E-commerce operations: How to increase GMV by breaking down indicators

GMV is a very important indicator in e-commerce and a concept that e-commerce people must understand. In this article, the author starts with GMV and summarizes for us how to improve GMV by breaking down indicators.

1. What is GMV?

The conventional explanation of GMV (Gross Merchandise Volume) is sales volume. Usually combined with the concepts of time and space, it can be understood that the total transaction amount generated by a certain type of unit within a certain period of time is GMV. So how do we generally calculate GMV?

1. Formula 1: GMV = A unit transaction amount + B unit transaction amount + C unit transaction amount + ….

Let's quickly understand that the transaction amount of the unit product in a certain period of time is the summary of the transaction amounts of all smaller unit products. For example, a street supermarket or Taobao store, the total transaction amount is the sum of the transaction amounts generated by all customers in a certain period of time.

Now if we ask a question at this time, how can we increase the GMV of the supermarket or Taobao store? According to the above formula, we can only increase the consumption amount of each consumer, or increase the number of consumers. If there are 10,000 users who consume in this store, then we seem to have no way to directly intervene in the consumption amount of each consumer. Then the above formula has no reference value for us. Let's try another formula.

2. Formula 2: GMV = A unit transaction amount + B unit transaction amount + C unit transaction amount + … = average customer unit price * total number of consumers

It is not difficult to see from Formula 2 that we no longer need to develop product operation strategies for each individual. We only need to increase the average customer unit price and the total number of consumers. For this indicator, we will continue to split it into more feasible indicators.

3. Formula 3: GMV = average order value * (new user consumption UV + old user consumption UV)

New user spending = total customer pool UV * store conversion rate * transaction conversion rate * average customer price

Consumption of old users = (active UV of old users + UV of lost users * activation retention conversion rate) * average order value

After breaking down the above formula, it is not difficult to see that what we need to do is to improve: total customer pool UV, store conversion rate, transaction conversion rate, activation and retention conversion rate, and average order value.

2. What actions can influence key indicators?

If the key indicators remain unchanged, we only need to make corresponding product operation actions based on the process indicators to improve the total GMV data. Let's list some of them for analysis. How can we better serve the key indicators and ensure the improvement of the key indicators through the operation process indicators?

1. Total customer pool UV
2. Store conversion rate = number of store visitors/number of exposures
3. Consumption conversion rate = number of consumers / number of people visiting the store
4. Promotion and retention conversion rate = recalled users / total lost users
5. Average order value

The following is relatively simple. Let's focus on analyzing what actions can improve these five data. Here are a few product operation actions for your reference:

1. Total customer pool UV

1) Stock with incremental

If there is a certain base, we usually supplement our total customer pool by attracting new customers and fissioning by pulling traffic from other channels or public domains. We usually do some operational activities, such as helping to collect cards, helping to draw prizes, old customers bringing in new customers, distribution reminders, etc. By giving old users some rewards, we can guide them to actively trigger the action of pulling credit, and expand the living circle of old users through activities. For general expansion channels, we usually choose WeChat as the fission carrier. Mini programs are natural marketing fission platforms. Making a new list around mini programs can not only accumulate some users of mini programs, but also increase the difficulty of bringing traffic to the main site APP.

2) Buying volume

For main sites that have no existing volume or platforms that are not satisfied with the growth rate, you can also buy traffic in the public domain. We generally divide buying traffic into: buying downloads in the app store or buying traffic platform advertising. Compared with advertising, we prefer the delivery of precise platforms. If you want to give some medical beauty users, buying on the novel platform is obviously not so accurate.

2. In-store conversion rate

1) Number of visitors

To increase the number of store visitors, we must first increase the number of store exposures to increase the maximum base data of the entire conversion funnel and allow more data to be leaked. Secondly, we must analyze the specific business situation, for example: modify the header image, modify the promotional copy, and guide coupons, etc.

2) Number of people exposed

Store exposure is nothing more than letting more people see it. There are many ways to let people see it on the Internet, such as: investing in platform advertising CPC, CPM, CPT, you can also accumulate private domain traffic, let the private domain and public domain empower each other, and ensure exposure.

3. Consumption conversion rate

1) Number of consumers

If we want to increase the number of consumers, we need to analyze which nodes can influence users to make purchases. In fact, for consumers, the premise of product purchase behavior is that the product is important and urgent enough for them, or the platform creates a scenario for them, making them feel that they definitely need this product.

It seems that we don’t need to do anything for the former, because it is the subjective behavior of the user and there is no way to intervene, but we seem to be able to help users complete the scene building.

Let me give you a few simple examples: Double Eleven creates a scenario for buying products at a discount, flash sales create a scenario for selling at a loss, and the recommendation engine pushes scenarios that meet your expectations. After a few scenarios, you find that the machine understands you better and can always give you the activities and products you want when you need them most. For machines, it is actually simple. If you are a mother of a newborn, and you buy a can of stage two milk powder, the usage cycle of a can is two months. 50 days after your purchase, the machine will recognize that you need to buy milk powder again. It will not only prepare the three-stage milk powder you need (each baby eats different milk powder in different months), but also prepare clothes, toys, and reading materials for you. It will be hard for you not to buy them.

2) Number of people visiting the store

I won’t repeat the description mentioned above.

4. Promote retention and conversion rate

1) The total number of lost users is easy to understand. We usually give defined rules, such as no visit in the past month, or no purchase behavior in the past two months. As long as the rules are defined, we can filter them out.

2) The remaining issue is user recall. As far as APP is concerned, the means of recall are still very simple, generally SMS and push. For the single means of recall, what we can do is to continuously optimize the possibility of recall, which requires extremely high accuracy in user screening, recall copy content, and attractiveness of recall activities.

For example, accurate screening of users is of utmost importance in the early preparation of user labels. Filling in user information, collecting behavior, purchasing goods, adding to carts, search records, etc. all play a decisive role in the accuracy of labels. This also involves a lot of preference algorithms, machine learning and other technical means. If the company does not have reserves in this area, it is also a good choice to first screen out users through some specific rules.

5. Average order value

In the consumption behavior of the original customers, the consumption amount of the customers is forcibly increased. Here, the platform needs to trigger some behaviors to guide the customers to continue consuming. Simply speaking, coupons are a good means. When users want to get this discount, they will increase the purchase amount, which will increase the average order value to a certain extent.

Not only can customers actively use coupons, the platform will also use recommendation algorithms to help you calculate how much money you still have left to get a larger discount. At this time, it will recommend products that meet the remaining amount. You can also add a little logic here. For example, if the product you recommend is of his interest and has a higher profit margin, you can see whether it can increase the possibility of his purchase and increase the platform's profit.

3. My thoughts based on platform indicators

In the course of work, we may easily receive indicators assigned by our leaders. Don't be anxious at this time. Clearly sort out the related businesses and logics corresponding to the indicators, and then break down the process indicators around the key indicators issued by the leaders. Then break down the specific product operation actions around the process indicators. The requirement for process indicators is to actually affect the core indicators, and the broken down product application actions can directly affect the key indicators.

At the same time, you should also pay attention to the key indicators assigned by the leaders, and whether this indicator is concrete enough to be executable. If the leader asks you to increase GMV by 10% next month, regardless of whether this indicator can be achieved, at least the leader is a business-driven leader; if the leader says that next month you should let users consume more and be more active, then this leader is most likely an emotional leader, but as a worker, don't be fooled by this indicator. Ask yourself, how do you define more consumption and more activity? If gmv increases by 10%, can it be defined as more consumption?

Come on, workers!

Author: Hankys

Source: Lao Han talks about the workplace