How To Calculate Growth Rate in Ecommerce | Complete Guide

If you don’t measure, you cannot grow.
Imagine running a shop without knowing how much money you earned today compared to last week. You may feel like sales are increasing, but without numbers, it’s just a guess. The same is true for your eCommerce business growth. To make smart decisions, you must know your growth rate.

This guide explains, in simple terms, how to calculate the growth rate for your e-commerce store. By the end, you will not only know the formulas but also learn how to apply them to your own Shopify, WooCommerce, or custom online store.

What is Growth Rate in Ecommerce?

Growth rate refers to the speed at which your eCommerce business is expanding. It shows the percentage increase or decrease in sales, revenue, customers, or traffic over a period of time.

For example:

• If you sold 100 products in January and 120 in February, your growth rate is 20%.

Growth rate helps you understand:

• Are sales going up or down?

• Is your online marketing working?

• Are customers coming back again?

Remember: Growth rate is like a health report for your business.

Why Should Ecommerce Owners Track Growth Rate?

Running an eCommerce business without tracking your growth rate is like driving a car without looking at the fuel gauge or speedometer. You may feel like you’re moving, but you don’t know if you’re moving in the right direction or how fast.

Most store owners only see daily sales reports – “Today I sold ₹50,000 worth of products.” That’s useful, but it doesn’t tell you if you are truly growing over time. Growth rate gives you the bigger picture.

• Global eCommerce growth rate in 2023 was 8.9% (Source: eMarketer).

• Shopify merchants contributed $444 billion to global economic activity in 2021 (Source: Shopify).

• India’s eCommerce CAGR is projected at 27% between 2023–2028 (Source: Oberlo).

Benefits of Tracking Growth Rate

1. Plan Better for the Future

When you know your growth rate, you can predict your sales.

• Example: If your store grows 20% every month, and last month you made ₹1,00,000, you can expect ₹1,20,000 this month and ₹1,44,000 next month.

• This helps you plan stock, marketing budget, and even staff hiring.

Tip: Use growth rate to decide how much inventory to order before festive seasons like Diwali, Black Friday, or Christmas.

2. Attract Investors and Funding

If you ever want outside investment, the first thing investors ask is:

• “What is your growth rate?”

Why? Because the growth rate proves business potential. A store making ₹10 lakh today with 5% growth rate looks less attractive than one making ₹5 lakh today with a 30% growth rate.

Note: Fast growth can attract not only investors but also partnerships and collaborations with big brands.

3. Check Marketing Impact

Running ads, SEO campaigns, or influencer promotions costs money. Growth rate helps you measure:

• Did sales increase after running Google Ads?

• Did website traffic grow after improving SEO?

• Did repeat orders increase after sending email campaigns?

If the growth rate doesn’t improve after spending, it means your strategy needs to change.

Remember: Growth rate shows real results, not just impressions or clicks.

4. Control Costs and Avoid Fake Growth

Sometimes sales grow, but profits don’t. Example:

• Sales in January = ₹5,00,000

• Sales in February = ₹7,00,000

• But if you spent ₹3,00,000 on ads in February compared to ₹50,000 in January, then growth is not healthy.

Growth rate combined with profit data shows whether growth is sustainable.

5. Stay Ahead of Competition

The eCommerce market is very crowded. New stores open daily. If your growth rate is higher than the industry average, you are winning.

• Example: If India’s eCommerce industry grows at 27% CAGR (Mordor Intelligence), but your store grows at 40% CAGR, you are beating the market.

• If your growth is slower, you risk losing customers to competitors.

“What gets measured, gets managed.” – Peter Drucker

Types of Growth Rates in Ecommerce

Now that you know why growth rate matters, let’s understand the different ways to measure it.

1. Simple Growth Rate

This is the most basic calculation.

Formula:

Growth Rate = ((New Value – Old Value) ÷ Old Value) × 100

Example:

• Sales in January = ₹10,000

• Sales in February = ₹12,000

• Growth Rate = (12,000 – 10,000) ÷ 10,000 × 100 = 20%

This means your sales grew by 20% in one month.

When to Use:

• For short-term changes like month-to-month or quarter-to-quarter comparison.

2. Compound Annual Growth Rate (CAGR)

CAGR shows average growth per year over a period. It smooths out the ups and downs.

Formula:

CAGR = (Ending Value ÷ Beginning Value)^(1 ÷ Number of Years) – 1

Example:

• Sales in Year 1 = ₹50,000

• Sales in Year 3 = ₹1,00,000

• CAGR = (100,000 ÷ 50,000)^(1/2) – 1 = 41.42%

This means your store grew 41% every year on average.

Why Important:

• Investors love CAGR because it shows steady long-term growth, not just seasonal jumps.

