Ecommerce Ecommerce Analytics & Metrics 2 — Questions and Answers
Question 1: What is a cohort analysis in ecommerce customer analytics?
- Grouping customers who started buying in the same time period and tracking their behavior over time to measure retention (Correct answer)
- Segmenting customers by demographic characteristics for targeted advertising
- Comparing the purchase frequency of loyalty members versus non-members
- Analyzing product reviews submitted within the same week
Correct answer: Grouping customers who started buying in the same time period and tracking their behavior over time to measure retention
Cohort analysis reveals retention patterns — for example, whether customers acquired in Q4 have higher LTV than those acquired in Q1.
Question 2: What does the 'purchase frequency' metric measure in ecommerce?
- The average number of times a customer buys within a given time period (Correct answer)
- The number of times a product page is viewed before purchase
- The frequency with which the merchant restocks inventory
- How often customers leave product reviews
Correct answer: The average number of times a customer buys within a given time period
Purchase frequency is calculated as total orders divided by unique customers in a period; increasing it is a key lever for growing revenue without new customer acquisition.
Question 3: What is the 'return rate' metric and why do high rates hurt ecommerce profitability?
- The percentage of orders returned — high rates erode margins because return shipping, restocking, and processing add significant costs (Correct answer)
- The percentage of customers who return to buy again — higher is better
- The rate at which ad spend is returned as revenue — same as ROAS
- The ratio of store credit issued versus cash refunds
Correct answer: The percentage of orders returned — high rates erode margins because return shipping, restocking, and processing add significant costs
Return rates in US ecommerce average 20–30% and each return can cost merchants $10–30 in logistics and processing, making returns management critical to profitability.
Question 4: What does 'session recording' software like Hotjar or FullStory capture for ecommerce analysis?
- Video replays of real user sessions showing mouse movements, clicks, and scrolling behavior on the website (Correct answer)
- Audio recordings of customer service phone calls
- Screen recordings of warehouse staff processing orders
- Video content uploaded by customers as product reviews
Correct answer: Video replays of real user sessions showing mouse movements, clicks, and scrolling behavior on the website
Session recording tools capture anonymized user behavior videos that reveal usability problems invisible in aggregate analytics data.
Question 5: What is 'revenue per visitor' (RPV) and how does it differ from conversion rate?
- RPV = Total revenue ÷ Total visitors — it combines conversion rate AND average order value into a single efficiency metric (Correct answer)
- RPV measures only organic traffic revenue; conversion rate includes all traffic
- They are the same metric expressed differently
- RPV excludes repeat customers; conversion rate includes all buyers
Correct answer: RPV = Total revenue ÷ Total visitors — it combines conversion rate AND average order value into a single efficiency metric
RPV is more comprehensive than conversion rate because a store could have a high conversion rate but low AOV, resulting in low RPV and vice versa.
Question 6: What does 'inventory turnover' analysis tell an ecommerce merchant about their product assortment?
- Which products sell quickly vs. slowly, enabling smarter buying, discounting, and discontinuation decisions (Correct answer)
- How many times staff physically count the warehouse inventory per year
- The speed at which new products are added to the website catalog
- How often customers switch between product brands in the same category
Correct answer: Which products sell quickly vs. slowly, enabling smarter buying, discounting, and discontinuation decisions
Products with very low turnover tie up cash and warehouse space, signaling the need for markdowns, promotions, or removal from the assortment.
Ecommerce Ecommerce Analytics & Metrics 2
What is a cohort analysis in ecommerce customer analytics?