In this segment, you will learn about the various key performance parameters that you will be calculating as part of this project.
In the next video, our expert will walk you through the KPIs that need to be calculated.
Note:
At 1:38, the SME is saying the following -”We will be deducting the total sum value of all the return orders…”.
As discussed in the video, you will be mainly calculating four KPIs on a tumbling window of one minute on orders across the globe. You will also be calculating the first three KPIs on a per-country basis.
The KPIs that you will be calculated are as follows:
- Total volume of sales:
By calculating this, you can see where and when demand is higher and try to understand the reason. It helps in creating projections for the future. The total volume of sales is the sum of the transaction value of all orders in the given time window. The total transaction value of all orders in the given time window. The total transaction value of a specific order will be calculated as follows:
∑(quantity∗unitprice)
The total volume of sales in a time interval can be calculated as the summation of the transaction values of all the orders in that time interval, the transaction amount needs to be subtracted. So, the equation for the total volume of sales, in this case, will be calculated as follows:
∑Order(quantity∗unitprice)−∑Return(quantity∗unitprice)
2. OPM (orders per minute):
Orders per minute (OPM) is another important metric for e-commerce companies. It is a direct indicator of the success of the company. As the name suggests, it is the total number of orders received in a minute.
?Invoices?
3. Rate of return:
No business likes to see a customer returning their items. Returns are costly because they need to be processed again and have adverse effects on revenue. The rate of return indicates customer satisfaction for the company. The rate of return is calculated against the total number of invoices using the following equation:
∑Returns∑Returns+∑Orders
4. Average transaction size:
The average transaction size helps in measuring the amount of money spent on average for each transaction. Evaluating this KPI over a year is a good indicator of when the customers are more likely to spend money, which enables the company to adapt their advertising accordingly. This can be calculated using the following equation:
TotalSalesVolume∑Returns+∑Orders
You will be calculating the four KPIs mentioned above for all the orders. You will also be calculating the first three KPIs on a per-country basis.
Note that in some cases, the total sales volume can be negative if the return cost is more than that of new orders in that window.
In the next segment, you will look at the solution approach as well as the tasks that you will be performing
Additional Resources
KPIs – Wiki page on what KPIs are along with examples in various domains.