The Shopify Conversion Illusion: Why your data’s lying (and what to do about it)

You make crucial decisions based on conversion rates every day. But do you know exactly how Shopify calculates these numbers? Or what they're missing? 

In a recent webinar, Third and Grove teamed up with ecommerce leaders from global beauty leader AmorePacific and Triple Whale, an AI-powered data platform, to decode how Shopify tracks conversion–and why it might be time to rethink the metrics that define success.  

What’s behind the numbers in Shopify’s conversion rate?

As ecommerce leaders and digital marketers, we're used to thinking of conversion rate as total orders divided by total traffic, usually measured in sessions (though some teams use users). It's the number we expect to see and the one we rely on for forecasting and media planning.

Shopify takes a different approach to calculate conversion rate: Sessions that converted ÷ by total sessions. Orders aren’t part of the formula. When Third and Grove recalculated using the traditional formula (orders ÷ sessions), we found that Shopify’s numbers were underreporting by about 20% on average for many of our clients.

This fundamental difference can lead to a significant underreporting of actual conversions, especially for brands utilizing subscriptions or other sales channels outside of the online store. Orders generated from platforms like Meta, TikTok, or in-store POS are often not counted in Shopify's conversion rate metric, leading to a skewed perception of performance. (Even Shopify POS sales aren’t included by default. POS is treated as a separate sales channel.) This becomes even more pronounced for brands with strict data privacy rules, as Shopify's reliance on session-based tracking can further distort the numbers.

Which metrics should brands track?

Getting the full picture of your Shopify conversion performance requires going beyond standard reports. Here’s what the top-performing brands Third and Grove partners with are tracking.

Foundation:

• Custom reporting: If your reports aren't custom, you're not looking deep enough.
• Segment by customer type: First-time buyers and repeat customers have completely different journeys.

Core Performance Metrics:

• Revenue 
• Bounce rates
• Engagement levels
• Cart abandonment
• On-site search usage and user intent 

Long-Term Value Indicators:

• Total subscribers
• Percentage of subscription orders
• Churn rate
• Lifetime Value (by Customer Type)
   

New metrics for a post-omnichannel world

Selling is happening everywhere now, from TikTok Shop to Amazon and AI-driven shopping agents. It’s time for brands to update how they measure success. Lauren Howanitz, Director of Ecommerce, Digital Business Division US at AmorePacific emphasized the need to move towards a "blended conversion rate" that accounts for these various touchpoints. While D2C sites traditionally focused on new customer acquisition, their role is evolving to become more of a retention tool, leveraging subscription, membership, and loyalty programs, exclusive products, and educational content. 

Jake Singer, Senior Partner Manager at Triple Whale, echoed this sentiment, stressing the importance of granular conversion rate analysis over surface-level metrics. "Getting in the granularities of conversion rate can really help you just identify where the glaring holes are," he advised, suggesting a deeper dive into metrics like conversion rate by ad level, page path, or even time of day.

Author's note: I also think it’s important to understand “assisted conversions” or “influenced revenue” in today’s omnichannel world, as the website assists in the buyer's journey even when the final purchase happens elsewhere.

When considering alternative, more impactful metrics, Customer Acquisition Cost (CAC) to Lifetime Value (LTV) emerged as a front-runner. This ratio provides a crucial understanding of profitability beyond a single conversion, highlighting whether acquired customers are contributing to long-term brand growth. Howanitz also highlighted the significance of Average Order Value (AOV) and LTV, particularly for brands focusing on retention, subscription and loyalty programs.

Uncover your true conversion rate

Feeling like your Shopify numbers don't tell the whole story? You're probably right. The standard conversion metrics can miss a lot of what's actually happening with your business. If you're ready to dig deeper and figure out what's really driving growth for your Shopify Plus store, we're here to help.