When you start a business on Amazon, you want to eventually see it scale to a point where it generates significant sales. To do that, you need to keep tabs on various elements of your business on Amazon. Amazon has key objectives that every seller needs to meet, and they use quantifiable metrics to assess how effectively you are achieving them. They include providing excellent customer service during all stages of a sale, adhering to Amazon's selling and shipping policies, keeping products in stock, and maintaining timely deliveries.
When your performance is off-target, Amazon sends you a notification so you can work on improving your seller performance. If you don't, they may take drastic measures like suspending or deactivating your seller account. In some cases, if the performance is very poor, Amazon doesn't even have to send a notification. Instead, they deactivate your account immediately.
In this article, we'll look at the key metrics you need to track to improve your performance on Amazon.
When selling on Amazon, your primary concern should be providing the best experience for your customers to increase conversion and encourage repeat purchases. To do that, you must track the following key metrics:
Most buyers who shop on Amazon go through the review section before deciding to trust you enough to make a purchase. Very few buyers will trust you if your seller account has more negative reviews than positive ones, leading to fewer conversions and a high order defect rate (ODR). ODR refers to the number of buyers who have a negative experience when shopping with you. Amazon considers an order defective if:
Amazon requires sellers to have an ODR of less than 1%, so monitoring this metric is the best way to maintain a low ODR and boost customer satisfaction. To keep your ODR low, provide excellent customer service, deliver quality goods and make shipments on time. Meeting Amazon metrics may mean hiring a reputable and well-established Amazon full management agency to ensure positive results.
Orders that you cancel before shipment fall under the pre-fulfillment cancellation category. Usually, order cancellation happens when the merchant doesn't have enough stock to fulfill the buyer's order. As an Amazon seller, Amazon expects you always to have any inventory you're advertising available. Amazon expects you to maintain a pre-fulfillment cancellation rate of below 2.5%. Since Amazon thrives on excellent customer experience, ensure that you always provide this. Keep track of your inventory and plan for periods where you may receive an influx of orders to ensure that you have enough inventory to meet the many order requests.
If you've ever shopped online, you know how annoying it is to receive your order past the expected delivery rate. Now that you're selling on Amazon, you should avoid this at all costs. Late shipments create a bad customer experience and leave you prone to negative customer reviews. This is referred to as the late shipment rate, calculated by dividing the number of overdue orders by the total orders over a 10-to-30-day period. To remain in good standing, your LSR shouldn't exceed 4%; otherwise, you risk your account getting canceled. Most Amazon FBA agencies should be able to help you track these dates and metrics to keep your account in good standing.
This refers to your engagement with your customers. How often do you respond to messages from your customers? How long does it take you actually respond to these messages? As you know, Amazon expects all buyers to maintain an excellent customer experience and one way to do that is to ensure that you respond to buyer messages. In fact, not responding to these messages can see your account flagged as you will have violated Amazon's terms of service. Amazon expects you to respond to buyer messages within 24 hours and keeps track of how often you don't respond to their queries. Keep tabs on any messages and respond or hire an Amazon FBA agency to handle customer messages.
Your conversation rate is one of the easiest metrics to monitor on your seller account. Amazon will not suspend your account if your conversion rate is low. However, if you want to scale your business, you want to ensure that your products are actually selling. To achieve high sales, you need to drive leads by pricing your products competitively, using Amazon FBA, shipping products on time, and ensuring good customer service, so buyers leave only good reviews. Your conversion rate is considered when Amazon determines how often to show your products against competitors, whether organically or using pay-per-click advertising.
This is probably one of the most important metrics you must constantly check, as it can make or break your business. On your seller account is a feature known as the Account Health Rating (AHR). Your AHR indicates how compliant you are with Amazon's terms of service and policies and is calculated based on:
To improve your AHR, fix any violations you have on your account by hiring an Amazon FBA full management agency to ensure you always create a great customer experience for anyone who buys from you.
Ideally, your performance metrics will positively impact the success of your business in the long run. If your business is doing well, you’ll likely see high conversion rates, positive reviews, and repeat buys from past customers. Providing a positive user experience to everyone who shops with you will increase conversion. Eventually, your products will rank higher on Amazon search results.
In contrast, if you're seeing a lot of negative results like low conversion rates and increased negative reviews, it's unlikely that you will break even. It is also impossible to scale your business in such a case. If your business doesn't meet Amazon's metrics, you risk getting your account suspended or canceled.
There are lots of ways to gain traction on Amazon. One of the best ways is to ensure that your account remains in good standing by tracking the above vital metrics. It's a lot of work, we know, but it's work that will pay off in the end.
If you are having trouble tracking important metrics or suddenly find yourself violating these metrics, a full Amazon FBA agency can advise on what to do to restore your seller account to good standing.
If you are ready to take the plunge, get in touch for a FREE 30 Minute Consultation with one of our industry Experts.
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