Estimating Online Sales

Nearly every eCommerce project that we bid on comes down to one final question:

How much will we sell online?

It's impossible to guarantee any sort of a projection but we have a formula that will get us in range. Our estimates are a combination of average conversion rates times current traffic levels and a bit of intuition. This estimate isn't possible without an honest traffic number.

Estimating Online Sales

We can make a solid estimate of online sales once we have a number for Avg. Monthly Unique visitors in hand. The more months we have to work from, the better - this gives us an idea of growth/decline rate and seasonality.

Take this average number of visitors and multiply it by a conversion rate you feel comfortable with using. This will give you an estimate of the average number of people who will purchase from you because of your site. Call this number Total Buys.

Online conversion rates can easily vary from 1% to 7%. We rely heavily on Omniture SiteCatalyst for analytics and we feel comfortable with starting at 3% conversion for a new site with a solid design.

Remember That Some Products Don't Sell Online

Here's where you need to trust your intuition. There are products that simply don't sell online and these products may not be obvious. If the timeliness of the product is so immediate that next-day delivery is too late then you will have a tough time selling it online.

Average Order Size

Two more variables need to be added to the formula: Avg. Order Size and another conversion percentage based on the Avg. Order Size.

Ask your prospective client for their average order size at the brick and mortar store(s). This number is often spot-on for web orders. If you don't have this number, pull an average price of all products available from the site and adjust that number about 30% down. This adjustment will accommodate for a higher percentage of small items over the bigger-ticket units.

If this Avg. Order Size is over $500, multiply your Total Buys number by 10%. If the Avg. Order Size is less than $500, multiply Total Buys by 40%.

Multiple eCommerce studies have shown - Of the visitors who start shopping online and purchase from you, better than 60% will purchase offline. The number increases to 90% if the purchase is over $500. This number should be referred to as the Online Buys Percentage.

The Final Estimate Formula

Total Buys = (Avg. Monthly Unique * Conversion Rate)

Estimated Revenue = (Total Buys * Avg. Order Size) * Online Buys Percentage


Remember: This is an estimate!

Keep in mind, this is an estimate based upon current traffic numbers and a fairly low conversion rate. We often bracket the current traffic numbers with a 50 and 100% average traffic increase over the next year.