There are a number of key ingredients when it comes to running a business successfully, but ones should be staying on top of are the vital metrics which build the picture of the health of their business.
This post is going to address Amazon seller metrics we should monitor as a seller and how these metrics affect your product rankings.
What metrics should I monitor as an Amazon seller?
1. Order Defect Rate (ODR)
An “order defect” occurs whenever an order receives an A-Z guarantee claim, negative feedback or a chargeback claim. Defect rate is calculated by dividing the number of defect orders out of the total number of orders for a given time period. Amazon likes sellers to aim for less than 1%, otherwise you may receive a warning notice or suspension. Therefore, monitoring this metric is important for boosting customer satisfaction and maintaining a low ODR. Learn ways to improve ODR here.
2. Pre-fulfillment Cancellation Rate
Pre-fulfillment cancellations are initiated by the seller prior to shipment confirmation. This typically happens because a customer buys a product, but the seller doesn’t have enough in stock. The seller must cancel the order for the product.
This rate is calculated by the number of cancellations divided by the number of orders in that same time period. If you are constantly cancelling your customer’s orders because you don’t have products in stock, you risk having a high pre-fulfillment cancellation rate.
Amazon wants all businesses to maintain a pre-fulfillment cancellation rate of less than 2.5%. If your business goes over this amount, you risk your account being suspended.
3. Late Shipment Rate
Late shipment rate applies to seller-fulfilled orders is another metric you’ll want to monitor to ensure you’re providing the best customer experience. It would be frustrating for customers if the shipment is delayed while they’re expecting a package by a certain time.
If your store consistently ships products late, it’s not a good look for your business. Amazon considers late shipping to be two or more days after the set shipping date. When you consistently ship your products late, it makes your business appear sloppy, disorganized, and uncaring towards customer satisfaction.
When you’re selling products on a site that values customer satisfaction, late shipment is not tolerated. Amazon expects that you will keep your late shipment rate below four percent to ensure that you continue to provide your audience with the best experience.
4. Conversion Rate
If you want to see if you’re driving successful results, your conversion rate is a good indication of your store’s performance. It’s one of the most important Amazon seller metrics for monitoring success. This metric shows you how many sales your business is getting. You want to have a high conversion rate because it indicates that people are coming to your page and buying your products.
A low conversion rate, however, calls for some changes to your strategy. There are numerous things you may need to alter to produce better results.
One method is adjusting your pricing to ensure you are in competition with your competitors. To evaluate this possibility, check out competing prices. You may find you are slightly over-priced compared to your competitors, which is causing you to miss out on leads. It’s also a great opportunity to see what else your competition is doing that you may not be doing. Are they offering free shipping or a discount for spending a certain amount? Creating tactical sales strategies can help you boost your conversion rate by driving more leads to your Amazon page.
Another thing you’ll want to monitor is your reviews. As we stated previously, people rely on reviews before deciding if your business is trustworthy. When you get negative reviews, take time to address them and help resolve the issue. Those people may end up changing their review because you fixed their problems!
Lastly, focus on improving your inventory management. Many companies fall into the trap of stretching themselves thin with inventory. It hurts their conversion rate because they never have the products in stock! If you know that a particular product gains popularity, work on keeping more of that product in stock. It will allow you to earn more conversions.
How Amazon seller metrics affect product rankings?
Your performance metrics impact your store’s success on Amazon. You want to constantly monitor them to understand where your store stands.
If you are seeing positive results with your Amazon store, your rankings will show it. An increase in conversions and positive user experience will help your products rank higher in the search results. You’ll reach more valuable leads and improve your store’s performance.
On the other hand, if you are seeing negative results, there are serious consequences that will arise for your business. If your site has a low conversion rate, your business won’t make a profit. In addition, you won’t obtain new leads for your business. This means that your business can’t continue to grow.
If your shop exceeds Amazon’s ODR rate, pre-fulfillment cancellation rate, or late shipping rate, you will lose your selling privileges. Amazon will suspend your shop for up to 60 days or shut down your shop for good.
If you aren’t pushing out more product sales because your store is suspended, you won’t be able to maintain or increase your ranking. It will cause your product rankings to drop.
In conclusion, Amazon has high expectations for sellers because they value customer satisfaction above everything else and only want to allow sellers on their site that provide positive experiences. If you want to be successful on Amazon, you must constantly monitor your store’s performance. Keeping track of performance ensures that you keep track of any issues that may arise with customer satisfaction.