Wednesday, April 24, 2013

Making Your E-Commerce Site Profitable

Making sales through your website comes down to one thing; Traffic. Nothing else really matters because as long as the maximum amount of people are visiting your website on a daily basis, you will make sales. Of course there are mitigating factors here. Your site must actually work, the pages must be viewable, the products something that people want to purchase, and the cart or checkout system functional. All things being equal in that regard, traffic is the clincher. The world of internet marketing, like the universe itself is governed mathematically. There is no such thing as luck or chance. Only math. Google ranks websites using a mathematical algorithm that it uses to determine a site's credibility and where to place it in the searches listings. The amount of people visiting that site organically depends on how visible it is. The more visible, i.e the higher up in the searches your website is, the more people will see the site for a given search term. From there it's a simple numbers game. No matter how much you regress the numbers, using whatever formula to ascertain the likelihood of potential buyers and or clients, it all starts with that daily number of visitors.
This begs the question of how much is enough traffic to make your website profitable? There is no answer for this that covers all websites all of the time, but there is some reasonable assumptions that one can make in terms of conservative estimates to calculate a bass goal of income from a given website.
If, for example you make one sale ever 250 visitors, and your profit per sale is $50, and your monthly overheads are $200, the numbers stack up like this;
• 4 X 50 = 200: You need 4 sales a month, or one a week to break even.
• 1 sale per week means you need 250 visitors per week based on the 1/250 conversion rate.
• This breaks down to about 36 visitors per day.
Thus your conservative estimate becomes this statement:
• "To break even on this site, I need to realistically try and get 36 people to my website every day."
Once you have a handle on this, it becomes relatively easy to scale the equation into profit territory.