No Half Measures: Which Amazon Seller Metrics Matter Most?
Scaling your Amazon business involves several things, guesswork isn’t one of them.
It’s the same as a compass on the trail, checking your blood pressure, or a report card at school.
As an Amazon seller, you want to do more than simply boost your sales and grow your Amazon business. You want you to understand how (and why) your business is growing.
Below we will look at some of the most important Amazon metrics for sellers to keep track of on their e-commerce journey.
Your product ranking data points tell you where in Amazon search results your listing is appearing.
70% of Amazon shoppers do not venture past the first page of search results. Your product search position is your visibility. Getting your listing in front of as many eyes as possible is what will ultimately bring you sales. There are many ways to get to page one, but at the end of the day, your product ranking will be one of the most telling metrics you have in your arsenal.
Note, don’t confuse this with your Best Sellers Rank, Amazon’s measurement of how well your product sells against others in its category. To learn more about how much your BSR does (and doesn’t) reflect the health of your business, check out our recent blog on the subject, here.
Buy Box Eligibility
When you make a purchase on Amazon and click “add to cart,” you are using the Buy Box. When more than one seller is selling the same product, only one can occupy the coveted Buy Box at a given time.
Think of it like having a prime location for your business on a busy street corner.
Buy Box eligibility hinges on a few different Amazon metrics, the following of which are the most important:
- Order Defect Rate (ODR): Amazon calculates this percentage based on the number of A-Z claims (unsatisfactory/late orders), negative feedback, and credit card chargebacks. These factors are combined and then divided by the total number of orders over the last 60 days. Keep your Order Defect Rate under 1%.
- Available inventory: Products that are immediately available to customers are favored by Amazon’s algorithm. While it’s not impossible for backordered items to win the Buy Box, it is in your best interest to stay on top of your inventory.
- Customer feedback, customer satisfaction & response time: Are you maintaining constant and positive seller feedback? Is your customer service response time efficient regarding customer inquiries? All of these things will affect your chances of winning the Buy Box.
- Fulfillment method: Although FBA (fulfilled by Amazon) and FBM (fulfilled by Merchant) are both viable business models, those who do business using Amazon FBA are more likely at an advantage when it comes to the Buy Box.
Want to check if your products are eligible for the Buy Box?
- In Seller Central, under your Manage Inventory page, select Preferences.
- Select Buy Box Eligible (bottom of page), then click save changes.
Seller Rating and Seller Feedback
Now more than ever, people validate their shopping decisions using social proof. With so many brands on Amazon selling so many similar products, reviews and reputation have become the difference makers in “pulling the trigger” on shopping carts.
Seller feedback is made up of the reviews customers leave about your brand and your service.
Seller Feedback Rating is the numerical success value, represented as a score from 1-100 (with 100 being the best). Note, this score is visible on your Amazon storefront to customers.
Factors that influence your seller rating include:
- Shipping time
- Customer reviews
- Customer inquiries
- A-Z claims
How are you supposed to know if you receive negative seller feedback? Well, you normally wouldn’t… unless you were using Helium 10 Alerts. As the premier Amazon product monitoring tool, Alerts effectively stands guard in front of your Amazon listings, immediately notifying you, should negative feedback come your way.
Inventory Performance Index
Your Inventory Performance Index, or IPI, is a measurement of how well you manage your inventory over time. Your IPI score “combines the past three months of sales, inventory levels, and costs into a single rolling metric updated weekly.”
An efficient inventory management process ensures products get delivered to customers faster, reduced costs, and ultimately makes your Amazon FBA business more profitable.
This is straight from Amazon:
“An IPI score above 450 means your FBA inventory is performing well, and a score above 550 indicates your inventory is a top performer.”
Be aware – If your score dips below 350, you may be subject to additional fees or storage limitations, so keep an eye on this key metric!
Factors that will help improve your IPI score:
- Reduce unproductive/excess inventory
- Ensure your productive inventory is maintained at “lean levels” while making sure you still have enough on hand.
