전환율: 럭셔리 브랜드가 전자상거래의 전환 능력을 잘못 판단하는 방식

Having established that traditional e-commerce metrics — such as Add-to-Cart Rate, Conversion Rate, and Digital Revenue — do not align with a luxury fashion brand’s objective of driving customers to physical stores, and having introduced Engagement Rate as a more relevant metric for the Product Discovery stage, this analysis now shifts focus to the next phase of the online funnel: the purchase stage.

Here, too, the goal is to identify a north-star metric that can serve as a guiding benchmark for all initiatives aimed at optimizing this phase. As in previous discussions, it is essential to take a holistic perspective, recognizing that the e-commerce platform is just one component of a broader brand ecosystem.

The objective is not to maximize the online channel in isolation but to configure it in a way that enhances the performance of the entire ecosystem. At times, this may mean that certain elements appear to underperform — when in reality, they contribute more significantly to long-term brand success by unlocking greater systemic value. With this perspective, identifying the right KPIs becomes crucial, ensuring that all experiments and optimizations align with the broader brand strategy.

At the lower funnel stage, customers finalize their purchase, completing the transaction for products they previously explored. When it comes to placing an order, they have multiple channel options:

• 물리적 매장 — Traditional brick-and-mortar locations where customers can buy in person.
• Third-Party Partner Platforms — External websites or apps, such as marketplaces and concessions, that facilitate transactions.
• Customer Support — Purchases made via phone, often using a secure pay-by-link method.
• 브랜드 웹사이트 — The brand’s primary e-commerce channel, where customers browse and buy directly.
• 브랜드 모바일 앱 — A dedicated transactional app, if available, that provides a seamless shopping experience.

The first key difference between the discovery and purchase stages lies in how customers interact with channels. During product discovery, they often engage with multiple channels, taking advantage of each one’s unique benefits. However, when it comes to making a purchase, they typically commit to a single channel and complete the transaction within that environment.

This analysis specifically focuses on website performance, as it remains the primary driver of e-commerce activity. For simplicity, the term “online” will refer exclusively to the brand’s website throughout this discussion.

THE PARADOX OF A PERFECT EXPERIENCE

For most e-commerce businesses, the purchase stage is the ultimate goal — both a key revenue driver and a crucial touchpoint for customer satisfaction. A seamless, intuitive checkout experience not only boosts conversions but also fosters long-term brand loyalty.

However, for luxury brands, the role of e-commerce is fundamentally different. Their customer journey is designed to be store-centric, prioritizing high-touch service and immersive in-person experiences. As a result, defining the right north-star KPI requires careful alignment with the brand’s overarching strategy.

Traditionally, e-commerce success is measured by Conversion Rate (the percentage of website visitors who complete a purchase) and Digital Revenue (total online sales within a given timeframe). While these metrics work well for mainstream online retailers, they can be misleading for luxury brands.

Consider this scenario:

A luxury collection is so captivating that it inspires immediate desire. The website seamlessly provides all necessary details, compelling every shopper within a specific timeframe to visit a physical store to complete their purchase. Once in-store, expert advisors enhance the experience — curating additional selections, deepening brand engagement, and ultimately increasing customer spend.

Paradoxically, in this scenario, the website’s Conversion Rate would register as 0%, and Digital Revenue would appear as zero — not due to failure, but because every shopper opted for the in-store path within that period, driving significant business impact. Does this mean the e-commerce platform fell short? Absolutely not. It achieved its ultimate goal: engaging customers, facilitating discovery, and driving store visits, where the brand’s value is truly maximized.

This reveals a fundamental flaw in how luxury e-commerce performance is measured.

While a frictionless online checkout remains important — some customers lack store access, and certain products are well-suited for digital sales — it should be viewed as a secondary function, not the primary goal. For luxury brands, the true success of an e-commerce platform lies in its ability to drive in-store engagement.

North-star metrics should reflect the brand’s strategic priorities — not be based on a fallback option. To accurately assess luxury e-commerce performance, brands must look beyond traditional metrics like Conversion Rate and Digital Revenue and adopt KPIs that better align with their unique customer journey.

