It can be difficult to keep the track of all those statistics on Seller Central to optimize your Amazon business can be confusing. Amazon is also known to provide more sophisticated measures as its marketplace grows increasingly complex.
This article will show you which metrics have the biggest effect on your eCommerce business, and how to keep track of them.
SKU-level Profitability
The success of your product is mostly determined by the cost of landing which is the sum you pay for the complete process of purchasing the product, shipping it, and completing orders. You’ll need to keep track of this metric month to month since the prices aren’t fixed.
The cost includes:
- FOB price. This is the price you pay to your supplier for only the product itself.
- Freight costs. This is the cost of shipping your product from China into the US.
- 3PL charges. If you’re using the services of a 3PL then this is what they’ll charge to store and accept your inventory.
- Charges for Partnered Carrier. This is the price you pay to ship your merchandise from your 3PL to the Amazon FBA warehouse.
- FBA costs. This is the amount Amazon will charge you for the storage of all your stock in FBA and also for fulfilling orders on your behalf of you.
The SKU-level profit is the amount that you can earn between your selling price and the total costs. Unfortunately, few sellers are taking this into account.
Keeping track of these expenses can be difficult however, certain applications let you enter these expenses to determine your profit and assist in determining the best price for your product.
FBA Costs
As we said earlier, as a matter of fact, this is the price that Amazon charges for storing stock and moving them to customers once you make an offer.
We’ve got an FBA fees calculator in which you can input your data to determine the actual cost of making sales on Amazon.
In the end, the FBA costs will be largely based on the weight of your item and its dimensions. This can fail due to several reasons.
One is that Amazon has not accurately measured your product or item, which could happen, or the items are larger than you expected.
To track your dimensions and weight You can visit Manage FBA Inventory on Seller Central.
If you find that the dimensions and weight are greater than they ought to be, you can request Amazon to make changes by submitting a claim in Seller Central.
To learn more about Amazon FBA, click here.
Advertising Costs
Advertising is an integral part of eCommerce. Astronomical costs of advertising are among the most significant dangers to an Amazon company.
In essence, What you need to examine is your TACoS or the Total Advertisement Cost of Sales. It is the amount of your ad spending to the total transactions under your account.
The TACoS calculation gives you an overall view of ALL sales that are made through your account. It considers your PPC sales as well as the organic sales you generate.
Account Health Metrics
Another category of crucial measures for sellers is the one we refer to as Account Health Metrics, or those dealing with the overall efficiency of the seller’s account on Amazon. To access these metrics visit Performance and Account Health.
Naturally, having a well-maintained seller account can help your business. A poor state of account can result in poor sales or even account suspensions or products.
Rate of Order Defect
Rate of Order Defect (ODR) is calculated to Your Account Health to represent the percent of your orders that have negative feedback from customers. Your ODR appears in the Account Health > Performance. The value of this is based on three factors:
- Negative feedback
- A-to-Z guarantees claim
- Chargeback claims
As per Amazon norms, a satisfactory quality order defect rate is below 1%. Anything above that level is a sign that you can expect Buy Box goodbye.
Product Reviews
Social proof is among the most important factors that influence purchasing online, which is the reason keeping reviews of your products is a no-brainer.
The most convenient way to have a comprehensive overview of all the product reviews you have is by using the new Brand Catalog manager.
If you’re interested in checking the individual ASIN the simplest method is to go to the detail page of the product for the specific ASIN. The use of software to track the historical ratings of products can be useful too.
Inventory Performance Index
Inventory Performance Index, also known as IPI refers to a value ranging from 0 to 1000 that informs Amazon and you on how you’re managing the inventory within its warehouses. To check your IPI check your Inventory Performance Dashboard on Seller Central.
The more high your IPI is the better you’re managing your inventory to Amazon’s eyes. However, having a low IPI exposes you to the danger of being subject to storage limitations.
Keeping track of various metrics and studying the results is crucial to expanding the size of an eCommerce business. If you’re aware of these important numbers, then you’re already on the correct path.
Recommended guide: What to sell on Amazon in 2022.
