Running a successful Amazon business is about a lot more than just listing and selling products. It involves careful planning, strategic decision-making, and consistent performance analysis. Tracking crucial metrics is part of the package. Understanding these key analytics can drastically improve your Amazon sales performance, catapulting you ahead of the competition. On the other hand, you cannot fully optimize your sales and marketing efforts without a clear grasp of these metrics. Here are some of the key metrics every Amazon seller should track.
Customer Metrics
1. Conversion Rate: This metric tells how well your product listings are performing. The conversion rate is your number of sales divided by the number of visitors. A higher conversion rate means more of your potential customers are purchasing your product. Tracking your conversion rate helps you identify if your product listing is attractive to customers or if improvements are needed. CR is necessary, but any Amazon marketing agency will tell you that it’s also a bit of a vanity metric – you can’t rely on CR alone to give you a clear picture of the health (or otherwise) of your Amazon store.
2. Customer Lifetime Value (CLTV): CLTV predicts the net profit generated from the entire future relationship with a customer. It helps you determine how much to spend to acquire new customers and retain existing ones. Remember, customer retention is a critical aspect of marketing, so it’s essential to monitor CLTV. The customers with high CLTV are the ones you want to pour your best efforts into.
Seller Performance Metrics:
1. Order Defect Rate (ODR): This metrics provide a percentage of your orders that have received negative feedback, an A-to-Z guarantee claim, or a credit card chargeback. Amazon expects the ODR to be less than 1%.
2. Perfect Order Percentage (POP): This metric measures the effectiveness and efficiency of your order fulfillment process. A perfect order is delivered on time, with the correct product, and no issues from order to delivery.
Financial Metrics:
1. Average Selling Price (ASP): This is the average price for the items you sell. Tracking this metric helps you formulate pricing strategies and evaluate your product mix.
2. Gross Profit Margin: This metric tells you how much money you are making after accounting for the cost of goods sold (COGS). As vital as it is to know your sales volume, understanding your profit margins can be more crucial to your business’s sustainability.
This is why it’s essential to have an integrated view of your business metrics. For example, a high conversion rate might make you think that you’re doing everything right – but if you don’t realize that your high CR is combined with a low GPM, you may get some nasty surprises when it comes to paying the bills.
Inventory Management Metrics:
1. Sell Through Rate (STR): This metric indicates how quickly your inventory sells in a given period. A higher sell-through rate implies that your sales are strong, and your inventory level is lessening.
2. Stock-Out Days: This is the number of days you are out of stock on a specific SKU (Stock Keeping Unit). Relentless tracking of this metric can help prevent lost sales due to out-of-stock issues.
While Amazon Seller Central provides a basic dashboard for tracking some metrics, consider using third-party Amazon seller tools for a more comprehensive and in-depth analysis. These tools can provide real-time insights, enabling you to act proactively and make informed decisions that fuel your business growth.
Overall, tracking these key metrics is not optional but necessary if you want to succeed as an Amazon seller. By regularly monitoring these metrics, you obtain a deeper understanding of your business’s health, allowing you to make data-driven decisions that can lead to enhanced profitability. Remember, what gets measured gets managed. Consequently, having a close eye on these metrics can revolutionize your performance and profitability on Amazon’s competitive marketplace.
