to?
The simplest metric that I advise to be taken as a basis, is growth. I always rely on this metric and often talk about it.
In addition to this, to calculate the internal indicators of the company you will need ROI or ROMI. These indicators contain commercial information that you don't always want to disclose to external partners. So, internally, these two indicators should be calculated.
And at the external partners - marketing agencies' level the best indicator will be ROAS as it is very simple and will be clear for both internal and external parties. ROAS (Return on Ad Spend) is a cool marketing metric that shows what percentage of sales you got for $1.
Also, there are three principles that I follow in my approach to using metrics and indicators:
- Everything that can be measured must be measured. If something can't be measured, you must figure out how to measure it and start doing it.
- Indicators of any metric should be in 3 different forms:
Past indicators - this is your experience, and there is no difference if this metric has bad or good indicators. You should analyze them carefully, accept them, draw conclusions and keep working (you must save all indicators to take them into account in the future in the analysis)
Current indicators - these are your today's results and they show you the quality of yesterday’s work. You can always correlate today's data with yesterday's or with data from the last month or year to understand what is the quality of today’s performance.
The indicators of the future - this is your forecast for tomorrow. The more accurate it turns out to be, the more expertise you have about both the process you are measuring and the area you are operating in.
- The team must have employees responsible for each of the metrics. The employees' KPIs must contain these metrics and thus they will be constantly thinking about how to influence performance and will try to do it.
As you understand, there can be many metrics at all stages of the project and not all companies need to have the same ones. There are important and common top-level metrics for the main processes. Also, there are lower-level metrics that you can display for yourself to better understand the dynamics of the process that you are currently building or optimizing. You will need the detailed metrics only at certain moments. And further, you would rather leave 2 or 3 ones that you will apply to ensure everything is ok or when there is an “anomaly” in the top-level metrics and you want to realize what it causes.
Every e-commerce project can be divided into several stages in terms of the client's way to the completion of the order and its delivery.
The first stage is website traffic generation. Here I advise you to derive the “session value” metric. For that, you need to divide the number of sales by the number of sessions, and that way you will understand how much income your site generates in one session. It would help if you tracked the dynamics of this metric. If the dynamics start to deteriorate, it means that either you are getting low-quality traffic from the marketing channels or the conversion of your site has dipped for some reason.
The second stage is conversion. To get an understanding of why it can change, pay attention to the conversions between the stages that the client went through on the site. This data could be found in Google Analytics in the "Buying behavior” report. If there is an anomaly with adding the goods to the cart at the level of sessions, it indicates that either the customers don't find what they need or the price is higher than the rest of the market offers. Also, if the metrics of sessions with transactions have dipped, pay attention to the checkout page. The issues often occur due to an inconvenient or incomprehensible checkout form.
The third stage is delivery. This stage can include many different metrics, but all of them should indicate how fast you deliver the order to the client. It is crucial to know about the speed at each stage and understand peak loads and operating production of staff to determine in time either to connect third-party delivery services or increase the operating capacity of your logistics.
I always recommend highlighting the top metrics such as:
- Daily number of orders,
- Daily sales amount,
- Daily average bill,
- Daily number of sessions,
- Daily conversion rate
- Daily delivery rate
You should compare these metrics with the metrics of yesterday, last month, and the averages of the previous 3 months. Such an approach always gives an objective understanding of today's metrics. And in case I notice anomalies in some of them, I turn to the lower-level metrics to understand why the top-level metric showed an anomaly.
Also, I would like to note that all the indicators of life metrics of your project should fit one dashboard, and ideally on one screen of a smartphone. Thus you will have good control over your project.
How, as you think, did the behavior of channels change before COVID-19, and afterward? What should we pay attention to in the future? What were the ROAS indicators then, and what indicators do you see now?
With the complete transition of the shops online, we identified an interesting pattern. We clearly defined: the effectiveness of advertising marketing digital channels immediately increases by exactly three times.
The effectiveness increases because people start to go through these channels and make orders. Before the pandemic, people also came to purchase through these channels, but there was a difference. Users could visit the website only to get information about the product's price and parameters. Then they went to an offline store to feel the product with their hands, communicate with the consultants, get answers to the missing questions and only later make the decision to purchase in an offline store.
Just when the pandemic broke out, people started to make decisions about the orders almost immediately and without hesitation. But as soon as offline stores began to work, the effectiveness of sales through marketing channels dropped by a factor of 3. And when offline stores closed, it increased again by a factor of 3.
Overall, if you ask me how the pandemic has affected sales and channels, I can say that it has played like a booster. A great number of people got their first user experience online. Also, the portrait of the consumer as a whole has changed.
Before the pandemic, the basic pattern of the buyer was to study a product from A to Z in an offline store and then possibly buy it online, choosing and comparing the options.