- Improving your FBA sell-through rate
Factors that will decrease your IPI score (or lead to missed opportunities to boost your score):
- Holding a substantially large inventory, compared to how much you are actually selling
- Running out of stock on a popular product
Your Amazon customer conversion rate measures how many potential customers viewed your listing against how many actual customers bought from you.
Think of it this way…
Total sales ÷ how many people viewed your listing (including return visitors)
Keep in mind, there is more than one definition of what constitutes a “conversion” (it may also refer to social shares or email signups). However you decide to apply this Amazon metric, it’s critical to know your rate of success. A poor conversion rate usually indicates a pain point in your business pipeline that’s costing you profits.
Check out some of the best ways to boost your conversion rate on Amazon.
While you’re looking into your conversion rate, you’ll also want to be aware of your sessions. A session is simply one unique view of your Amazon listing. A drop in sessions can determine if (or why) your keyword ranking decreased.
You can find both conversions and sessions within the “Detail Page, Sales and Traffic.”
Pre-Fulfillment Cancellation Rate
The pre-fulfillment cancellation rate (or as I call it in my head, “a mouthful”) is calculated by dividing the total number of order cancellations (before shipping confirmations) by the number of total orders in a given time period.
What’s the magic number for this Amazon seller metric?
Your pre-fulfillment cancellation rate should be less than 2.5%.
Late Shipment Rate
This one’s a little more self-explanatory. If you are consistently late on shipments, it reflects poorly on your business standards and procedures. This is not the picture you want to paint of yourself, especially in regard to the Amazon algorithm.
Your late shipment rate is calculated as follows:
Number of overdue orders (exceeding two days) ÷ total number of orders in a given timeframe
Your late shipment rate should remain under 4%.
PPC (pay per click advertising) is a term you’re going to want to become familiar with. As your Amazon business grows, you will be required to supercharge your sales to keep profits up. Amazon PPC ad campaigns are your superchargers. Of course, like anything e-commerce related, excessively complex acronyms are involved (otherwise known as ECA’s).
Your ACoS, or advertising cost of sales, is the metric that tells you how much revenue you are generating from your advertising spend. This metric is exclusive to the Amazon platform.
How do you calculate your ACoS?
Ad spend ÷ sales earned from ads (the lower your ACoS, the better!)
As an example, if you earned $1,500 in sales from PPC ads and you spent $375 on the PPC ads for that product, your ACoS is 25%. For reference, the average ACoS is around 30%, so you’d be in pretty good shape!
Also known as “return on ad spend,” your RoAS measures your total ROI (return on investment) regarding your paid advertisements. RoAS is not exclusive to Amazon, but used widely across most of the e-commerce world.
Total Ads sales ÷ ad spend (the higher your RoAS, the better!)
Yes, TACoS. Rather than simply measuring the cost of sale for products directly sold through PPC ads, TACoS (or Total Average Cost of Sales) measures your ad spend against all of your Amazon sales, organic (non-PPC) sales included.
This weighted average gives sellers a much more holistic view of the relationship between their ad spend and sales.
If all of these acronyms and equations are raising your blood pressure, you’re not alone. That’s why we created ADS, Helium 10’s new Amazon PPC Management Tool. ADS takes the headache out of PPC management by:
- Utilizing a simplified, but intuitive campaign management dashboard
- Delivering automated bid suggestions (don’t worry, we give you control to tailor automation settings to help fine tune your experience)
- Giving you streamlined and visual representations of your ad performance on Amazon (at-a-glance charts and graphs galore)
- Giving you access to all Amazon PPC metrics (including TACoS, which you cannot find in seller central)
It’s Time to Measure Up
If you have recently decided to start selling with Amazon FBA, you’ve chosen a wonderful time to start. Between Helium 10 Amazon seller tools and new opportunities sprouting up every single day, success is well within reach.
You may be in the product research stage of your Amazon journey. Or, you may be waiting on your very first shipment. Take this time to familiarize yourself with these Amazon metrics so you’ll recognize success when it happens (trust us, it’s the best feeling in the world).