3. GAGR (Geometric Average Growth Rate)

GAGR is used when the growth rate changes every period. It’s useful for monthly data.

Formula:

GAGR = [(1 + g1) × (1 + g2) × (1 + g3)…]^(1 ÷ n) – 1

Example:

• Month 1 growth = 10%

• Month 2 growth = 20%

• Month 3 growth = 15%

GAGR = [(1.10 × 1.20 × 1.15)^(1/3)] – 1 ≈ 14.9%

This means your average monthly growth is 15%.

When to Use:

• When you want to see the true average over different periods.

4. Ecommerce Growth Rate (Specific to Your Store)

This looks at your online store’s revenue or orders.

Formula: Same as Simple Growth Rate, but applied to eCommerce metrics like orders, revenue, or customers.

Example:

• 2023 Sales = ₹1 crore

• 2024 Sales = ₹1.4 crore

• Ecommerce Growth Rate = (1.4 – 1) ÷ 1 × 100 = 40%

Tip: Always measure ecommerce growth rate in both revenue and customers, not just sales value.

5. Online Shopping Growth Rate

This is about the overall eCommerce market, not just your store.

Why Important:

• If the industry is growing 10% per year, and your store grows 15%, you are ahead.

• If the industry is 20% and your store is 10%, you are falling behind.

• Global eCommerce sales = $6.3 trillion in 2024, projected to be $8.1 trillion by 2026 (Statista).

• Indian eCommerce = $350 billion by 2030 (IBEF).

Note: Comparing your store’s growth with industry growth helps set realistic targets.

Step-by-Step Guide to Calculate Growth Rate for Your Ecommerce Store

Tracking your growth rate is not complicated if you follow a clear process. Here’s a detailed, 5-step guide with examples and tools you can use right away.

Step 1: Choose What to Measure

Growth rate is not only about money. You can measure growth in many ways depending on your goal.

A) Revenue Growth

This tells you how much your total sales are increasing.

• Example: In January, you sold ₹2,00,000 worth of products. In Februar,y you sold ₹2,50,000. That’s a 25% growth in revenue.

Best for: Business owners who want to track overall income.

B) Order Growth

Number of orders placed, even if the order value is small.

• Example: If you got 500 orders in January and 700 orders in February, your growth rate is 40% in orders.

Best for: Stores focusing on order volume (like FMCG, fashion, and daily-use items).

C) Website Traffic Growth

Visitors on your website also show growth. If your traffic grows but sales don’t, you know the conversion rate needs work.

• Example: 10,000 visits in January → 12,000 in February = 20% growth in traffic.

Best for: Checking if marketing campaigns (SEO, ads, influencers) are working.

D) Customer Growth

How many unique customers bought from you?

• Example: If 300 unique customers bought in January and 400 in February, that’s a 33% growth in customers.

Best for: Long-term brand building.

E) Repeat Customer Growth

Shows how many old customers are coming back.

• Example: If you had 80 repeat buyers in January and 100 in February, your growth is 25% in loyal customers.

Best for: Stores that want to build loyalty and lifetime value.

Tip: Don’t track only one metric. For eCommerce, you should measure both sales and customers to get the real picture.

Step 2: Collect Data

Without clean data, your growth rate calculation will be wrong. Here are the most common tools:

• Shopify Analytics – For Shopify stores, check your revenue, orders, and customers.

• Google Analytics – To track website visitors, traffic sources, and conversions.

• WooCommerce Reports – For WordPress stores, see orders and sales reports.

• Custom Dashboards – If you run large-scale operations, connect your database to BI tools like Power BI, Tableau, or Looker.

Note: Always double-check your data. Remove refunds, cancelled orders, and fake sign-ups before calculating.

Step 3: Select the Period

Growth rate only makes sense when measured over a defined period.

• Monthly Growth Rate: Best for tracking fast-moving eCommerce businesses.

• Quarterly Growth Rate: Best for medium-term goals.

• Yearly Growth Rate: Best for investors and long-term planning.

Remember: Always compare the same type of period (month vs. month, year vs. year). Don’t compare January with the entire last year.

Step 4: Apply the Formula

Now comes the math. You can choose the right formula depending on your case:

• Simple Growth Rate: ((New Value – Old Value) ÷ Old Value) × 100

• CAGR (Compound Annual Growth Rate): (Ending Value ÷ Beginning Value)^(1 ÷ Years) – 1

• GAGR (Geometric Average Growth Rate): [(1 + g1) × (1 + g2) × …]^(1 ÷ n) – 1

You don’t need to do this manually – Excel or Google Sheets can calculate these easily.

Step 5: Compare and Analyze

Once you calculate, ask yourself:

• Am I growing faster or slower than last period?

