In the crowded Amazon marketplace, simply listing products isn’t enough. Success on Amazon requires understanding and using various Amazon seller metrics to create effective strategies. These metrics influence everything from product visibility to customer trust. This article delves into the 10 essential Amazon performance metrics and their role in business growth. These include:
- 1. Product ranking
- 2. Conversion rate
- 3. Pre-fulfillment cancellation rate
- 4. Late shipment rate
- 5. Advertising Cost of Sales (ACoS)
- 6. Total Advertising Cost of Sales (TACoS)
- 7. Return on Advertising Spend (ROAS)
- 8. Buy Box percentage
- 9. Inventory Performance Index (IPI)
- 10. Account health rating
Let’s discover these Amazon metrics in detail to optimize your performance and increase sales.
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What are the Most Important Amazon Performance Metrics?
As an Amazon seller, you have access to numerous seller metrics, which might feel overwhelming, especially for beginners. So, it’s crucial to identify Amazon key performance indicators (KPIs) that matter most. They help you assess how well your Amazon business is doing compared to your objectives.
Here are the critical Amazon KPI examples you need to monitor.
1. Product ranking
Product ranking is one of the most important Amazon performance metrics. Most Amazon shoppers use the search bar to search for specific items, rather than just browsing. Importantly, many shoppers don’t look beyond the first page of results. That’s why your product’s rank matters so much.
Usually, it’s best to aim for a high best-seller rank in your category to be on the first page of results. You can see your current product ranking in your Amazon Seller Performance Metrics. It is calculated based on your product sales and reviews. Note that your rank updates hourly, so you need to keep up with your product listings.
So, it’s important to regularly work on improving your product ranking. The higher you rank, the more sales you’ll get.
Read more in our Amazon SEO guide to optimize your listing and product ranking.
2. Conversion rate
Conversion rate (or unit session percentage in Amazon Seller Central) is also one of the most crucial Amazon metrics to track for every item you sell on Amazon. It tells you how many clicks on your ad result in sales. Here’s the basic formula:
Conversion rate = number of orders/number of clicks
For example, if you had 100 sales from 2,000 clicks, your conversion rate would be 5%.
A higher CVR means your ad is doing its job, bringing in sales successfully. So, it’s essential to work on improving your conversion rate to boost your sales.
You can also go to Seller Center > Reports > Business Reports > Detail page sales and traffic by child item. Your conversion rate is automatically calculated and displayed in the Unit session percentage column.
You can read our full guide on how to increase sales on Amazon for more details.
3. Pre-fulfillment cancellation rate
Another vital Amazon performance metric is the pre-fulfillment cancellation rate. As an Amazon seller, it’s crucial to have the inventory you’re selling available. If you cancel an order because you’re out of stock, it’s called a pre-fulfilment cancellation.
To calculate it, divide the number of cancellations by the total orders in that period. It should be less than 2.5%. If you cancel orders often, your rate goes up.
Amazon doesn’t like rates higher than 2.5% because they want happy customers. So, don’t cancel orders unless it’s necessary. All cancellations count, no matter the reason. You should keep an eye on your inventory, especially during busy times like holidays or events like Black Friday.
To check your pre-fulfillment cancellation rate, simply go to your Seller Central > Performance > Account Health > Delivery Performance.
4. Late shipment rate
Besides the pre-fulfillment cancellation rate, the late shipment rate is also an essential Amazon performance metrics indicator to track. Receiving orders late disappoints customers and often leads to negative reviews. That’s why shipping on time is crucial for customer satisfaction.
If you consistently dispatch orders two or more days late, Amazon considers it a late shipment. This reflects poorly on your business, showing disorganization and a lack of concern for customers.
Here’s how to calculate your late shipment rate:
Late shipment rate = number of orders delivered late / total number of orders during that period.
Accordingly, your late shipment rate should be below 4%. This means ensuring most orders arrive on time.
Amazon calculates these seller metrics every 7 to 30 days. If your late shipment rate approaches 4%, Amazon notifies you. It’s important to take this seriously and improve your shipping process to avoid late deliveries.
5. Advertising Cost of Sales (ACoS)
Advertising Cost of Sales (ACoS) is one of the most crucial seller metrics of your Amazon advertising campaigns’ profitability. It compares how much you spend on ads to the revenue they bring in.
You can check your ACoS by visiting your Seller Central > Campaign Manager. Or you can also calculate this metric by yourself:
ACoS = Total ad spend / Sales generated from advertising
For instance, if you spend $200 on Amazon ads and they bring in $1,000 in sales, your ACoS is 20%. This means for every dollar spent on ads, you make $5 in sales.
Usually, a lower ACoS means your ads are more efficient and bring in more revenue for every dollar spent. Nevertheless, your ideal ACoS depends on your budget, advertising goals, and product costs.
Discover our comprehensive Amazon ads guide and best practices to improve your ASoS and other ads indicators.
6. Total Advertising Cost of Sales (TACoS)
Your TACoS, the total advertising cost of sale, is one of the most important Amazon performance metrics to track. It shows how much your advertising affects your overall Amazon business.
You can check your TACoS metrics in the same ACoS report in the Campaign Manager.
TACoS measures your PPC (pay-per-click) ad spending compared to your total sales revenue, including ad and organic sales. Here’s how to calculate your TACoS:
TACoS = (Advertising spend / Total revenue) x 100
For instance, if you spend $2,000 monthly on Amazon advertising and earn $30,000 in total revenue from PPC and organic sales, your TACoS would be 6.67%.
