In order to become a successful seller on Amazon, you’ll have to analyze your performance so that you can make crucial decisions affecting both your business and your customers. With an Amazon FBA course, you can learn how to use your performance and data to your benefit, helping you get one step closer to becoming your own boss.
In this article, we’ll discuss your performance as an Amazon seller and how you can analyze it to work in your favor.
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Analyzing Your Amazon Seller Performance
If you’re already an Amazon seller, you know that Amazon’s main priority is their customers. This means that they place a very high importance on maintaining the trust of their customers and have established performance targets for sellers like you. This allows buyers to continue to trust Amazon and shop online with a sense of security about their transactions and the products they purchase.
Seller Performance Targets
You should always be working to achieve a customer service level that meets the following targets that Amazon provides for you:
- Order defect rate: Less than 1%
- Pre-fulfillment cancel rate: Less than 2.5%
- Late shipment rate: Less than 4%
A seller who fails to meet these set targets can have their selling privileges revoked. For example, it’s in your best interest to have most of your customer feedback come back as three or more stars.
A seller who works directly with customers to resolve problems with the products or service itself will avoid having their privileges revoked in most cases. Amazon measures your claims using the percentage of all orders that involved a claim.
Measuring Seller Performance
There are a few different metrics used to measure a seller’s performance. These include:
Order Defect Rate (ODR)
Your order defect rate is the percentage of orders for which you have received negative feedback. Negative feedback is typically defined as one or two stars. An ODR also includes an A-to-Z Guarantee claim or a chargeback. Adding all of these factors together allows Amazon to measure the overall performance of your selling.
Pre-fulfillment Cancellation Rate
The pre-fulfillment cancellation metric is the number of orders fulfilled by the seller that are cancelled by the seller prior to the shipping confirmation. This number is then divided by the number of seller-fulfilled orders in a specific time period. All cancellations on orders initiated by the seller, for any reason, are considered when calculating this rate.
Late Shipment Rate
The late shipment rate is a metric that’s determined by the number of seller-fulfilled orders with shipments that are not confirmed by the ship date. This number is then divided by the number of seller-fulfilled orders in a stated time period. Orders that are ship-confirmed late can lead to an increased number of customer contacts and negatively impact the overall customer experience.
Seller Performance Review
Amazon reviews the performance of each of its sellers. They also notify sellers when they aren’t hitting their targets, giving them a few months to improve upon their targets after the first warning. However, occasionally, sellers with extremely poor performance ratings are immediately suspended.
Monitoring Your Performance
All sellers should monitor their performance to make sure that they are reaching and staying on target. You can monitor your performance using the customer metrics tool in your seller account.
How to Analyze Your Seller Performance
There are a few statistics that you, as a seller, should be paying attention to. These include:
Product Ranking
Your product ranking represents where you fall in comparison to all the other products available on Amazon. Very few shoppers make it past the first page when they are shopping on Amazon, so it’s important to get your products on that page and then maintain your ranking.
There is also something called the “Best Seller Rank,” which is calculated by sales volume instead of seller reviews or feedback from customers.
Make sure to check your conversion rates. While tons of traffic to your products is great, a low conversion rate will signal to Amazon that something is wrong.
Seller Rating
Your seller rating gives your performance a more exact number. The seller rating score is between 0 and 100, and it includes six major metrics, including:
- Shipping time
- Order cancellations
- Customer reviews
- Customer inquiries
- A-to-Z Guarantee claims
- Chargebacks
Unit Session Percentage Rate
The unit session percentage rate is essentially the conversion rate. While the average unit session percentage will depend on your unique industry, the average for Amazon is 12.3%.
This number is calculated by dividing the number of units ordered by the number of total sessions.
Inventory Performance
The Inventory Performance Index is a great metric for any seller relying on Amazon storage. Amazon limits storage for sellers with low Inventory Performance Indexes, so it’s important that you check on this information regularly.
Amazon doesn’t let you know how they’ve calculated this score, but the platform gives you a few suggestions for increasing your score.
Fulfillment Performance
Fulfillment performance keeps sellers accountable for their fulfillment. Seller rating has a lot to do with customer experience, while fulfillment performance deals more with the hard numbers involved in fulfillment, including cancellations, late shipping, and order defects.
Fees
As you know, Amazon charges fees for using its FBA program because they do so much work for you. Tracking your fees versus your revenue will help you determine whether or not to continue selling on the platform and how to price your products. While fees aren’t technically considered a metric, they will give you a number for determining the profitability of each order.
Do you want to learn more about how to analyze your performance as an Amazon seller? In Beau’s Amazon training program, you’ll learn how your performance can impact your business. Sign up today.
