Location. Location. Location.

The oft-repeated cliché of the real estate business also holds for the retail industry, where property usually represents the largest non-goods expense and the most crucial component of the business formula.

But if L-cubed is the magic elixir of the physical world, what is its corollary in the virtual world of e-commerce? And what benchmarks are emerging to measure success, as "sales per square foot" does in traditional retailing?

The good news is that e-commerce is ripe with high-value indicators. And most of them revolve around customer behavior – which is a lot more interesting and actionable than reading the income statement and pacing off the room.

The most common benchmark for e-commerce sites is traffic to the web site, usually measured in user visits and page views. Compare your traffic (and traffic growth) to the industry as a whole and you’ll have one indicator of your success. Better yet, compare traffic to e-commerce sites in your category (consumer electronics, toys, cosmetics, jewelry) to get a feel for how you are faring against your direct competitors.

Traffic alone does not make a successful e-commerce site, however. The wrong traffic, visiting for the wrong reasons, will not purchase goods or services. So the percentage of customers who purchase becomes a crucial benchmark for e-commerce. The figure is usually referred to as the conversion rate.

Internet order conversion rates are notoriously low. According to an industry surveys by The Boston Consulting Group (BCG) for shop.org, the e-commerce trade organization, only about 1.5 percent of e-commerce site visits result in a purchase. The reasons for that low number are many, ranging from poorly targeted ads that drive the wrong traffic to a site right through to confusing checkout sequences that cause all but the most stalwart e-shoppers to "bail out" before completing the order.

Perhaps one of the most interesting e-commerce benchmarks is the behavior of repeat buyers, and their impact on the success of e-commerce sites. Intuitively, we all know that a loyal customer is the best customer. But this is being proven empirically by e-commerce sites.

Again citing BCG studies for shop.org, repeat buyers represent between 35 and 40 percent of Internet purchasers, but account for more than 50 percent of the revenue for the reporting companies. And in some categories, the loyalty factor represents more than 2 times the revenues that their per capita representation would suggest.

The loyalty factor becomes all the more important when you consider the cost of acquiring a new Internet customer. Even though the hyper-competition of the early Internet days has relaxed -- when heavy reliance on expensive TV and radio advertising meant each new customer cost as much as $100 to acquire -- customer acquisition is still an expensive proposition for e-commerce sites.

So after acquiring a customer, the smart e-commerce company retains him or her for as long as possible. This fact provides the rationale for the regular e-mail correspondence most high-end e-commerce sites conduct with their customers – whether they are providing special offers, product advisories, or topical content.

There is no shortage of benchmarks in e-commerce, in part due to the infinitely measurable nature of the Internet business. For the inventive manager, there are plenty of ways to tinker with the e-commerce formula and fine-tune results. And it’s a lot cheaper than moving a brick-and-mortar store to a different intersection or mall.