Closing in on Conversion Rates
Furniture Today Staff -- Furniture Today, September 29, 2011
For online retailers, a conversion rate is the ratio of shopping sessions to purchase sessions. It's the online equivalent of a brick-and-mortar store's close ratio - the number of visitors to the number of buyers.
Online conversion rates are much lower than in-store close rates as a larger portion of consumers browse online. Eight out of ten consumers research a product online before buying it, through any channel, according to figures from the Pew Internet & American Life Project.
Recent studies put the worldwide conversion rate for online sales of all product categories at about 2%. As a comparison, a brick-and-mortar furniture store's close ratio was 35% last year, according to Furniture/Today's 2010 Furniture Store Performance Report.
That means that only 2% of all consumers visiting a furniture website accounted for the $6.4 billion worth of furniture sold online last year.
"There's an opportunity to increase a retailer's online sales dramatically by focusing on increasing its conversion rate," according to David Lively of Grey Suit Retail. "It's no longer acceptable for furniture dealers to spend a percentage of their marketing dollars on an online strategy and not receive a real sales return-on-investment," Lively explains.
Organic searches on Google are still the top source online shoppers use to find products. San Francisco-based RichRelevance recently released its Online Consumer Report which found that 80.6% of shoppers use Google to search for products. Less than 1% of online traffic came from Facebook and Twitter.
According to RichRelevance, conversion rates remain below 3% for all traffic sources. AOL has the highest conversion rate among the search engine channels at 2.9%.
Conversion rates |
Online traffic sources % of visitor traffic |
|
1.9% |
 |
|
Yahoo |
2.6% |
|
Bing |
2.4% |
|
AOL |
2.9% |
|
1.2% |
||
0.5% |
||
|
For all U.S. retail products Source: RichRelevance Online Consumer Report, August 2011 | ||
With Google's majority share among online channels, it is increasingly important for retailers to use search engine optimization to drive consumers to their sites. While Facebook and Twitter have low conversion rates, they can play a large role in helping consumers connect with retailers.
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