Traditional e-commerce metrics assume that brand websites function like Amazon — where every visitor is expected to complete a transaction online. This perspective fails to account for the distinct objectives of luxury fashion’s upper and lower funnels.

Here’s the flaw in that logic: if a customer visits a luxury brand’s website, finds exactly what they need, and is successfully guided to a physical store to complete their purchase, traditional metrics would still count this as a failed conversion. This artificially lowers the Conversion Rate and shows no contribution to Digital Revenue, creating a misleading assessment. In reality, for many luxury brands, driving in-store visits can be far more valuable than an online sale.

Beyond the multi-channel nature of the upper funnel and the single-channel flow of the lower funnel, another key distinction lies in online behavior. Product discovery is inherently nonlinear — customers move fluidly between product listing pages (PLPs), product detail pages (PDPs), and search results (SERPs), continuously refining their choices. This back-and-forth journey is shaped by inspiration, research, and evolving preferences. In contrast, checkout is a structured, goal-oriented process designed for efficiency and transaction completion. It typically follows these key steps:

• Customer Identification — Also known as the Checkout Login screen, this step can be bypassed via guest checkout but remains crucial for loyalty programs and marketing.
• Shipping Selection — Customers choose delivery methods and preferred locations.
• Packaging Options — A consideration for sustainability-conscious buyers and gift-givers.
• Payment — A range of payment methods accommodate different customer preferences.

Some of these steps can be streamlined with express checkout or pre-saved preferences, further reducing friction. However, while product discovery is an exploratory process, checkout follows a linear path toward transaction completion — a fundamental difference that should be reflected in north-star metrics.

Since product discovery is complex and non-linear, measuring its effectiveness requires a combined metric, such as engagement rate. On the other hand, the structured nature of the checkout funnel makes it better suited for traditional ratio-based metrics.

However, the standard Conversion Rate falls short in this context. While the numerator (completed transactions) is clear, determining the right denominator requires deeper analysis. What constitutes a meaningful conversion opportunity for a luxury brand? Instead of blindly applying traditional e-commerce KPIs, brands must examine user behavior patterns to develop more accurate measures of funnel efficiency — ones that reflect the true impact of their digital experience.

When analyzing users transitioning from product discovery to a purchase decision, we can identify three key categories:

1. Users who haven’t visited the website but have interacted with products through other digital channels or physical stores.
2. Users who browsed the website without adding items to the cart; still they might have shown measurable intent (e.g., clicking ‘Find in Store,’ contacting customer support) or not (taking screenshots, or saving product links).
3. Users who browsed the website and added one or more products to the cart, along with other engagement actions.

Users in all three categories may ultimately choose not to purchase, buy in-store, or complete their transaction through another channel instead of the website. However, only the third group is relevant to this analysis, as adding a product to the cart is a prerequisite for entering the website’s checkout process. This is why traditional e-commerce often considers the Add-to-Cart Rate the most reliable leading indicator of an impending transaction.

Given this, one might reasonably define the Add-to-Cart action as the entry point to the lower funnel and measure the effectiveness of this stage by the ratio of purchasers to users who added items to the cart. This approach provides a better proxy than the overall Conversion Rate, as it excludes visitors who merely browse the catalog without displaying intent to purchase via the website.

However, for many brands, the Add-to-Cart function often serves more as a wishlist than a direct purchase intent signal. The final transaction — whether online or in-store — is driven more by customer preference than by the efficiency of the purchase funnel. It’s common for customers to add products to their cart simply as a way to bookmark them, later exploring and purchasing in a physical store.

This makes an Add-to-Cart-based north-star metric vulnerable to the same fundamental flaw as the Conversion Rate: it misclassifies users who engaged in product discovery, added items to their cart, and ultimately completed their purchase in-store as failed conversions.

In reality, the Add-to-Cart action is a stronger indicator of successful online product discovery than of an imminent online purchase. From a holistic perspective, these customers have followed a highly successful and preferred journey, emphasizing the need for a broader evaluation beyond traditional e-commerce metrics.

To eliminate this bias, it is essential to identify a funnel stage that is reached primarily by customers who intend to complete their purchase online rather than in-store. This point should come after the Add-to-Cart action but may vary depending on the website’s flow.

