Hi everyone, Working on a business plan for a new (not launched) niche ecommerce website and trying to estimate monthly sales based upon estimated traffic to website. Some assumptions I have used so far are as follows: 1.) Am using my closest competitors monthly traffic as a baseline for my business. Have made assumptions related to alexa ranking, www.trafficestimate.com, www.compete.com, and www.quantcast.com. Have been very conservative with my estimate here. For this discussion lets use 5,000 monthly visitors which is basically 40% of my competition and is a number I feel should be able to hit quite quickly and grow from. 2.) For a conversion rate based upon my business vertical market, I have selected a conservative 1%. The place I grabbed this data point from is http://index.fireclick.com/fireindex.php?segment=9 . (If there is someplace else that is better more then willing to hear about it!!!) 3.) For Average Order Value a customer spends, the only numbers I was able to grab from the net was http://www.nielsen-netratings.com/pr/pr_050407.pdf . For this discussion will use $102.00. This is from 2005 have not been able to find anything from 2008. So with these assumptions I come up with the following sales forecast: 5000 x 1% Conversion Rate x $102.00 AOV =$5,100.00/month Now the questions I have are 1.) This sales figure is a general overall estimate of all goods sold, if I intend to sell Widgets A, Widgets B, Widgets C, and Widgets B is there a way to dive even deeper in the sales forecast for each product line. ?? This is where I am stuck... 2.) Also curious on peoples thoughts on best way to establish a growth estimate for monthly visitors, example)1st month 500 visitors, 2nd month 1000 visitors and so forth. If there is a national average for successful webstores. Any and all feedback is helpful!! thanks again.
1) If you are planning to do detailed forecasting, look into the various forms of "Proforma Forecasting". That's what most business plans use, and there are various ways to approach it that you'll find online. 2) As a general rule, assume 1% of your website will convert into a sale. Over time, you may find you site converts higher or lower than this, but 1% is the average for ecommerce websites. So with your examples: First Month: 500 visits =~ 5 sales =~ $510.00 Second Month: 1000 visits =~ 10 sales =~ $1020.00 Once you've had your site up and running with a good analytics program, you'll find what your actual conversion rate is and be able to forecast way more accurately into the future.
contact me and i will help you out on estimating the correct number for the traffic, i'm also into e-commerce. as far as conversion rate? it's all about the keywords you use to drive the traffic or the sites that sends you traffic (referring sites). Sites that send people with no intention to buy but are useless, only good for long run if these users are seeking for reviews/info and will be returned in the future (and again it will depend on their time they spend on your site) also your assumption per a sale, how much your visitors will spend money will depend on the products you have, since higher prices products will tend users to hesitate before they buy, so less sales.
Thanks Christian, been researching today everything about proforma forecasting, very interesting. Wounded1987, thanks for the information and think I will need to take you up on your offer! Curious, noticing that some of the marketing papers completed by Research Firms on the interent are very expensive, ($2000-3000) and most likely contain alot of important information. Do you think library's carry this information?