• Am I growing faster than competitors and the industry average?

• Is my growth coming from new customers or repeat customers?

• Is growth profitable or just due to higher ad spend?

Tip: If your growth rate is positive but your profit margin is shrinking, it means you’re spending too much to grow.

Practical Example for Shopify Owners

Let’s see this in real numbers.

Case 1 – Monthly Growth

• Sales in January = $5,000

• Sales in February = $7,500

Formula: (7,500 – 5,000) ÷ 5,000 × 100 = 50%

Your Shopify store grew by 50% in February compared to January.

Case 2 – Yearly Growth (CAGR)

• Sales in December 2022 = $50,000

• Sales in December 2023 = $100,000

Formula: (100,000 ÷ 50,000)^(1/1) – 1 = 100%

Your store grew 100% in one year, meaning you doubled your sales.

Note: CAGR gives a cleaner picture if you calculate for 3–5 years instead of just one.

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Tips for Ecommerce Owners to Increase Growth Rate

Once you know your growth rate, the next step is improving it.

1. Focus on Customer Retention

• It is 5 times cheaper to retain a customer than acquire a new one (Harvard Business Review).

• Offer loyalty points, discounts for repeat orders, and personalized follow-up emails.

2. Improve Website Speed

• Google reports that 53% of users leave if a site takes more than 3 seconds to load.

• Use lighter images, faster hosting, and Shopify apps that improve performance.

3. Invest in SEO & Paid Ads

• SEO: Long-term, organic traffic with higher ROI.

• Paid Ads: Short-term boost for sales.

Tip: Balance SEO and ads. Ads give you today’s sales, SEO gives you tomorrow’s.

4. Use Upselling and Cross-Selling

Show “Frequently Bought Together” or “Customers Also Bought” at checkout.

• Example: If someone buys a mobile phone, suggest a case or earphones.

5. Partner with a Shopify Development Agency

A professional agency can:

• Optimize checkout flow to reduce cart abandonment.

• Add custom dashboards for tracking growth.

• Automate reporting so you don’t calculate manually.

Remember: Growth rate isn’t only about sales – it’s about making your business efficient and scalable.

Common Mistakes When Calculating Growth Rate

Even smart business owners make errors when measuring growth. Avoid these:

• Not Considering Returns/Refunds
  If you sold ₹5 lakh but had ₹1 lakh returns, your real growth is smaller.

• Mixing Metrics
  Don’t compare sales revenue with the number of customers in one formula. Pick one metric.

• Using Very Short Periods
  One week of high sales during Diwali doesn’t mean real growth. Always compare at least a month or a quarter.

• Ignoring Costs
  If your growth is only due to doubling ad spend, it’s fake growth. Always track profit growth rate, not just sales.

FAQ’S

1. What is the growth rate in ecommerce?

• Growth rate means how fast your online store is growing. It shows the increase (or decrease) in sales, orders, or customers over time. For example, if you sold 100 items last month and 120 this month, your growth rate is 20%.

2. Why should I calculate the growth rate for my store?

If you don’t measure, you don’t know. Growth rate tells you:

• Are your sales going up or down?

• Are your ads and marketing working?

• Are you keeping old customers and gaining new ones?

It’s like a health check-up for your business.

3. What is the difference between CAGR and GAGR?

• CAGR: Shows yearly average growth.

• GAGR (Geometric Average Growth Rate): Shows average growth over multiple periods (like months).

Think of CAGR as a yearly average speed, and GAGR as a monthly average speed.

4. How often should I check my growth rate?

• Small stores: Every month.

• Growing stores: Every week and month.

• For investors: Every year (CAGR).

Tip: Don’t only check once a year. Monthly tracking keeps you alert.

5. What is a good ecommerce growth rate?

It depends on your industry and stage.

• New stores: Even 30–50% per month is possible.

• Stable stores: 10–20% per year is good.

• Note: Compare your growth with the industry average. For example, global ecommerce is growing at 8–10% per year. If you grow faster, you’re winning.

Final Words

Now you know how to calculate growth rate using simple formulas, CAGR, and GAGR. You also know why it matters and how to improve it.

Here’s what you should do next:

• Collect the last 6 months of your sales data.

• Calculate the monthly growth rate.

• Calculate yearly CAGR.

• Compare with industry benchmarks.

• Plan strategies to improve.

“Without data, you’re just another person with an opinion.” – W. Edwards Deming.

Want your online store to grow faster? At Tameta Tech, we are your trusted Shopify Development Partner. We help you build, improve, and scale your store with simple solutions that bring real results. Let’s grow your sales together. Start your success journey with us today!

If you need help setting up analytics, dashboards, or scaling your online store, consider working with a Shopify Development Agency. Professional guidance can save time and help you grow faster.