Key Performance Indicators (KPIs) for Manufacturers Selling Direct-to-Consumer (D2C)
For manufacturers expanding into Direct-to-Consumer (D2C) sales, success depends on more than launching an eCommerce site or marketplace presence. D2C fundamentally changes how manufacturers interact with customers, manage inventory, price products, fulfill orders, and measure performance. Traditional wholesale metrics still matter, but they are no longer sufficient on their own.
To operate a profitable and scalable D2C channel, manufacturers need a well-defined set of Key Performance Indicators (KPIs) that span marketing, sales, operations, fulfillment, and customer experience. In a previous blog, we outlined several KPIs for manufacturers. The D2C KPIs below are specifically designed for manufacturers that produce goods and sell directly to end customers, often alongside existing distribution or retail channels.
Revenue and growth KPIs
Total Direct-to-Consumer Revenue
This value represents the total revenue generated from direct sales channels, including your website, branded marketplaces, or direct subscriptions.
How it’s calculated: Calculate the sum of all completed D2C sales within a defined period.
D2C Revenue = Σ (Order Value for D2C Orders)
Why it’s important: This KPI measures the size and growth of your D2C channel relative to wholesale or distributor revenue. It helps manufacturers evaluate whether their D2C strategy is gaining traction and justifies further investment.
Average Order Value (AOV)
The AOV calculates the average amount spent per order in your D2C channel.
How it’s calculated: The total D2C revenue divided by the total number of D2C orders.
AOV = (Total D2C Revenue) / (Number of D2C Orders)
Why it’s important: Increasing AOV improves profitability without increasing customer acquisition costs. Manufacturers often use bundles, accessories, or tiered pricing to increase AOV.
Revenue Growth Rate
This value shows the rate at which D2C revenue is increasing (or decreasing) over time.
How it’s calculated: Calculate the change in D2C revenue compared to the prior period.
Revenue Growth Rate = [(Current Period Revenue – Prior Period Revenue) / (Prior Period Revenue)] × 100%
Why it’s important: Growth rate shows momentum. A fast-growing D2C channel can offset margin pressure from distributors or provide resilience during market volatility.
Gross Margin (D2C)
The Gross Margin for D2C manufacturers shows the profit after accounting for product and fulfillment costs.
How it’s calculated: Revenue minus cost of goods sold and fulfillment costs.
Gross Margin (%) = [(Revenue – COGS – Fulfillment Costs) / Revenue] × 100%
Why it’s important:
D2C margins can be higher than wholesale—but only if fulfillment, marketing, and returns are well managed.
Customer and marketing KPIs
Customer Acquisition Cost (CAC)
The CAC is the average cost to acquire a new D2C customer through marketing and sales efforts.
How it’s calculated: Divide the total marketing and sales spend by the number of new customers acquired.
CAC = (Total Marketing and Sales Spend) / (# New Customers Acquired)
Why it’s important: Manufacturers entering D2C often underestimate acquisition costs. Monitoring CAC ensures marketing spend remains sustainable relative to customer value.
Customer Lifetime Value (CLV)
The CLV represents the total revenue a customer is expected to generate over their lifetime.
How it’s calculated: Multiply the AOV by the expected purchase frequency over the customer’s lifespan.
CLV = AOV × (Purchase Frequency) × (Average Customer Lifespan)
Why it’s important: CLV helps manufacturers understand how much they can afford to spend on acquiring and retaining customers. A healthy D2C model typically requires CLV to exceed CAC significantly.
Website Conversion Rate
The website conversion rate indicates the percentage of website visitors who complete a purchase.
How it’s calculated: Divide the number of completed purchases by the total number of website sessions.
Conversion Rate = (Orders / Website Sessions) × 100%
Why it’s important: Low conversion rates often indicate pricing issues, poor user experience, or friction in checkout. Improving your conversion rate has an immediate impact on revenue.