In many cases, based on the checkout process flow outlined above, the best approximation for measuring true conversion intent is the Customer Identification step, also known as the Checkout Login screen. Reaching this stage indicates a clear intent to complete the transaction online, making it a more reliable benchmark for assessing conversion potential.

As a result, one of the most effective north-star metrics for evaluating purchase funnel efficiency is Checkout Conversion Rate — the proportion of customers who successfully place an order after reaching the Checkout Login screen. This metric provides a clearer picture of checkout performance and offers valuable insights for optimization.

At this stage, customers are prompted to log into an existing account, create a new one, or continue as a guest. Encouraging account registration is particularly important for loyalty-driven CRM initiatives, which is why brands often highlight benefits such as easy access to order status to incentivize registered purchases.

While most customers encounter the Customer Identification step, some checkout flows bypass it. For example, registered users who are already logged in will skip this step when entering the purchase funnel, and those using express payment methods may follow a different flow entirely.

To ensure accurate metric calculations, brands must account for these exceptions. The equivalent step in alternative checkout paths should be included in the denominator to accurately reflect the number of users reaching this stage, while all successful transactions — regardless of the path taken — should be counted in the numerator. This approach ensures a comprehensive and precise measurement of checkout conversion rate and overall funnel efficiency.

While the checkout login screen is chosen as the point reached only by customers intending to complete their purchase online, a potential concern with this approach is that some users may enter this stage solely to gather information that influences their decision. Many e-commerce websites observe users progressing into the purchase funnel not necessarily to buy immediately, but to check delivery options, shipping times, packaging details, final costs including taxes, or accepted payment methods.

Although these behaviors may lower the Checkout Conversion Rate, they present an opportunity to improve the product discovery funnel. The upper funnel’s role is not just to help customers find products that match their preferences in terms of shape, material, or color, but also to address broader purchasing considerations. For example, if a customer needs an item by a specific date, delivery timelines and availability should be clearly communicated upfront, without requiring them to enter the checkout process unnecessarily.

In other words, optimizing lower funnel performance may require a more systemic approach that enhances clarity and accessibility across the entire website, ensuring that critical purchase-related information is available at the right stage of the journey. The traffic reaching the checkout should be highly qualified, meaning that customers enter the purchase process with clear expectations and encounter no unexpected issues. This is even more crucial in e-commerce than in physical stores, where in-person interactions can help resolve last-minute uncertainties.

Other times, analysis may reveal that improving the north-star KPI requires removing frictions within the checkout process itself.

However, even when customer journeys successfully result in an order, the purchase funnel provides valuable insights from a broader perspective. Given that online purchases are a secondary goal compared to in-store transactions, every completed order on the website can also be viewed as a missed opportunity for store conversion. By analyzing these transactions, brands can gain insights into which products — and, to some extent, which customer segments, such as those in specific shipping locations — chose to purchase online instead of visiting a store.

In the ideal world envisioned by luxury brands, online checkout would be unnecessary. Customers would explore products online but ultimately visit physical stores, where they could enjoy a superior shopping experience while allowing brands to build deeper, more valuable relationships with them.

However, this vision is not entirely realistic. While the primary goal remains to drive as many customers as possible to stores, it is equally important to provide a seamless and effective online purchase experience. When in-store visits are not an option, ensuring that customers complete their purchases through e-commerce becomes the secondary goal.

Traditional e-commerce metrics, such as Digital Revenues and Conversion Rate, primarily measure the effectiveness of online sales but fail to capture the full complexity of customer journeys that blend both digital and in-store interactions — an essential consideration for luxury brands.

The Checkout Conversion Rate, by attempting to filter out users who engage with the website purely for product discovery, offers a more refined and relevant metric for assessing lower funnel performance. As a guiding north star, it helps shape improvement plans that enhance the online purchasing experience. However, these plans may also require optimizations in the upper funnel to ensure that high-quality traffic flows through the entire purchase journey.

In the next article, we will consolidate insights from both the upper and lower funnel to present a holistic, end-to-end view of e-commerce’s role in the luxury brand customer journey.

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