GMAT Focus EditionData InsightsMedium
An e-commerce company is analyzing its website traffic and conversion rates. The following dashboard shows the number of unique visitors and the conversion rate (percentage of visitors who make a purchase) for three different product categories: Electronics, Apparel, and Home Goods, over the last month. [Imagine a dashboard with two columns for each category: Unique Visitors and Conversion Rate (%)] **Electronics:** Unique Visitors: 150,000 Conversion Rate: 2.5% **Apparel:** Unique Visitors: 200,000 Conversion Rate: 1.8% **Home Goods:** Unique Visitors: 100,000 Conversion Rate: 3.0% If the company wants to identify the category that generated the highest number of actual purchases, which category should it focus on?
- AMore information is needed to determine the number of purchases.
- BHome Goods
- CApparel
- DElectronics
Show answer & explanationAnswer & explanation
Correct answer: D. Electronics
To find the number of actual purchases, multiply the Unique Visitors by the Conversion Rate (as a decimal) for each category. Electronics: 150,000 * 0.025 = 3,750 purchases. Apparel: 200,000 * 0.018 = 3,600 purchases. Home Goods: 100,000 * 0.030 = 3,000 purchases. Electronics generated the highest number of actual purchases (3,750).
Why the other options are wrong
- A. All necessary information is provided to calculate the number of purchases for each category.
- B. Home Goods generated 3,000 purchases, which is the lowest.
- C. Apparel generated 3,600 purchases, which is less than Electronics.
Conversion Rate Calculation
The process of determining the percentage of users who complete a desired action (e.g., purchase, sign-up) out of the total number of users who had the opportunity to complete that action.
- Conversion Rate = (Conversions / Total Visitors) * 100%.
- Conversions = Total Visitors * (Conversion Rate / 100).
- A key metric for measuring marketing and sales effectiveness.
Memory trick: Visitors times rate, seals the purchase fate.