‘Exclude $0 Orders’ feature, what’s it for?
Source Medium’s Exclude $0 Orders feature removes any order with a Total Revenue of $0 — and associated order components such as shipping, tax, revenue, etc. — from reporting on your Executive Summary, YoY performance, and Retention / LTV modules. These orders are not removed from any of the deep dive pages (e.g. Orders Deep Dive, Customer & Product modules etc).
- Gross Revenue =
line item priceXquantity - Net Revenue =
Gross Revenue-discounts-refunds - Total Revenue =
Net Revenue+shipping+taxes
Your business generates $1000 in Gross Revenue in the month of May, from 10 orders of $100 (Gross Revenue) each. These orders all have shipping amounts paid of $5 and taxes paid of $10 — resulting in a Total Revenue of $115 for each order, and Cumulative Revenue of $1150 for the month of May.
Now, 2 of these orders receive a $10 discount due to a shipping delay, and then 1 of these orders eventually gets refunded for the full value (the remaining $90 plus the $15 shipping and tax) at the request of the customer — leading to a total discount amount of $20, and refunded amount of $105.
Let’s also assume that you’ve spent $500 on marketing in the moth of May.
Metrics | Exclude $0 Order Turned Off | Exclude $0 Order Turned On |
Spend | $500 | $500 |
Orders | 10 | 9 |
Gross Revenue | $1,000 | $900 |
Net Revenue | $1,000 - $20 (discount) - $105 (refund) = $875 | $900 - $10 (discount) = $890 |
Total Revenue | $885 + $45 (non-refunded shipping) + $90 (non-refunded tax) = $1,020 | $890 + $45 (shipping) + $90 (tax) = $1,025 |
AOV (Net Rev / Orders) | $875/10 = $87.50 | $890/10 = $89 |
CPO (Spend / Orders) | $500/10 = $50 | $500/9 = $55.56 |
ROAS (Net Rev / Spend) | $875 / $500 = 1.75 | $890 / $500 = 1.78 |
Why turn on the Exclude $0 feature — the benefits & implications
There are many scenarios in which an order could come out to a Total Revenue of $0, such as:
- fully refunded orders
- fully discounted orders
- free promo / gift orders
These orders aren’t necessarily useful — and in some situations should be removed from the picture — to ensure the most accurate analyses. Consider the example in the section above — having a fully refunded order inflated ROAS vs removing that order from the equation, due to lower net revenue with that order included. CPO was similarly impacted, but to a more extreme degree — CPO was $50 with the refunded order included, compared to having it excluded with a CPO of $56.
Depending on which view of macro-level KPIs you consider to be “pure” (from the above example), should inform whether or not you should enable the Exclude $0 Orders feature.
In our view, it’s usually a good idea to exclude these orders so metrics like AOV, Cost Per Order/Acquisition, ROAS etc. are more accurate. Since your marketing spend for the period wasn’t really effective in generating a successful order / revenue, our opinion is that marketing spend should only be measured against the effective/successful orders when looking at overall business health (Executive Summary) — e.g. ROAS should not use revenue from fully refunded orders, CPA should not reflect you paying money for a fully refunded order, that spend should be spread over the remaining successful orders. The Shopify sales report does not do this, which is why we focus on data cleaning and accuracy.
Additional information and related articles
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