Guest post by Brooklin from OrderMetrics
Amazon isn’t going anywhere, and will most likely only become an even bigger part of ecommerce in the United States. This leaves many ecommerce brands asking whether they should sell on Amazon or their own storefront.
Thankfully, it’s not an either-or question. ecommerce brands will sell on both their own storefront and the Amazon platform. The former allows for more control over everything from listings to marketing, while the latter lets brands gain a huge amount of exposure.
But this isn’t a post about the merits of Amazon. It’s a post about tracking your metrics.
Whether you sell solely on Amazon or across multiple channels, keeping track of your metrics is critical for long term success. How else will you know what’s working, what’s not and what ultimately drives your profitability?
“Every ecommerce seller knows the rule — utilize your data to increase sales,” writes Sellbrite co-founder Michael Ugino. “Though everyone may have heard this rule, not everyone knows how to use data to increase their revenue. With so many metrics to track, it can be difficult to know which ones to focus on and improve.”
Amazon seller metrics will give you insight into your Amazon account health including everything from product pricing, marketing effectiveness, customer satisfaction and more. But what are the most important metrics to track?
1. Product Ranking
When people land on Amazon, they are there to shop — and most take advantage of Amazon’s robust functionality. 75% of Amazon customers utilise Amazon’s search box — though 40% don’t scroll beyond the first page.
This means you need to focus on your products’ ranking so that you land on that first page of search results. Aim for Best Seller ranking for best results.
The Best Seller rank is calculated by sales volume, not seller reviews or customer feedback. They are also updated hourly, so get selling!
If you see a lot of traffic to your Amazon products but a low conversion rate, it may be worth exploring your pricing strategy. With product comparison so straightforward on the Amazon platform, a price differential of just a few dollars could make a huge difference to reaching that Best Seller ranking.
2. Seller Rating
Amazon’s Seller Rating puts a more objective number to your performance as a seller by combining metrics from customer feedback, fulfilment and more.
According to FeedbackExpress, the Seller Rating is a score between 0-100 and includes six major metrics.
- Shipping time
- Order cancellations
- Customer inquiries
- Customer reviews
- A-to-Z Guarantee claims
Keeping track of your Seller Rating will help you keep a pulse on the big picture and give you a foundation to actively seek out ways to improve.
3. Unit Session Percentage Rate
This is simply Amazon’s lingo for conversion rate on their platform. According to Digital Commerce 360, the average unit session percentage rate on Amazon is 12.3%.
Similar to conversion rate, the unit session percentage rate is calculated by dividing the number of units ordered by the number of total sessions. This number could be low because of low sales or low traffic — take a closer look at both the units ordered and your sessions to determine how to improve this version of conversion.
4. Units Ordered
While there’s no objective benchmark to run a comparison for units ordered, looking at how many units are ordered on a daily, weekly and monthly basis is a great way to see how effective your Amazon presence is.
This is an even better metric than your total orders, since many Amazon customers will purchase multiple units in a single order. The average Amazon order holds just over two products, according to analysis from Jumpshot.
The logic of increasing multi-unit orders is sound when it comes to profitability. “ When a seller processes and ships an order with two units, its overall variable expenses are generally much less than if it had sold just one,” writes Stephen Bulger at Practical Ecommerce. “Not only did the total net income more than double, the per unit net income also increased.”
5. Order Defect Rate
The Order Defect Rate doubles up with your Seller Rating with a more specific focus on the order itself. Was it defective or successful? An order is considered defective by Amazon if the customer:
- Makes an A-to-Z Guarantee claim,
- Makes a chargeback, or
- Leaves negative feedback (1- or 2-stars).
With a defect rate of 1% or more, Amazon may issue a warning or suspend your seller account.
6. Inventory Performance
One of the newest metrics from Amazon is its’ Inventory Performance Index. This is particularly important for FBA sellers, who rely on Amazon storage. Amazon will limit storage for sellers with a low Inventory Performance Index.
While Amazon has not announced how they calculate the score, the platform has given three suggestions for increasing the score (which ranges from 0-1,000): reduce excess inventory, update what you keep in stock, and avoid stranded inventory.
7. Fulfilment Performance
Fulfilment performance is a relatively new metric from Amazon designed to keep sellers accountable with how they fulfil orders for customers on the platform.
While seller rating has more to do with customer experience, fulfilment performance deals with hard numbers regarding pre-fulfilment cancellation, late shipping and order defects. Amazon recommends that all Amazon sellers should be “working toward achieving and maintaining a level of customer service” that meets their standards for fulfilment performance. These numbers are:
- Less than 1 per cent order defect rate
- Less than 2.5 per cent pre-fulfilment cancel rate
- Less than 4 per cent late shipment rate
Using Amazon’s powerful and far-reaching platform comes with a cost. Tracking your fees relative to your revenue will help you determine whether selling on the platform is worth it.
While fees aren’t exactly a metric, they are a critical hard number for determining how profitable each order, customer and product is for your brand.
9. Invoice Defect Rate (New for 2020)
The Invoice Defect Rate (IDR) is all orders from Amazon Business customers for which an invoice was not uploaded within one business day after shipment as a percentage of total orders from Amazon Business customers. Amazon Business customers expect invoices for tax and accounting purposes.
Sellers are expected to maintain an IDR under 5% in order to provide a good customer experience, however, there is no penalty for not meeting the performance target at the moment.
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