When your ad campaigns do well, it’s likely to boost your product’s organic sales, leading to lower TACoS.
7. Return on Advertising Spend (ROAS)
Return on Advertising Spend (ROAS) is a crucial Amazon seller performance metric for checking how effective your ads are. It compares the sales revenue from advertising to how much you spent on advertising. Simply put, it tells you if your ad campaign is profitable.
Here’s how to calculate your ROAS:
ROAS = Sales generated from advertising / Total ad spend
For instance, if you spend $200 on Amazon ads and they bring in $2,000 in sales, your ROAS would be 20.
The higher your ROAS, the more profitable your ads are. It’s essential to track this metric because if you’re investing in Amazon ads, you want to ensure they’re performing well.
You can also check your ROAS with your Campaign Manager in Seller Central.
8. Buy Box percentage
The next vital Amazon sales metric is the Buy Box Percentage, also known as Buy Box Wins. It shows how often your product appears in the prominent “Buy Box” on Amazon.
You can calculate your Buy Box percentage by dividing the times you owned the Buy Box when customers viewed your listing by the total page visits. This metric applies only to active listings.
Amazon refers to it as “Buy Box Wins” and provides two separate values for it in Seller Central. One covers your Buy Box percentage over the last 2 days, while the other spans a 30-day period.
To see your Buy Box percentage, log in to your Seller Central > Reports > Business Reports > Detail Page Sales and Traffic > click on the Buy Box Percentage column.
This spot greatly affects purchases, making it easy for customers to add items to their carts with one click. So, having a high Buy Box percentage is one of the most crucial Amazon performance metrics. It leads to more sales and higher revenue.
Check out our detailed guide on how to win Amazon buy box and increase sales.
9. Inventory Performance Index (IPI)
Inventory Performance Index (IPI) is one of the most frequently used metrics used by Amazon FBA sellers. It shows how well you manage your FBA inventory. A high score means you sell products quickly and efficiently, while a low score means you may have too much inventory or slow-selling products.
To check your IPI score:
- Expand the IPI section on your Seller Central Homepage
- Click on the IPI score next to the store you want to review
Tracking your IPI score helps you know how well your inventory sells and prevents overstocking. The main factors affecting your IPI score are:
- Sell-through rate: It’s units sold over 90 days, compared to usual stock.
- In-stock rate: It indicates how well you keep stock in 30 days, compared to sales in 60 days.
- Stranded inventory: It shows stored units without an active listing.
- Excess inventory: It measures the units exceeding 90 days’ worth of demand.
The IPI requirement ranges from 400 to 500. However, it doesn’t affect new ASINs because Amazon requires a 90-day sales history to calculate it. There are two IPI reviews each quarter, and you need to pass at least one. Aim to improve your IPI by mid-September to prevent stock limits in Q4.
10. Account health rating
The last crucial Amazon performance metrics indicator is account health rating (AHR). This metric assesses your compliance with Amazon’s rules and standards. It considers factors like your customer feedback, order defects, and late shipments.
You can check your account health rating by logging into your Seller Central > Performance > Account Health.
Currently, AHR displays as Good (green label), At Risk (yellow), or Critical (red). It indicates how well you’re following the rules. If your AHR is “Healthy,” your account is safe from deactivation. Otherwise, any violations are flagged in the Policy Compliance section with a red danger sign.
To boost your AHR, work on enhancing your customer feedback, order accuracy, and timely shipments. Here’s how:
- Ship orders accurately and promptly to reduce defects.
- Use dependable carriers and fulfill orders swiftly to improve shipment times.
- Provide top-notch service and quality products to improve feedback.
In case your store has lots of bad reviews, learn how to remove negative feedback on Amazon to increase your account health rating.
Why are Amazon Seller Performance Metrics Important?
Tracking Amazon performance metrics is vital for managing your business effectively and maintaining a good standing with Amazon. Here’s why it’s crucial:
- Maximizing profits: Metrics reveal which products sell well and help adjust pricing and sales strategies for better profitability.
- Identifying improvement areas: Monitoring metrics helps pinpoint areas needing enhancement, directing resource allocation for improved performance.
- Managing inventory: Tracking inventory metrics prevents overstocking or running out of stock, ensuring steady sales and avoiding extra fees.
- Ensuring Amazon compliance: Amazon enforces strict performance standards and policies for sellers. Monitoring metrics helps you comply with these rules, avoiding penalties or account suspension for policy violations.
- Staying competitive: Analyzing pricing and sales metrics keeps you competitive in your niche, highlighting areas for improvement to outperform competitors.
Amazon Seller Metrics – FAQ
Amazon KPI (Key Performance Indicators), or seller metrics, are measurements that show how well your Amazon store is doing. They aren’t just rules sellers have to follow but also offer valuable insights for sellers to grow and expand their online business. 10 Amazon KPI examples are product ranking, conversion rate, pre-fulfillment cancellation rate, late shipment rate, Advertising Cost of Sales (ACoS), Total Advertising Cost of Sales (TACoS), Return on Advertising Spend (ROAS), Buy Box percentage, Inventory Performance Index (IPI), and Account health rating. Amazon uses different metrics to measure how well sellers are doing. These include customer feedback, order defects, late shipments, etc. Sellers need to meet these standards to keep selling on the platform.
It’s Time to Measure Your Amazon Performance Metrics
Now that you understand the significance of Amazon performance metrics, it’s essential to take action. Start tracking your metrics today to optimize your Amazon store’s success.
Need assistance in improving your Amazon metrics and maximizing your sales potential? Feel free to contact us now for expert guidance and support.