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As a seller on Amazon, you have an incredible amount of information at your disposal about how your products are performing, but with so many different metrics available it can be overwhelming.
To avoid analysis paralysis you need to know where to focus your attention.
Today we’ll break down what some of the most important Amazon metrics mean, and how you can use that information to improve your sales and profits.
Product Ranking is by far the most important metric if you are aiming for success on Amazon, it ties in directly to your sales and profits, and could easily be considered the single defining factor in an Amazon store’s success or failure.
But what exactly do we mean by Product Ranking?
Product Ranking is how high on Amazon’s search engine your product ranks for certain keywords. Ranking higher on Amazon’s search engine equates to better sales, it’s a simple fact, with 40% of users claiming to never scroll past the first page of results if you’re not ranked highly you’re missing out on valuable potential customers.
It’s become a well-known statistic in the marketing world over the last few years that over 50% of product searches now start on Amazon, even beating out Google. In fact, if you consider YouTube’s search engine as an extension of Google, Amazon is now the second-largest search engine in the world.
Leveraging that incredible search demand is vital to success on Amazon, and tracking your rankings is the first step to improving them.
Not sure how to track your rankings? Try the KeyworX Free 7 Day Trial.
For any business, Conversion Rate is a vital metric, it lets you know at what rate customers see your listing and choose to buy. On Amazon, that metric is labelled as Unit Session Percentage Rate, and keeping it high is incredibly important.
First you need to know how your Unit Session Percentage Rate is calculated:
Unit Session Percentage Rate = Units Ordered / Number Of Sessions
Amazon claim the average rate is 12.3%, so if you’re under that you should be actively working to improve your conversion rate.
The key to improving your Conversion rate is optimising your listings, and making sure your products are competitively priced.
Order Defect Rate (ODR) is the most important negative metric to keep track of, in simple terms ODR is the percentage of orders that have gone wrong in one way or another. Amazon use ODR as a measure of your ability to provide a good customer experience.
An important note is that ODR is constantly being calculated as a percentage based on your last 60 days of sales.
We all know that Amazon are a customer centric company, and their policies when it comes to ODR reflect that. An ODR of over 1% can be grounds for account deactivation, so this is an important metric to keep on top of at all times.
There are 3 main components to ODR to keep in mind:
Let’s break each of those down.
Negative Feedback Rate is calculated by dividing the number of orders that have received negative feedback by the total number of orders in the relevant period. This is essentially a measure of how many customers you have that are unhappy with your product or service.
For Amazon negative feedback is defined as any reviews that leave a one- or two-star rating. Addressing these reviews quickly and efficiently is a great way to keep your Negative Feedback Rate low.
It is important to know that if a buyer withdraws negative feedback it will no longer count towards your ODR.
A-to-z Guarantee Claim Rate is another straightforward metric that simply measures how many customers have made claims against you using the A-to-z Guarantee in the last 60 days.
The A-to-z Guarantee is Amazon’s way of protecting customers, knowing the terms of the guarantee and understanding how to stay on the right side of it will keep your claim rate to a minimum and in turn keep your ODR low.
It is also worth keeping in mind that not all claim types will affect your ODR, Amazon has a list of claims that do and don’t affect your ODR which you can read below.
The following types of claims impact your ODR:
The following types of claims do not impact your ODR:
The key takeaway from this is that you should always be aiming to deal with claims in a timely manner, as a customer can’t actually log a claim with Amazon unless they’ve contacted you and waited 2 days, you have a window to deal with the problem before getting Amazon involved.
The final metric that impacts your ODR is your Credit Card Chargeback Rate, which measures how many orders have had a credit card chargeback over the last 60 days.
Credit Card chargebacks happen for a variety of reasons but are always triggered by a buyer disputing purchases charged to their cards. Amazon broadly splits chargebacks into two categories. Fraud or Service.
Fraud chargebacks are a result of credit card fraud, when a buyer claims not to have made the purchase. These chargebacks do NOT count towards your ODR.
Service chargebacks occur when the buyer acknowledges the purchase, but indicates a problem with the experience to their card provider.
These are the chargebacks that affect your ODR, and unfortunately you don’t have much control over these as they aren’t handled by Amazon, and instead are a feature that credit card providers offer their customers.
You can of course contact customers directly with the Buyer-Seller Messaging Service to try and solve any problems, but typically this is a metric you can’t control.
The Amazon Inventory Performance Index (IPI) is a metric that is particularly important for sellers using Fulfillment By Amazon.
In Amazon’s own words it measures “how well you drive sales by stocking popular products and efficiently managing on-hand inventory”.
While that is quite a vague description, it is essential a measure of how efficiently your inventory is performing at any given time. Amazon will give you a score ranging from 0 to 1,000, and their standards set 500 and above as an excelling score, and anything below 450 as a score that you should be working to improve.
In practical terms, Amazon will limit storage capacity for sellers with low scores, so if you are dependent on Amazon’s storage facilities you will definitely want to keep your score up.
The key factors in how Amazon judges your IPI are Excess Inventory, Sell-through, Stranded Inventory, and In-stock Inventory. They will even give you a breakdown of which aspects you're excelling at, and which need more work.
What this all means for you practically is the need to have a constantly moving inventory, without having stock sitting stagnant for too long.
While there are a lot of other metrics that are important, focusing on these first will keep your Amazon store selling well, and prepare you for any issues that may be coming your way.
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