Top 10 online marketplace metrics to evaluate the business performance

To earn a profit, a digital marketplace platform has to attract customers, deliver an engaging shopping experience, as well as generate a large volume of sales. It is also important to prevent user churn and other potential issues. With these aims in view, companies have to monitor a range of online marketplace metrics, from the number of unique users to gross merchandise value and lifetime value.

By continuously tracking marketplace performance indicators, organizations become able to measure business success, improve budget planning, and identify aspects that require additional effort. Furthermore, it is possible to make more informed decisions and launch personalized advertising campaigns.

This article describes the main marketplace metrics that platform owners need to analyze. But first, let’s have a look at the classification of marketplace KPIs.

The classification of online marketplace metrics

In order to measure marketplace success, it is crucial to take into account a variety of KPIs. Marketplace performance indicators are divided into the following categories:

• Usage metrics. Showcase how many users visit a marketplace website or application, the lengths of their sessions, and bounce rate. To receive detailed statistics, a company can enable Google Analytics that requires no intervention of software developers.
• Customer satisfaction metrics. These marketplace KPIs serve for estimating user engagement and retention rates. As a result, marketplace platform owners can determine reasons for churn, as well as find out how to improve relationships with existing and potential clients.
• Transaction metrics. Allow organizations to view the number of transactions within a certain time period and estimate marketplace business liquidity.
• Business metrics. By monitoring these marketplace performance indicators, businesses can see customer acquisition rate, revenue generated through the platform, and overall profitability.

Now, we will describe the core online marketplace metrics that you should track to enhance user experience and increase revenue.

Top 10 online marketplace metrics to measure success

Marketplace usage metrics

1. Monthly active users

By tracking monthly active users (MAU), marketplace operators can define the number of people who have visited an app or website at least once within a specified period. If this figure remains the same or increases very slowly, this means that a company does not attract new customers or existing clients do not come back. Reasons for this situation can be different.

For instance, a website may not provide the necessary goods, or online payments do not work, or shoppers have to wait for hours until their requests are answered, or an organization does not invest in marketplace promotion.

It is worth noting that businesses can also monitor the number of daily users and overall marketplace visits that include people who have interacted with the platform more than once during 30 days.

2. Bounce rate

Bounce rate (BR) is an online marketplace metric that represents the percentage of single-page sessions—lasting 0 seconds—to the total number of visits. In fact, bounce rate showcases the percentage of users who enter a website and immediately exit without making any actions, for example, clicking on a link. Typically, a high BR starts with 56%, an average BR ranges between 41%–55%, and a good BR is 10%–40%, according to Semrush.

Since not engaged customers are not likely to continue using a digital marketplace platform, a company should strive to make a bounce rate as low as possible. If this metric is not so high as necessary, an organization has to identify and address existing issues. For instance, web pages can load over 10 seconds or a design of web pages may look outdated.

3. Average session duration

The average session duration shows the time spent by a user on a marketplace application. By tracking this online marketplace metric, it is possible to determine the level of customer engagement. Considering websites in general, a good session length varies between 2–3 minutes.

However, this figure is higher for two-sided marketplace platforms across the majority of industries (e-commerce, education, healthcare, food service, etc.), as consumers may spend a lot of time browsing goods or services, reading reviews, and comparing prices. When monitoring this metric, it is crucial to analyze it for each page. Say, if the session length on the checkout page is too long, there may be a problem with carrying out transactions.

Customer satisfaction metrics

4. Net promoter score

A net promoter score (NPS) is among the key marketplace performance indicators demonstrating the willingness of customers to recommend the platform to their friends, family, or colleagues. To obtain an NPS, a company asks the following question: "How likely is it that you would advise an e-marketplace?" Users, in their turn, estimate the service from 0 to 10.

As a consequence, an organization can segment the audience into three categories:

• Promoters (9–10). Promoters are the most loyal customers who will keep purchasing from you while leaving positive feedback and recommending a marketplace to others.
• Passives (7–8). Consumers are satisfied with a marketplace application but can not be characterized as enthusiastic clients.
• Detractors (0–6). A group of users who are disaffected with rendered services and are willing to share their disappointment, for example, by writing negative reviews or reporting badly about a marketplace to their friends.

Hence, the more customers are engaged with an online marketplace business, the higher volume of sales will be generated through the platform. As a result, marketplace owners will manage to maximize their revenues. If an NPS is too low, it is important to collect user feedback and identify issues that have to be resolved. For instance, consumers may be dissatisfied with shipping services or insufficient payment options.

