What is AUR? The five most important things to know are:
- AUR is an e-commerce metric that stands for "average unit retail".
- AUR is calculated by dividing a product's net sales by the total units sold over a specific period.
- AUR can help refine your sales and pricing strategies by understanding customer behavior.
- AUR is more powerful when used in combination with other sales and pricing metrics.
- AUR and other e-commerce metrics should be calculated with a powerful, enterprise-grade business intelligence (BI) and data analytics solution.
E-commerce stores such as Amazon have revolutionized the field of online shopping. But whether you're a massive online store or a small business owner, you need to keep track of your company's metrics and KPIs (key performance indicators) to evaluate the success of your business model.
The importance of the right e-commerce metrics is hard to overstate. By understanding the performance of your social media, SEO (search engine optimization), and email marketing campaigns, you can drive sales through better digital marketing strategies. E-commerce metrics can help you quantitatively measure concerns such as lead conversion rates, customer loyalty, customer experience satisfaction rates, and more.
The question then becomes: with dozens of e-commerce metrics out there, which ones should you choose to monitor? The right answers here will depend on your unique business situation and goals.
AUR (average unit retail) is a widely used e-commerce metric that can help you optimize your sales and pricing strategies. So what is AUR, exactly, and what benefits does tracking AUR bring to your e-commerce store? Keep reading for all the answers.
Table of Contents
- What is AUR?
- How AUR Can Help Power Your E-Commerce Business
- How Integrate.io Can Help with Your E-Commerce Business
What is AUR?
AUR (average unit retail) is a metric for retail businesses, both in-person and e-commerce websites, that calculates the average price that a product is sold for during a given time period.
The formula for AUR is simple. First, sum up the product's net sales over the time period in question, and then divide by the total number of units sold.
For example, suppose that you had a total of $30,000 in net sales for a particular product over the previous quarter, and you sold a total of 500 items. Then your AUR for this product and for this period would be $30,000/500 = $60.
The three steps involved in calculating AUR are:
- Select the time period: AUR is typically calculated on a monthly, quarterly, or annual basis, or for specific periods (such as the holiday season).
- Calculate the net sales: A company's net sales figures consist of the total sales minus any returns, discounts, or allowances (e.g. missing or damaged products).
- Calculate the units sold: E-commerce stores typically calculate the total units sold across the business. Brick-and-mortar retail outlets may also isolate their analysis to a single store or geographic area.
How AUR Can Help Power Your E-Commerce Business
Whether you're an entrepreneur or a multinational retailer, it's essential to keep a close eye on the metrics and KPIs that are most important for your business. Without understanding these metrics, it will be significantly more challenging to sell your products and offer an excellent user experience. Potential shoppers will leave your storefront before making a purchase, and the customer journey will be over before it's even begun.
With all that said, how does AUR play into the mix? AUR is an important e-commerce metric that can help you understand if your sales and pricing strategies are appropriate for your target market and customer base. AUR is most valuable when it is used in combination with other e-commerce metrics and KPIs, such as total revenue, GMROI (gross margin return on investment) and AUM (average unit margin).
For example, suppose that you've noticed an increase in your AUR over several quarters. In isolation, you might think that this is a positive trend—after all, your products are selling for a higher price.
However, AUR by itself doesn't provide context about why this trend might be occurring. An increase in AUR could be due either to an increase in net sales or to a decrease in the total number of items sold.
To continue with our example above, suppose that you raise your price for the item, while still managing to sell the same number of products. This would mean that the AUR increases to e.g. $35,000/500 = $70. On the other hand, suppose that you raise your price for the item, and the total number of purchases decreases. Still, you would observe an increase in the AUR, e.g. $28,000/400 = $70.
AUR, and other sales and pricing metrics, are essential for e-commerce businesses for multiple reasons:
- Comparing the sales performance of a particular item across multiple periods.
- Assessing customer habits and behaviors to develop strategies for customer retention (e.g. sales, promotions, and discounts).
- Evaluating inventory levels to determine whether products are out of stock too often.
- Creating a well-considered pricing strategy, balancing the need for profitability against customer satisfaction.
In order to analyze AUR, GMROI, AUM, and other crucial pricing metrics, your e-commerce business will need a systematic analytics solution. On-the-fly calculations in Excel might be sufficient on an ad hoc basis. If you want a mature, robust business intelligence and data analytics solution, however, you'll need a method of collecting and processing all this information in a single centralized location.
How Integrate.io Can Help with Your E-Commerce Business
AUR (average unit retail) and other e-commerce site metrics are essential trends to monitor for your online business. There's just one question: how can you actually collect the data you need for AUR and other metrics, and start crunching the numbers? That's exactly where data integration platforms like Integrate.io come in.
Integrate.io is an ETL (extract, transform, load) and data integration solution that has been built from the ground up for the needs of e-commerce businesses. The Integrate.io platform includes more than 140 pre-built connectors and integrations with third-party data sources, including e-commerce platforms such as Shopify, Magento, and BigCommerce. This makes it easy for Integrate.io to fit into your existing IT environment, rather than the other way around.
What's more, Integrate.io offers a simple, user-friendly, drag-and-drop visual interface. Even the most non-technical users can get started building powerful, robust data pipelines between their data sources and destinations (such as a centralized data warehouse). With Integrate.io, it's never been easier to get a customer 360 view of the online shoppers in your target audience.
Integrate.io also makes use of advanced data integration techniques such as change data capture (CDC), which automatically detects data that has changed in a source database or table. Integrate.io's FlyData CDC functionality makes your data integration workflows faster and more efficient by only consuming the information that has changed since your last data integration job.
Want to learn more about how Integrate.io can benefit your e-commerce website? We're here to help. Get in touch with our team of e-commerce data experts today to discuss your business needs and objectives, or to start your 7-day pilot of the Integrate.io platform.