Many individuals think of key performance indicators (KPIs) as dos and don’ts. Yet KPIs on Amazon, also known as seller metrics, provide sellers with useful insights that may be used to expand their online businesses. They are an important component of your online business growth strategy because they show you what customers like and how they engage with the system.
Scaling your business on Amazon requires a strategic approach and familiarity with metrics analysis. It’s no simple task, and you'll need top-notch tools. You can choose from a wide variety of third-party tracking and analytics solutions, like this one here. However, ensure you choose one that will help you to get the most out of your business. Moreover, specialized software can benefit sales, order processing, and interactions with your customers.
Besides, while there are a lot of Amazon seller metrics you need to keep track of, only a handful directly affect your ability to sell. Some examples of the most important metrics to track are as follows:
1. Product Ranking
Product ranking is a significant KPI for Amazon merchants. Customers know they can find what they need on Amazon. They never aimlessly browse and use search engines to find stuff. Many people won't even bother clicking through the following pages of results. The importance of the product rating comes from this fact. Thus, to get on the first page of results, you must become a best-seller in an applicable category.
The Amazon product ranking metric is a great place to start if you're trying to decide what to sell on Amazon. Use the metric to decide what to sell. Low rankings indicate that a product is not likely to sell successfully.
Achieving the ideal rating requires some careful balancing. The sweet spot is to find a product for which you believe there is both a market and profit opportunity and room to optimize and improve its Best Sellers Rank (BSR).
2. Fulfillment and Shipping Metrics
Amazon has made two-day shipping the norm and is working hard to make same-day and one-day shipping the new norm.
It also prefers sellers who can meet their customers' quantity and delivery time needs. You have less to worry about if you're using Fulfillment by Amazon (FBA). Hence, if you can keep up with Amazon's demands for product deliveries, you should be fine.
3. Amazon Click-Through Rate (CTR)
Every Amazon seller needs to understand and keep an eye on their CTRs.
Amazon CTR measures the percentage of users interacting with advertisements by clicking on them. Amazon's CTR is reported per keyword and search term. Low CTR could indicate poor product-keyword alignment or unproductive search keyword traffic to avoid.
To boost the CTR percentage of your listings, here are the following areas you should work to improve on:
- Title. Find out which keywords have a lot of views. This can help you determine which keywords are too broad for your title.
- Price. Keep your prices competitive to attract customers. Ideally, you'd like to offer a price that prompts people to buy the product after they click on it.
- Reviews. The higher the number of reviews for a product, the more likely it is to be clicked on.
- Image. Making your items look more polished will boost their perceived value and give shoppers trust in your brand's dependability.
- Badges/Coupons. The CTRs of your ads will increase if you promote Amazon discounts, coupons, and limited-time offers.
4. Negative Feedback Rate
This metric is calculated by dividing the number of negative feedback orders by the total number of orders. Amazon calculates the percentage of orders with poor ratings based on the order date, not the day the customer left a negative review.
Subpar ratings of only one or two stars in the feedback section are a poor sign. Thus, it is crucial to get in touch with the affected customer through Amazon's Feedback Manager to figure out what went wrong.
Because FBA delivery is Amazon's job and has nothing to do with your performance, any negative feedback citing delivery delays or late delivery can be removed from your record.
5. Buy Box Percentage
The Buy Box percentage report demonstrates the frequency with which your product is featured in the Buy Box position.
The number of visitors to your site, including the time they spend there, and the number of items they purchase will all decline if your Buy Box percentage is low.
Find out which products require more attention with the Buy Box Percentage Report. You'll need to outweigh several competitors, so ensure you double-check these things:
- Improve on-time delivery and customer service.
- Price and stock wisely.
- Check your Inventory Performance Index and examine inventory management over time.
6. Return On Ad Spend (ROAS)
The ROAS metric is useful for businesses in determining the effectiveness of their marketing campaigns. The calculated cost for each campaign is used as a reference point by brands to determine if a campaign is successful or if a different strategy is needed.
Spending more on ads that lead to more sales doesn't always guarantee things will go as planned. If you don't take steps to reduce it, a high advertising cost of sale will eat into your earnings and set you on a path to financial ruin. So, you should monitor your advertising budget to see which campaigns have an unreasonable cost per click or are performing poorly because they are not getting enough impressions. You must also monitor which ones are doing well and should be given more funds to drive sales.
Finding out whether or not your advertising budget is paying off is a simple process. By doing so, you can adjust underperforming campaigns and put more resources into successful ones.
7. Page Views
Page views refer to the total of people who have viewed any of your Amazon product pages. The basic metric of page views can help you evaluate the efficacy of both your existing organic and paid marketing strategies in attracting potential customers. To the same extent, they provide valuable feedback to Amazon's search algorithm about the interest in and engagement with your products. After all, more people clicking on your listing and buying your product means a higher search and product rating.
However, it may not be good news if your page views and session counts are similar. It could mean that you are failing to keep the customer interested. If they only look at one item before clicking away, this could indicate problems with your price or product description.
In addition, humans tend to be somewhat lazy. Most consumers are in a hurry and don't want to spend time weighing the pros and cons of several products before making a final purchase. The average reader will spend no more than 15 seconds reading your product description. Hence, it's crucial always to optimize your product listings.
8. Inventory Performance Index (IPI)
The recent metric offered by Amazon is the IPI, causing quite a stir among the wider group of businesses that sell on Amazon.
To evaluate the progress and profitability of an FBA business, it compiles information from Amazon sales, inventory, and expenses. That is to say, it is applied to evaluate the efficiency with which Amazon merchants control their stock. A higher rating indicates superior performance.
A higher IPI score can be achieved by implementing the following suggestions:
- Improve your sell-through rate.
- Stay in stock.
- Fix stranded inventory.
- Sell or remove excess inventory.
Notably, you need a reliable inventory management system to keep tabs on sales velocity and product seasonality so that fluctuations don't cause you to run out of stock or drop in BSR. You can use time-tested methods, such as keeping spreadsheets, or you can save time by switching to a real-time dashboard provided by a third party.
What Happens If You Ignore Amazon’s Seller Metrics?
Sellers who do not satisfy Amazon's performance standards are subject to penalties. Likewise, if a seller doesn't meet Amazon's standards, it could limit the types of items they can sell or even terminate their account. Now that you know the risks, you can either keep an eye on Amazon's metrics or suffer the repercussions down the road.
If your financial stability depends on Amazon, this might have devastating consequences. Additionally, the suspension of an account may result in the account being deleted altogether. That said, you should avoid suspension at all costs.
The interests and behaviors of consumers are continuously evolving. So, keep a close watch on your market by consistently checking in on these Amazon performance metrics.
Furthermore, don't stress out if you notice a decrease in your numbers. Put that newfound knowledge to use and remedy the situation. You can start by changing shipping companies because of your On-Time Delivery Rate or changing your product images in response to a low CTR.
The goal isn't perfection but efficiency. Therefore, checking your performance metrics regularly will help you respond better to changes in Amazon's reports.