5. Conversion rate

A conversion is any desired action that a company wants a customer to take, from making a purchase to registering on a digital marketplace platform. Simply put, the conversion rate represents the number of conversions divided by the number of unique marketplace visitors within a certain period. Businesses generally have numerous conversion goals, which helps them evaluate the performance of marketplace applications.

Thanks to this, it is possible to monitor what percentage of users have done certain activities when interacting with an e-marketplace and improve lead generation. This way, an organization can earn higher profits from the same amount of traffic.

However, a good conversion rate varies across different industries. Invesp reports that the average conversion rate of web e-commerce platforms is 2.86%. In the US, the average e-commerce website conversion rate accounts for 2.63% in comparison with the worldwide rate of 4.31%.

6. Churn rate

Churn rate, also known as attrition rate, is another vital online marketplace metric that companies should track. By monitoring customer churn rate, marketplace businesses define the proportion of users that have discontinued using the app, for example, by closing their personal accounts or not visiting a website for more than a year.

A high churn rate may have an adverse effect on marketplace platform growth and revenue, as well as alert about some issues. With the view to this problem, it is essential to implement functionality that engages the audience, including one-click ordering and an artificial intelligence-based chatbot. To learn more, read our article describing the top 8 marketplace features to ensure the best customer experience. Additionally, it is reasonable to analyze vendor churn rate to find out the percentage of merchants who have stopped delivering services via the marketplace.

Transaction metrics

7. Liquidity

Liquidity is a marketplace KPI that showcases the number of transactions carried out via the platform. In order to earn a profit, an e-marketplace requires a critical transaction number and sales amount, as well as a balance of vendors and consumers. Say, if a single provider has to serve 50,000 on a monthly basis but a marketplace has 10,000 MAU, a seller will not manage to generate sufficient revenue.

Therefore, the income of an online marketplace business will be rather low. With the view of preventing this issue, it is crucial to attract clients and merchants while maintaining a balance between them.

In this regard, there are two types of this metric, namely customer liquidity and seller liquidity. Consumer liquidity is the percentage of app visitors who have made a payment. Basically, if this score is more than 30%, this means that a company is rather prosperous.

Vendor liquidity is the percentage of listings that have resulted in successful transactions performed during a specified period. On marketplaces such as Airbnb and Booking.com, liquidity—the percentage of apartment/room reservations—is measured daily. When operating a food delivery service like Uber Eats, this metric should be evaluated hourly.

It is worth noting that liquidity is closely related to another marketplace KPI, called the buyer-seller ratio. This metric shows the number of customers that a single provider is able to serve. This ratio differs across sectors. While a ratio of 1:1 is good for an online real estate marketplace, e-commerce platforms can have this number amounting to 1:10,000.

Marketplace business metrics

8. Gross merchandise volume

Gross merchandise volume (GMV) is among the principal marketplace metrics representing the total sales value of goods or services ordered via the platform over a certain period. By tracking this KPI, a company can evaluate the actual growth of the online marketplace business.

With GMV, an organization can get an understanding of:

• How popular a marketplace application is and how well it performs.
• The amount of money generated through the system.
• How well a two-sided marketplace platform performs.

However, GMV does not show you the revenue earned through the app or website. To calculate it, a company has to multiply the GMV by a take rate, which is a commission paid for each transaction, fees, or/and other marketplace monetization strategies.

9. Customer acquisition cost

Customer acquisition cost (CAC) is about the cost that an organization spends to attract a new client. Apart from marketing and sales expenditures, this price includes additional expenses, such as delivery, user support 24/7, and platform maintenance. The best thing is when CAC is close to zero, which means that a company does not make efforts to increase the audience, which is growing organically.

10. Customer lifetime value

Customer lifetime value (CLV) is among the top-priority marketplace KPIs that implies the total amount of money a consumer is expected to spend with a company during the whole period of their relationship.

By calculating the CLV, an online marketplace business can find out:

• The most profitable goods or services.
• User groups that bring major income.
• Products or services that are especially wished by consumers with the highest CLV.
• A maximum price that can be paid to acquire a new client.

Thanks to this, an organization can improve sales and marketing processes, as well as fulfill customer demand in the best possible way. When measuring CLV, it is important to remember that CLV has to be more than CAC for achieving marketplace success.