10 Amazon KPIs to Track for Your Business
Key performance indicators, commonly known as KPIs, have become a crucial aspect of businesses across various industries. Incorporating KPIs into your company allows you to establish clear goals, develop effective strategies to achieve them, and evaluate their performance along the way.
In this article, we’ll share some of the biggest Amazon KPIs that can impact your business. Monitoring these metrics can help ensure that your Amazon store operates at its peak potential.
What is a Key Performance Indicator?
Key performance indicators, or KPIs, serve as valuable tools for assessing performance and progress toward specific goals. By providing objective measures of success, they enable you to track performance over time and devise strategies to achieve your desired outcome.
In the world of online retail, Amazon KPIs hold immense significance. With increasing competition on the platform, you must explore innovative ways to grow your brand. Fortunately, the answer may lie in analyzing your KPIs! By carefully studying these vital metrics, you can gain valuable insights that will enable you to make well-informed decisions, ultimately improving your profitability and overall performance.
10 Amazon KPIs for Your eCommerce Business
In addition to the obvious seller metrics like sales, profit margins, and stock levels, here are some crucial Amazon KPIs that you should track for your business.
1. Inventory Performance Index
If you rely on Amazon FBA to fulfill any of your orders, it’s vital to keep track of your Inventory Performance Index (IPI) score. This score is calculated using your:
- Excess inventory percentage
- FBA sell-through rate
- Stranded inventory percentage
- FBA in-stock rate
Maintaining an IPI score at or above Amazon’s threshold is essential for keeping your account in good standing and avoiding FBA storage restrictions. Your score also plays a vital role in the new FBA capacity management system, which determines the amount of storage space you can use.
By monitoring your IPI score, you can gain valuable insights into your overall inventory performance and ensure that your products are selling well without being overstocked. The score ranges from 0 to 1,000, with scores below 350 indicating room for improvement and scores above 400 indicating strong performance. You can find your score on your Seller Central dashboard or the FBA dashboard.
2. Order Defect Rate
All Amazon sellers must provide an excellent customer experience. Amazon measures this through the Order Defect Rate (ODR).
Your ODR is the percentage of your recent orders that have one or more defects, such as negative seller feedback, credit card chargebacks, or successful A-to-Z Guarantee Claims. To maintain a good standing and avoid any issues, it’s important to keep your ODR under 1%. Exceeding this threshold could result in a warning or even the suspension of your account.
If your ODR isn’t meeting expectations, evaluate your customer service practices and thoroughly analyze the feedback you’ve received. This will help you identify any underlying issues that may be contributing to the decline in your ODR.
3. Product Reviews and Seller Feedback
Continuing with the focus on enhancing the customer experience, the next important thing to consider is your seller feedback and product reviews. It’s crucial to understand that these two are distinct from each other. Seller feedback specifically reflects the buyer’s experience with you as a seller, while product reviews provide ratings for your actual product.
Monitoring your seller feedback rating is crucial for establishing and maintaining a strong reputation as an Amazon seller. This rating is prominently displayed alongside your store name on your seller profile page, allowing potential customers to easily assess your credibility.
Similarly, Amazon product reviews play a significant role in boosting the visibility of your products in search results and shaping shoppers’ choices. These reviews provide valuable information for customers who are unable to physically evaluate your products in person.
Regularly monitoring both your seller feedback and product reviews is essential. Consistently low seller feedback ratings can negatively impact your eligibility to participate in certain Amazon programs and may even result in selling restrictions.
Keeping a close eye on Amazon reviews (yours and your competitors’) not only helps you gauge customer satisfaction with your product quality, but also allows you to analyze the reviews of your competition. This analysis can provide inspiration for new features, product enhancements, or even the development of new products to expand your offerings.
4. Return Rate
Returns can have a huge impact on your business’s profitability. Excessive returns can also harm your account health and serve as a warning sign that customers are not happy with your products.
To determine your overall refund rate, log in to Seller Central and navigate to the Reports tab. From there, select Business Reports > Seller Performance to access the refund rate for your Amazon seller account.
To find your FBA return rate, go to the Reports tab and click on Fulfillment in the dropdown menu. Look for the Customer Concessions section on the left-hand side and select the FBA customer returns report. This report will display all returns received at Amazon’s fulfillment centers.
Additionally, Amazon provides data on your return-related buyer contact rate through the Returns Performance dashboard. You can also view a summary of your returns performance metrics on the Manage Returns page.
5. Conversion Rate
Conversion rate is a crucial metric for Amazon sellers as it indicates how successful you are in turning potential customers into buyers. If your conversion rate is low, it means there are factors that are discouraging customers from making a purchase. These factors can include high prices, unappealing product images, incomplete product information, negative reviews, and more. On Amazon, a good average conversion rate falls between 10-15%.
Amazon refers to conversion rate as “unit session percentage,” which represents the percentage of people who viewed your products and ended up making a purchase. To find your Amazon conversion rate follow these steps in Seller Central:
Step 1: Go to Reports > Business Reports.
Step 2: Click on Detail Page Sales and Traffic By Child Item.
Step 3: Scroll to see the Unit Session Percentage column.
You can monitor your unit session percentage to gauge the performance of each of your products. By doing so, you can identify any areas for improvement and optimize your listings to increase conversions.
