The most important Amazon KPIs at a glance: These metrics sellers must definitely consider!
The myth persists: Amazon makes sellers rich. However, anyone who has dealt with this topic quickly comes to the conclusion: Amazon can work well for sellers, but it is by no means a given! Like in any other business, entrepreneurs must also keep an eye on important KPIs on Amazon.
Since the e-commerce giant quickly penalizes sellers on the marketplace who do not monitor their metrics. But first, let’s clarify what the so-called key performance indicators, or KPIs, are and how they can be useful. Then we will delve into Amazon KPIs.
What are KPIs and why are KPIs useful?
“Key performance indicator” can be translated as “performance indicator” and it originates from the field of business management. With the help of KPIs, one can measure the extent to which important goals have been achieved or how well they have been realized. In the manufacturing sector, an important KPI could be, for example, the average machine load compared to the maximum possible load.
The concept has also become widespread in the digital industry. Whether it’s a personal online store or Amazon – an important KPI, for example, is the conversion rate. For advertisers, KPIs relate to ad impressions and its click-through rate. Meanwhile, B2B sites often measure their success by the number of leads.
Thus, KPIs help to keep important performance indicators under control and systematically check critical success factors. Only those who measure their success or failure know where problems arise in the mechanism and what is already working well. Then it is also possible to optimize wisely and with understanding.
Which KPIs are relevant for Amazon?
Unlike sellers who have their own online store, sellers on the marketplace face unique challenges. The fact is that the relevant KPIs for Amazon are largely set by the online giant itself. Those who do not take these performance indicators into account have no chance of ranking their products highly or winning the Buy Box. And those who do not achieve this are unlikely to be able to sell their products.
The situation is complicated by the fact that many common KPIs, such as impressions or click-through rates, cannot be measured or can only be measured approximately by sellers on the marketplace. Sellers have the best chance to influence the click-through rate, conversion rate, and sales volume if they know the established Amazon KPI metrics and adjust their business optimization in that direction.
Penalty for non-compliance
But there is another important reason why the relevant Amazon KPI metrics must be monitored: Amazon does it too. By ignoring performance metrics, sellers risk not meeting the required standards. Once this happens, Amazon will find out about it – and this can affect not only the ranking or profits from the Buy Box. Anyone who has ever had to create an action plan knows that this is not a desired goal and only wastes time and money. In the worst case, the e-commerce giant may even block the entire seller account. For entrepreneurs whose main business is Amazon, this would be a disaster.
Thus, there are many reasons to monitor all performance metrics. If any Amazon KPI threatens to enter a critical zone, measures can be taken in advance to avoid account suspension.
Important KPIs: Seller Performance
What shipping method and delivery time play an important role is now likely known by every seller on the marketplace. Amazon prefers that sellers ship products through the Fulfillment by Amazon (FBA) program. On one hand, this brings additional revenue to the platform, while on the other hand, it ensures fast and easy delivery, which guarantees customer satisfaction. However, the shipping methods Prime through seller or Fulfillment by Merchant also meet the standards.
No less important than Amazon KPIs is the overall seller performance. It consists of various indicators:
| Amazon KPI | Description | Maximum Value / Ideal Value |
|---|---|---|
| Rate and order quantities | Negative feedback related to service, credit card return, A-to-Z Guarantee claim | less than 1%, preferably 0% |
| Cancellation rate | Seller cancellations before order processing | less than 2.5%, preferably 0% |
| The level of validity of tracking numbers for shipments | Tracking numbers for shipments that are valid | at least 95%, preferably 100% |
| The level of delays in delivery | delay in delivery = confirmation of shipment after the expected shipping date has passed | less than 4%, preferably 0% |
| Dissatisfaction with returns | Return request with negative customer feedback, unanswered return questions within 48 hours, mistakenly declined return requests | less than 10%, preferably 0% |
| Seller ratings | Average seller rating and number of ratings | as positively as possible, as high as possible |
| Response time | average time over the last 90 days spent responding to customer inquiries | less than 24 hours, preferably less than 12 hours |
| Inventory of goods | Out of stock, delivery difficulties | as rarely as possible |
| Dissatisfaction with customer service | negative customer feedback on the response in the buyer-seller inbox | as little as possible |
| Return rate | The ratio of returns in the last 30 days to the total number of orders | as low as possible |
Other important KPIs for Amazon
Professional sellers not only list their products on Amazon, track important KPI metrics, and end their workday. It involves more. Especially private label sellers should also engage in advertising. And the same performance metrics apply on Amazon, which are used as KPIs in marketing in general.
Thus, another important KPI for Amazon is ACoS, short for “Advertising Cost of Sales.” This metric relates advertising campaign costs to the revenue generated from that advertising: ACoS = advertising expenses / revenue.
With a revenue of 50,000 euros and advertising expenses of 3,000 euros, the ACoS will be 6%. However, the maximum ACoS can vary depending on the product. To determine this, all additional costs incurred by the seller must be subtracted from the selling price, such as production costs, VAT, or overhead. If the seller, for example, makes a profit of 15 percent from the selling price of a coffee machine, the ACoS should not exceed 15 percent. Otherwise, it will lead to losses.
However, how high or low the ACoS is as an Amazon KPI depends on many other factors that need to be considered individually, such as the goal of PPC campaigns, margin, and the level of competition within the product category. Unlike Google Ads, advertising on Amazon not only affects product sales but also always impacts organic visibility.
Due to this more comprehensive impact, many sellers have started to pay more attention to cost per order (CPO) as an Amazon KPI. In this case, advertising expenses for a specific period are divided by the total sales achieved during the same period. This takes into account the fact that advertising on Amazon has a broader reach.
Conclusion: Those who do not monitor, lose!
Selling on Amazon but not regularly checking important KPI metrics? You can try, but it’s pointless. After all, those who do not know where the error in the system lies are unlikely to be able to optimize their business in time. The consequences can include not only a drop in ranking or loss of the Buy Box – account suspension is also a very real prospect.
Therefore, sellers on Amazon must always monitor important KPI metrics and respond to issues in a timely manner. The same applies to the performance of PPC campaigns within the Amazon ecosystem, even if the requirements here are not as specific as in the case of seller performance. It is important to keep an eye on ACoS and CPO to assess whether the campaign is meeting its goals.
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