Know Your Numbers: The Most Important Metrics Every Amazon Seller Should Track
You measure the health of your brand by understanding key metrics. By tracking these data points, you can keep your brand growing year after year!
As an Amazon seller, you’re aware that running a successful business requires more than just listing products then looking at the color options for your new Tesla. To thrive on Amazon, you need to be strategic, data-driven, and constantly optimize your operations to stay ahead of the competition.
That’s where these metrics become a crucial component of your eCommerce success.
By tracking and analyzing these data points, you’ll be able to gain valuable insights into your business performance, identify areas for improvement, and make highly informed decisions that significantly increase your overall sales and profitability.
In this post, we’re going to take a close look at the most important metrics for Amazon sellers. Whether you’re a seasoned seller or just starting out, it’s a good idea to understand these critical indicators of online selling success (or failure).
A better knowledge of these metrics will help you to optimize your eCommerce operations, improve customer satisfaction, and most importantly, level up your Amazon business.
It all comes down to sales. So, let’s start here.
As an Amazon seller, sales metrics are invaluable because they’ll give you valuable insight into how your business really functions. That way you can make highly informed decisions about how to boost your overall profitability.
Some of the principal sales metrics include your gross and net sales, average order value, conversion rate, repeat purchase rate, customer lifetime value, and sales velocity. Gross and net sales provide an overall picture of revenue generated by the seller. The average order value and conversion rate help measure the effectiveness of your marketing and sales strategies.
Repeat purchase rate and customer lifetime value tell you whether or not you’re building customer loyalty and maximizing long-term revenue. There’s a lot of talk about sales velocity these days. It’s a metric that Amazon uses to determine who gets the Buy Box. It’ll also help you identify trends and adjust your inventory levels accordingly.
By tracking these sales metrics, you’ll be able to optimize your operations, improve customer satisfaction, and put more money in the bank!
- Gross sales: The total amount of revenue generated by a seller before any deductions, such as fees or returns.
- Net sales: The total amount of revenue generated by a seller after all deductions, such as fees and returns.
- Average order value: The average amount of money spent per order by a customer.
- Conversion rate: The percentage of visitors to a seller’s listing who make a purchase.
- Repeat purchase rate: The percentage of customers who make more than one purchase from a seller.
- Customer lifetime value: The total amount of revenue a seller can expect to receive from a customer over the course of their relationship.
- Sales velocity: The rate at which a seller’s products are selling on Amazon.
If you don’t know what you have in stock, it’s hard to sell!
Keeping track of your materials and products as they make their way through the supply chain is not just a task, it could be the key to success for your business. Inventory management can substantially reduce costs while maximizing efficiency. That leads directly to higher profits that impact your bottom line. Proper inventory management will ensure you have what customers want when they need it!
Inventory turnover rate and days of inventory give you the critical insight into how quickly your products are selling, while sell-through rate helps you determine whether or not you’re keeping up with demand.
FBA storage fees, stockout rates and order defect rates could lead to costly repercussions – not just financially but in customer satisfaction as well. Monitoring these key metrics is essential for successful sales performance!
You can maximize your profits and sales by carefully tracking stock levels. Keeping a close eye on your inventory metrics enables you to create a seamless customer experience. Plus, it can even help decrease storage costs, getting hit with high Amazon storage fees can endanger your brand’s overall profitability.
- Inventory turnover rate: The number of times a seller’s inventory is sold and replaced over a given period.
- Late Shipment Rate (LSR): This number represents how often a customer receives an order past its expected delivery date.
- Days of inventory: The average number of days it takes a seller to sell their entire inventory.
- Sell-through rate: The percentage of inventory sold within a given period.
- FBA storage fees: The fees charged by Amazon for storing a seller’s inventory in their warehouses.
- Stockout rate: The percentage of time a seller’s inventory is out of stock.
- Order defect rate: The percentage of orders that result in a defect, such as a late delivery or a damaged product.
Amazon Pay per Click (PPC) advertising used to be just one of the ways of launching an eCommerce product. Now, it’s almost mandatory. Amazon’s Demand-Side Platform (DSP) advertising is rapidly gaining traction, as a next-level ad product. And, your success or failure will come from your ability to adjust to data.
If you want to enjoy success as an Amazon seller, leveraging data and analytics is key. Data uncovered through keyword research allows you to understand the terms that not only help shoppers find your product, they’ll also keep your ad campaign cost under control.
Amazon continues to increase the data transparency of their marketplace. That’s a very good thing for you. Make sure and take advantage of the data available to you.
There are a lot of sellers that aren’t treating Amazon like a real business. That creates a big opportunity for those sellers that do.
- Advertising cost of sales (ACoS): The percentage of sales revenue spent on advertising.
- Total Advertising cost of sales (TACoS): This number measures the relationship between ad spend and total sales, and is the ratio of ad spend to total sales (in %).
- Click-through rate (CTR): The percentage of people who click on a seller’s ad after seeing it.
- Cost per click (CPC): The amount a seller pays each time someone clicks on their ad.
- Impressions: The number of times a seller’s ad is displayed to potential customers.
- Return on advertising spend (ROAS): The revenue generated by a seller’s ad campaigns compared to the amount spent on those campaigns.
- Conversion rate (CVR): The percentage of people who make a purchase after clicking on a seller’s ad.
If you’re not paying attention to your customer’s experience, it’s hard to know where you stand as an Amazon seller. Customer metrics are vital components that give you a clear picture how shoppers interact with your business.
From customer acquisition cost (CAC) and retention rate to seller feedback rating, product review scores, order cancellation rate and negative feedback – these are all key insights that can make all the difference when it comes to increasing sales profits!
Accurately tracking customer metrics can present an opportunity to maximize your marketing and sales potential. Not only will it enable you to improve product quality and foster long-term relationships, but it could also act as a driver of increased profitability for your business.
- Customer acquisition cost (CAC): The cost of acquiring a new customer.
- Customer retention rate: The percentage of customers who continue to make purchases from a seller over time.
- Product review rating: The average rating given to a seller’s products by customers who leave reviews.
- Seller feedback rating: The average rating given to a seller by customers who leave feedback.
- Negative feedback rate: The percentage of orders that result in negative feedback from customers.
- Order cancellation rate: The percentage of orders that are canceled by the seller or the customer.
How Canopy Management Can Help
As an Amazon seller, you understand that metrics are the key to understanding your business performance and staying ahead of the competition. Knowledge is power. By tracking the right metrics and analyzing the data, you can make informed decisions to optimize your operations, improve customer satisfaction, and increase your sales and profitability.
With Amazon, there’s no such thing as too much success! Tracking the right metrics can help uncover opportunities for you to excel and grow even further. Analyzing these metrics provides an invaluable advantage in reaching new heights of achievement on Amazon’s increasingly competitive platform.
Canopy Management is a full-service marketing agency for Amazon and Walmart sellers. Our team consists of former Amazonians, multi-million dollar sellers, and award-winning experts. When you consider the many ways that Canopy Management can help you grow your business, you’ll see why selling on Amazon is much easier “under the Canopy.”
- Strategic Growth Planning
- Listing Copywriting Optimization
- Listing Photography
- Product Videography
- Advertising Management
- Customer Service
- Demand Side Platform (Amazon DSP)
- Amazon Posts
- Full Service Management
- Amazon Review Aggregation