6. Keyword Ranking
Your product’s keyword ranking determines how prominently it appears in Amazon’s search results when a shopper searches for that specific keyword. A higher keyword ranking increases the visibility of your products, leading to more sales opportunities.
It’s long been said that 70% of shoppers won’t go past Page 1 on Amazon’s search results. Therefore, if you want to make sales and not be left behind on Page 20, you must get your products to rank higher for the keywords that you’re targeting.
To improve your keyword ranking, you can optimize your product listing in an effort to drive more organic (i.e. non-sponsored) traffic. Here’s a few things that you can do:
- Conduct thorough keyword research to choose the right keywords for your products.
- Use high-quality images and video to showcase your item.
- Create concise and informative product titles that include 1-2 main keywords.
- Craft well-written bullet points and product descriptions that also include several short-tail and long-tail keywords.
- Add additional keywords to your backend search terms.
Remember to avoid keyword stuffing at all costs – this will do more harm than good!
7. Account Health
Monitoring the health of your Amazon account is critical as it directly impacts your ability to sell on the platform. Any issues or violations could potentially lead to account suspension or even removal. To check your account health, go to the Performance tab in Seller Central and click on the Account Health tab.
There are three primary factors that contribute to your account health:
- Customer service performance
- Policy compliance
- Shipping performance
You must meet the target thresholds for each metric shown, but keep in mind that some are specific to fulfillment type and may not apply to you.
To ensure your account remains in good standing and complies with Amazon’s selling policies, Amazon also provides an Account Health Rating (AHR) to help you stay informed. This rating considers factors such as the number and severity of policy violations on your account and the positive impact you have on the customer experience through your selling actions.
If your rating is categorized as at risk (100-199) or critical (99 or lower), you must take immediate action to prevent your account from being deactivated. A healthy account rating ranges from 200 to 1,000.
By actively monitoring and maintaining a healthy account, you can safeguard your ability to sell on Amazon and continue delivering a positive experience to your customers. This should also translate into better feedback and reviews!
8. TACos, RoAS, and ACoS
We’ll lump all of these Amazon KPIs together to make things a little easier. All three of these ad metrics are essential for making informed decisions about your advertising campaigns, optimizing your ad spend, and maximizing your return on investment. By monitoring them, you can quickly evaluate the performance of individual campaigns, keywords, and products.
- ACoS: Also known as advertising cost of sale, your ACoS tracks the earnings from your advertising efforts. It’s calculated by dividing your ad spend by your ad sales.
- TACoS: Your total advertising cost of sale is calculated by dividing your ad spend by your total sales (even if they weren’t a direct result of your advertising). This metric helps you fully understand the impact of your advertising on your overall sales.
- RoAS: This stands for return on ad spend. It’s calculated by dividing your ad revenue by your ad spend and measures the amount of revenue generated in sales for every dollar spent on ads.
You can use third-party tools or Amazon’s advertising portal to calculate and track these metrics effectively.
9. Buy Box Percentage
Keeping track of your Buy Box percentage on Amazon is absolutely essential for maximizing your sales, visibility, and competitiveness. The Buy Box, also known as the Featured Offer, is where customers can easily add items to their cart or make a purchase from a product detail page. Being featured in the Buy Box significantly boosts visibility, trust, and click-through rates for your products.
By monitoring your Buy Box percentage, you can optimize your pricing, detect any pricing issues, and improve your advertising campaigns. It’s a crucial component in maintaining a competitive edge and making well-informed decisions about your pricing, inventory, and marketing strategies.
Your Featured Offer (Buy Box) percentage is calculated by dividing the total page views in which you’re the Featured Offer by the total page views received.
You can see your Buy Box percentage on your Seller Central dashboard. You can also go to Reports > Business Reports and view any of the Detail Page Sales and Traffic reports.
10. FBA Fees
Approximately 94% of Amazon sellers rely on the Fulfillment by Amazon (FBA) program to handle at least some of their order fulfillment needs. This is because FBA offers a range of prime benefits, including hands-off order fulfillment, fast shipping, increased Buy Box share, built-in customer service, and more.
Your FBA fees are an important KPI because they directly impact the financial health and profitability of your business. Monitoring them helps you optimize costs, set competitive prices, manage inventory, and assess your product performance.
FBA fees change quite frequently and lately, they’ve been on the rise. So whether you’re just starting your selling journey or you’re thinking about launching a new product, you need to know what you’ll be getting into.
Do yourself a favor and use an FBA calculator to estimate the profitability of the items you currently sell or intend to sell on Amazon. Simply put, if you’re paying too much in fees, you’re never going to be profitable.
Need More Help?
Consistently monitoring these Amazon KPIs allows you to make informed decisions that optimize your store’s performance and drive long-term success on the platform.
At eComEngine, we have been supporting Amazon sellers since 2007, providing them with powerful automation software that optimizes their growth. Our tools enable you to effortlessly get and manage Amazon reviews, keep track of changes within your Amazon listings, and effectively manage your FBA inventory. Designed to save you time and maximize your profits, our solutions are tailored to your needs.
And once you have a well-optimized, growing FBA business, you may want to consider an exit. If you’re curious as to how you can translate your account optimization into a great valuation, schedule a call with an Empire Flippers Seller Advisor. We look forward to working with you through this journey.