Since buyer persona became older, the overall approach to the selection and purchasing of goods also has begun to change. This led to changes in customer behavior patterns as well as an increase in the average check. People with absolutely no previous experience and understanding began to make orders online and therefore, the age group of buyers has changed (usually people 50+ years). Before the pandemic, online shopping was made mostly by young people without fear of risks, but now there appeared consumers with a different view and another level of financial capacity. This group of buyers mainly prefers to buy something expensive, but of high quality and in the long term.
That is why when the pandemic started we faced the issue that it was necessary to set up our store in terms of a new flow of customers. Also, we needed to provide the new target audience with the best possible information about the product, so that the user had no desire to close the site and go to another online store. At this point, we focused on the most detailed product card, pleasant product presentation, and informative content.
Evgenii, please tell us about the product card information content and this component analysis. How does it affect sales, and why is it important? I want to tell you an exciting story about one service that worked directly with such manufacturers as Samsung, LG, and other well-known brands. The purpose of the tool is not only to attract the consumer's attention but also to form an accurate picture of the product. On its constructor, the tool was forming a special rich content in which the product page represents a tandem of text and images, a video with a product description. The content contains information about the features and benefits of the product or service and demonstrates how to use it.
We started to work with this service as we needed to fill product cards quickly and qualitatively. The service could provide us with the information on fill rate between our online store and competitors' stores. Also, it would be possible to trace who has a better product presentation and as a consequence who has a higher chance of purchase.
We decided that for successful sales, it is important not only to have a well-populated product card. The amount of traffic coming to the page and the conversion rate of the product in relation to the traffic also matter. After working through this information, we started to see interesting information about the correlation between the product card and sales. There were cases when the product has a perfectly designed card, and there are lots of interactions with it, but the amount of sales is small. So, it became a wake-up call to us that perhaps this product has something wrong with the price. And based on marketing data we should try to do a promotion and try to reduce the price, making it more competitive in the market.
Getting back to the question about the coming pandemic recession. What do you think e-commerce needs to stay in trend? What are the dynamics and trends in this sector?
When I consider e-commerce as an example of several of my projects, I do not see a downward trend or any problems in sales. The dynamics are only positive, and even offline sales don't have time to grow as much as online. After COVID people stopped being afraid to buy online and now they understand that sometimes ordering online is even more convenient.
By tracking the behavior of our customers, we see that for example, a customer may buy something online 2 or 3 times, buy it offline the 4th or 5th time, and then order online again. We understand that, as a rule, people order online something large and bulky. So, I always emphasize that in an online store, customers should feel at home - warm, cozy, and comfortable. Only then, the customers will pay attention, and make an order. It's important that nothing distracts and irritates them, but rather contributes to obtaining useful information, and finding good deals, based on their past purchases.
Currently, many businesses are actively trying to improve and accelerate the "last mile" stage making it its competitive advantage. It implies the faster and better you can deliver the product to the more remote location, the more chances that people will buy it exactly from you.
That's the reason why online has become even more profitable for customers. 365 days a year, couriers can deliver to the user any chosen online store product from a warehouse or offline store within 2-3 hours or a convenient time slot. After all, before, some people didn't want to wait 2-3 days for delivery and therefore preferred offline stores. With the acceleration of the "last mile" stage, things have significantly moved in favor of buying exactly in the online store.
Today, everyone is talking about breaking delivery chains and the fact that only those who manage to create strong delivery chains will remain in the market. So, how can e-commerce avoid ruptures in logistics chains as painlessly as possible in terms of business processes?
In this matter, a lot depends on the market of the country and the kind of goods they have.
From our experience, we defined several third-party local postal services through which we can send goods without any problems and the client will pick up his goods himself at the branch on the specified date. But there are deliveries of larger items, and it is important to optimize the process of information transfer about the delivery of the order. This is where the technical preparation comes in from my side and the partners' side.
If all of these processes are established, and the delivery company is responsible for its employees, it's great and we will benefit from it. The delivery satisfaction factor affects the NPS index (Net Promoter Score). At the same time, each project has its logistics, which must have automation and technical support.
In general, the logistics process is very complex and complicated. If you have large investments, ambitions, and strategic plans, then you need to invest a lot of money in logistics, open hubs, pick-up points, and where you can quickly pick up the goods you need. If you don't have large investments, you have to turn to delivery services and partners providing courier services.
Let's touch on sales and the marketplace. Do you see the marketplace model as potentially successful for e-commerce? And what is your experience of working with marketplaces?
Talking about the marketplace model in its ideal form, then it will be relevant for any market. The marketplace generates crazy amounts of traffic and its main task is to make sure that your product would be noticed and sold there. However, the marketplace is most interesting for small and medium-sized businesses.
I know many stories of marketplace failures. Among them were the ones with a large budget, but marketplace mismanagement and misunderstanding of how to properly monetize it. The marketplace is not just about making money from commissions. Often the monetization share in the form of commission can be only 40-50% of the profitability of the entire marketplace.
Evgenii, I am grateful that you shared your work experience. It was nice to learn so many new things about e-commerce. And I think our readers will get a lot of interesting information to emphasize from our dialogue. Thank you for the interview.
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