E-Commerce Analytics: KPIs (Conversion, AOV, Churn), Funnels, Cohorts and A/B Testing Basics Questions

Question 1

List any three important e-commerce KPIs and mention what each measures (use a table).

Accepted Answer

KPIs (concept):

| KPI | What it measures |
|---|---|
| **Conversion rate** | orders/visits |
| **AOV** | revenue/orders |
| Cart abandonment | carts not converted |
| Return rate | returns/orders |
| Payment success | successful payments/attempts |

Write any three.

Question 2

Explain an e-commerce funnel (any five stages) and draw a simple funnel flowchart.

Accepted Answer

Funnel stages (concept): visits → product views → add to cart → checkout started → payment success → order placed.

Flowchart:

```text
Visit -> View -> Add to Cart -> Checkout -> Payment -> Order
```

Question 3

Interpret funnel drop-offs: give any three drop-off points and one likely cause for each (use a table).

Accepted Answer

Drop-offs and causes (concept):

| Drop-off point | Likely cause (concept) |
|---|---|
| View → Add to cart | weak PDP info/low trust/high price |
| Add to cart → Checkout | hidden charges/long forms |
| Checkout → Payment success | payment failures/limited payment options |
| Payment → Order | technical errors/timeout |

Write any three rows.

Question 4

Explain cohort analysis (any three points) and show a simple cohort table.

Accepted Answer

**Cohort analysis** tracks behavior/retention of users who started in the same period (concept).

Any three points:
- group users by acquisition month/event
- track retention/repeat rate over time
- compare cohorts to see improvement/decline (concept)

Example table:

| Cohort | Month 0 | Month 1 | Month 2 |
|---|---:|---:|---:|
| Jan | 100% | 35% | 22% |
| Feb | 100% | 40% | 25% |

Question 5

Define conversion rate in e-commerce.

Accepted Answer

**Conversion rate** is the ratio of orders to visits (Orders/Visits), showing how well visitors are converted into buyers (concept).

Question 6

What is AOV?

Accepted Answer

**AOV (Average Order Value)** is average revenue per order (Revenue/Orders) (overview).

Question 7

A funnel shows step-by-step user journey and drop-offs. (True/False)

Accepted Answer

True. A **funnel** maps stages (visit → purchase) and where users drop off (concept).

Question 8

Define churn in e-commerce.

Accepted Answer

**Churn** is the percentage of customers who stop purchasing during a given period (concept).

Question 9

Cohort analysis groups users based on a shared start time/event. (True/False)

Accepted Answer

True. **Cohort analysis** tracks groups (e.g., acquired in a month) over time for retention/behavior (concept).

Question 10

A/B testing compares two versions to see which improves a KPI. (True/False)

Accepted Answer

True. **A/B testing** compares A (control) vs B (variant) to improve a metric like conversion (concept).

Question 11

Define AOV and write any three ways to improve AOV (use a table).

Accepted Answer

**AOV (Average Order Value)** = Revenue / Orders (overview).

Ways to improve AOV (concept):

| Method | Example (concept) |
|---|---|
| Bundling | combo offers (e.g., shampoo + conditioner) |
| Cross-sell/upsell | “Frequently bought together” / higher variant |
| Free shipping threshold | “Free delivery above ₹X” |
| Personalized recommendations | add relevant add-ons |

Write any three methods.

Question 12

List any three common mistakes in A/B testing and how to avoid them (use a table).

Accepted Answer

Common A/B testing mistakes and fixes (concept):

| Mistake | Why it is wrong (concept) | How to avoid (concept) |
|---|---|---|
| stopping too early | insufficient sample size | run for enough time/data |
| multiple changes together | can't identify cause | test **one change** |
| unclear KPI | confusing result | choose one primary metric |
| mid-test changes | adds noise | keep conditions stable |

Write any three rows.

Question 13

Explain e-commerce KPIs and how they guide decisions (exam-style) with a table.

Accepted Answer

### Meaning
**KPIs** are measurable indicators used to evaluate performance and make improvements in e-commerce (concept).

### KPI → decision mapping (table)

| KPI | What it indicates (concept) | Typical action (concept) |
|---|---|---|
| **Conversion rate** | site effectiveness | improve UX/PDP/checkout |
| Cart abandonment | checkout friction | simplify steps, show charges early |
| **Payment success** | payment reliability | add options, retry flow, fix failures |
| Return rate | mismatch/quality issues | improve catalogue, QC, packaging |
| **AOV** | basket size | bundles, cross-sell, pricing offers |

Conclusion: Tracking KPIs continuously improves conversion, cost control and profitability (concept).

Question 14

Explain A/B testing process and precautions (exam-style) with a flowchart and table.

Accepted Answer

### A/B testing process

```text
Hypothesis -> Create A/B -> Split traffic -> Measure KPI -> Decide winner -> Implement
```

### Precautions (table)

| Rule | Why (concept) |
|---|---|
| test **one change** at a time | identifies true cause |
| define primary KPI | avoids confusion |
| run long enough | sufficient sample size |
| keep other changes stable | reduces noise |

Conclusion: A/B testing improves conversion safely using controlled experiments (concept).

Question 15

Discuss churn and retention in e-commerce and suggest ways to reduce churn (exam-style) with a table.

Accepted Answer

### Meaning
- **Churn**: customers who stop purchasing in a period.
- **Retention**: customers who continue purchasing (concept).

### Reducing churn (table)

| Churn driver (concept) | Action to reduce churn (concept) |
|---|---|
| late delivery/poor tracking | reliable SLA + proactive updates |
| mismatch/defects | better catalogue + QC + packaging |
| poor support/refund delays | faster resolution + refund transparency |
| low engagement | personalization + loyalty rewards |

Conclusion: Better experience and service quality improve retention and increase LTV (concept).

KPI	What it measures
Conversion rate	orders/visits
AOV	revenue/orders
Cart abandonment	carts not converted
Return rate	returns/orders
Payment success	successful payments/attempts

Drop-off point	Likely cause (concept)
View → Add to cart	weak PDP info/low trust/high price
Add to cart → Checkout	hidden charges/long forms
Checkout → Payment success	payment failures/limited payment options
Payment → Order	technical errors/timeout

E-Commerce Analytics: KPIs (Conversion, AOV, Churn), Funnels, Cohorts and A/B Testing Basics

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