E‑commerce upselling

Definition of e-commerce upselling

E-commerce upselling is about offering web store customers a better or additional item when they browse your online catalog, add a product to their shopping cart, or check out.

What are the benefits of e-commerce upselling?

There are many benefits of e-commerce upselling. These benefits include:

  • It increases your customer lifetime value (CLV). CLV is the estimated revenue that a customer will bring in throughout the time that they purchase from your business. To determine a customer’s CLV, you first calculate the average purchase value of a customer and then multiply it by the average number of purchases (frequency of their purchases). This will determine your customer’s value. Once you have calculated the value of a customer, you need to determine the average time a customer buys from you (this is called customer lifespan). After that, you can multiply the value of your customer by the customer lifespan to get your CLV.
  • It’s easier to upsell to your existing customers than to attract new customers. Acquiring new customers is costly and time-consuming. It is less costly to upsell to your existing customer database. And e-commerce upselling is the perfect way to do so.
  • By offering customers the right product that is of interest to them, you build a stronger relationship with them.
  • E-commerce upselling keeps customers coming back. Amazon is one of the best e-commerce platforms to successfully implement e-commerce upselling persuasion techniques. Amazon attributes 35% of its revenue to upselling and cross-selling.

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What are the challenges of e-commerce upselling?

The challenges of e-commerce upselling depend on the channel you are trying to upsell on:

  • Upselling on online marketplaces: On online marketplaces, you won’t be able to control what products are being recommended to your customers. The best way to optimize this is to optimize your product descriptions in the online marketplace. Providing the marketplace algorithm more information helps the platform determine what other products it can recommend together with yours.
  • Your own e-commerce platform: On your own e-commerce platform you’ll have more control of what items you can suggest to customers when they buy certain products. E-commerce upselling is best done on your own web store. Depending on which e-commerce platform you are using, you can download apps and plugins to optimize this.

Get more tips on how to manage your product catalog, or learn more about 5 winning web strategies.

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