Website analytics is widely used by business to business and business to consumer online merchants to examine various markets and track their customers accurately. Web analytics is also becoming increasingly popular with webmasters of other websites as well. Since tracking visitors accurately is very important for most websites, most webmasters use web analytics to get customer conversion rates and other important data. Usually, web analytics software tracks visitor behavior by inserting a small piece of tracking code on each page of the site. The tracking code transmits information to the analytics software vendor's data collection facility using a tiny gif image or a small JavaScript code. To identify returning visitors tracking ID stored in a cookie is used.

Over the past decade, e-commerce retailers have become proficient with web analytics and have improved their website design to help customers navigate and complete the purchase process easily. Having completed this process, many retailers have become overloaded with additional data that adds no further discernable value. It is difficult for most companies to process the data to extract important information and understand what to measure next. Going forward, e-commerce companies are discovering that they need to be highly innovative and respond to the latent needs of customers. Web analytics software applications provide a wealth of information which can help them do that.

Interestingly a recent report by Jupiter Research sent shockwaves through the industry when it stated that increasingly high rates of cookie rejection and deletion by internet users makes third-party cookies, which is the default method for hosted analytics solutions to measure visitor activity, an unreliable method for collecting and reporting on web marketing results.

Focusing on finding new ways to improve the customer experience will simplify e-business and increase the customer conversion rate. Only by using web analytics and usability testing together can companies get a complete picture of user behavior and experience on an e-commerce site. This is a very powerful method to understand customers and make improvements to the site based on customer needs.