Order and fulfillment KPIs
Order Fulfillment Rate
This value represents the percentage of orders fulfilled correctly and on time.
How it’s calculated: Divide the orders fulfilled without errors by the total orders.
Order Fulfillment Rate = (Orders Fulfilled Correctly / Total Orders) × 100%
Why it’s important: D2C customers expect fast and accurate delivery. Poor fulfillment performance adversely impacts brand reputation and repeat purchases.
Order Cycle Time
The Order Cycle Time is the average time from order placement to delivery.
How it’s calculated: Divide the total fulfillment time for all orders by the number of orders.
Order Cycle Time = Σ (Delivery Date – Order Date) / Number of Orders
Why it’s important: Shorter cycle times increase customer satisfaction and reduce inquiries, returns, and cancellations.
Inventory and operational KPIs
Inventory Turnover Ratio
This value shows how often inventory is sold and replenished over a period.
How it’s calculated: Divide the cost of goods sold by average inventory value.
Inventory Turnover = COGS / Average Inventory Value
Why it’s important:
D2C requires tighter inventory control. Low turnover ties up cash, while high turnover may signal stockout risk.
Stockout Rate
The Stockout Rate shows the percentage of time products are unavailable for purchase.
How it’s calculated: Divide the out-of-stock occurrences by total SKU availability opportunities.
Stockout Rate = (Out-of-Stock Events / Total SKU Opportunities) × 100%
Why it’s important:
Stockouts result in lost sales and frustrated customers, particularly in D2C where alternatives are only one click away.
Inventory Carrying Cost
The Inventory Carrying Cost represents the percentage cost of holding inventory, including storage, insurance, and obsolescence.
How it’s calculated: Divide the total inventory carrying costs by the average inventory value.
Inventory Carrying Cost (%) = (Total Carrying Costs / Average Inventory Value) × 100%
(where the Total Carrying Costs = Capital Costs + Storage Costs + Service Costs + Risk Costs, covering expenses like warehousing, insurance, taxes, labor, shrinkage, and opportunity costs of tied-up capital)
Why it’s important: D2C manufacturers often expand SKU counts. Understanding carrying costs helps balance assortment breadth with profitability.
Returns and customer experience KPIs
Return Rate
The Return Rate is the percentage of orders returned by customers.
How it’s calculated: Divide the number of returned orders by the total number of orders.
Return Rate = (Returned Orders / Total Orders) × 100%
Why it’s important: Returns are significantly more expensive in D2C than wholesale. High return rates may indicate issues with quality, sizing, or product descriptions.
Cost per Return
This figure shows the average cost incurred for processing a return.
How it’s calculated: Divide the total return processing costs by the number of returns.
Cost per Return = Total Return Costs / Number of Returns
Why it’s important: Understanding return costs allows manufacturers to improve packaging, product content, and reverse logistics strategies.
Net Promoter Score (NPS)
The NPS is a measure of customer loyalty and satisfaction.
How it’s calculated: Subtract the percentage of detractors from percentage of promoters (taken from customer surveys).
NPS = % Promoters – % Detractors
Why it’s important: NPS provides insight into brand perception and the likelihood of repeat purchases and referrals.
Find out more
For manufacturers selling direct-to-consumer, KPIs must go beyond traditional production and wholesale metrics. D2C success requires visibility into customer behavior, digital marketing performance, inventory efficiency, fulfillment execution, and profitability at a granular level.
The most successful manufacturers use integrated ERP, eCommerce, and analytics platforms to track these KPIs in real time—turning data into actionable insights that drive growth, efficiency, and long-term customer loyalty.
By focusing on the right KPIs, manufacturers can build a D2C channel that complements existing sales models while delivering sustainable, profitable growth.
Contact ArcherPoint by Cherry Bekaert to find out how you can sell direct to consumers using Business Central.
Trending Posts
Stay Informed
Choose Your Preferences
"*required" indicates required fields