Repeat purchase rate
Second purchase is the leading indicator of LTV.
- Formula
- Customers with >=2 orders / total customers (within window)
- Unit
- %
- Models
- E-commerce, Marketplace
| healthy within 90 days | 20%–25% | Northstar Finance |
What it is
Repeat purchase rate measures the share of customers who place at least two orders within a defined window. It is calculated as customers with two or more orders divided by total customers in the same cohort or time period.
How to calculate it
Within a specified window (commonly 90 days), count the number of customers who completed at least two distinct purchase transactions. Divide by the total number of customers who made at least one purchase in the same window, then express as a percentage.
Why it matters
Repeat purchase rate is a leading indicator of customer loyalty and LTV. For ecommerce and marketplace businesses, returning buyers typically carry higher margins than first-time acquirees once CAC is excluded, making repeat rate a critical driver of unit economics. A low repeat rate signals that acquisition is funding one-time buyers rather than building a compounding customer base.
Benchmarks & pitfalls
Northstar Finance's directional guidance places ~20–25% repeat rate within 90 days as a healthy threshold for ecommerce and marketplace operators — this is a practitioner heuristic, not a rigorous peer-reviewed study. Window definition matters significantly: a 90-day rate is not comparable to a 12-month rate, so standardize before benchmarking. Category also matters heavily — consumables and subscription-adjacent products naturally repeat faster than big-ticket or seasonal goods.