The ecommerce market is growing, and it’s growing fast. In 2013, the growth of ecommerce significantly outpaced brick-and-mortar both domestically and worldwide. 2014 kept up this pace of growth, and according to recent projections from eMarketer, this trend is going to continue in the coming years:

  • Worldwide total retail will continue to grow between 5-6% through 2018
  • Worldwide ecommerce will grow at a rate between 13-25%
  • U.S. total retail will grow at a rate around 5.5%
  • U.S. ecommerce will grow at a rate between 11-16.5%

On average, ecommerce retailers are making over $1 million in monthly revenue by the end of year three, not a bad business to be in. This is an interesting data point, but as Avinash Kaushik famously said, “The interesting thing about averages is that they hide the truth very effectively.” So, here’s the first tip about indicators of breakout ecommerce growth: ignore the averages.

So let’s step away from averages and start looking at what separates the best ecommerce companies from the rest.

Indicator #1: Acquire new customers 3.5x faster

Once we get the averages out of the way, we can start looking at performance by quartiles. Top performing companies are Quartile 1, next best are Quartile 2, and so on. What you see here is that out of the gate, top performing ecommerce companies are performing exceptionally well at one of the toughest challenges of any new business — acquiring customers.

By month six, top performing companies are acquiring new customers at a rate 3.5x that of the others. They maintain this advantage throughout the first three years of their business. By the end of year three, this builds into top performers having 196% more total customers than others.

Indicator #2: 36% Higher Average Order Value

Top performing customers are acquiring customers at a faster pace than other companies, they’re also getting those customers to spend more per order. Top performing ecommerce companies have an average order value (AOV) of $102, 36% higher than companies in the lowest quartile.

Indicator #3: 3.5x the Number of Monthly Orders

The third growth indicator is that top quartile companies are generating over three and half times the number of monthly orders by month six. At the end of year three, they have reached over 500,000 all-time orders, while the lower quartiles have yet to break 150,000.

Indicator #4: More loyal customer base

All these repeat purchases mean that by the end of year three top performing companies have a loyal customer base, with the majority of their revenue coming from repeat purchases. The ability to keep customers coming back creates a “renewable resource” for top performing companies.

Indicator #5: $600k in monthly revenue by month six

And what all of these indicators add up to is the bottom line — revenue. By month six, top performing companies are generating $600k in monthly revenue, over 4x that of Quartile 2 companies.

How are they doing it?!

Of course, this is the million dollar question, and it’s a tough one to answer definitively. But we caught up with our friends over at Lerer Hippeau Ventures to see what their theories were. Here are a few areas where they’ve observed best-in-class companies creating a competitive advantage:

  • Creating a near frictionless buying experience. From solving the inconvenience of mattress shopping (Casper) to delivering all the ingredients for a healthy home-cooked meal (Plated), ecommerce companies are building lasting consumer brands by blurring the line between product and service.
  • Building passionate communities. Amazon owns commodities, but best-in-class companies build competitive advantage by engaging with vibrant communities. Bark & Co. has built a strong community around shared interests of dog lovers, just as Chubbies has done with shorts for “bros.” In these companies, customer loyalty fuels growth.
  • Blending content and commerce. Other companies have re-imagined the catalogue and turned it into an editorial experience. Examples of this include Thrillist with Jackthreads and Glossier with Into the Gloss.
  • Offering a “try before you buy” experience. The “What if it’s not like the picture?” hurdle is a barrier that any ecommerce retailer needs to overcome. But some of today’s biggest success stories come from companies who have made overcoming this hurdle a core part of their experience. Warby Parker’s home try on kits for prescription glasses builds returns into the experience. Birchbox reimagined the cosmetic sample, creating an entirely unique buying experience.

Bottom line: Top performing companies excel at two things:

  1. a product and brand experience that customers love and keep coming back for, and
  2. a keen focus on their KPIs, particularly around customer acquisition.

Get more ecommerce benchmark data

In case you’re wondering, all of the data in this blog post comes from our 2015 Ecommerce Growth Benchmark Report. It’s the result of analyzing 200+ ecommerce businesses, 31 million customers, and $25 billion in transactions.

Over the next few months we’re going to continue to mine this data set and uncover the secrets of top-performing ecommerce companies. The 2015 Ecommerce Growth Benchmark is only the first report in this series. Sign up to access the full report here and, if you subscribe to the blog, you’ll automatically be notified when new research is released.