These Are the Most Important Metrics for Amazon Sellers
Winning the Buy Box is vital for seller success on Amazon. Based on various factors, a complex algorithm determines which seller deserves the Amazon Buy Box. It is therefore crucial for Amazon sellers to understand what is behind these factors and to constantly keep them in view. To that aim, we’ll take a closer look at the key seller metrics that influence Buy Box share in this article.
- Why Is It Important to Monitor Seller Metrics?
- Most Powerful Parameters in the Buy Box Battle
- Further Relevant Metrics
Why Is It Important to Monitor Seller Metrics?
Up to 90% of all sales on Amazon take place by clicking on the Buy Box, known as the yellow “Add to cart“ button. It’s therefore obvious that the higher the Buy Box share, the more turnover you will obtain. However, it often turns out to be difficult to win this magic button, especially in the case of products with many suppliers. In general, whatever makes the customers happy increases the chance to get the Buy Box. In Amazon language, it means that a high seller performance increases this chance, whereas poor performance can even disqualify you from the battle. Therefore, various seller metrics defining the overall seller performance affect the Buy Box algorithm’s final outcome. If you are a Private Label seller, you might think seller metrics are less relevant in your context, since there are no competitors fighting for the same product to be placed in the Buy Box. However, poorly performing Private Label sellers may lose the “Add to cart” button as well. Finally, in the worst-case scenario, Amazon sellers who let their metrics drop under a certain threshold risk getting their seller account to be deactivated. In any case, it is essential to monitor the relevant seller metrics.
Most Powerful Parameters in the Buy Box Battle
Shipping Method
In case the seller fulfills Amazon’s specific criteria, he or she can be also qualified for the Seller Fulfilled Prime (SFP) program. This kind of hybrid solution allows the seller to ship the products directly to the customer. Thus, SFP is especially relevant when it comes to selling high-end, fragile, or bulky goods and still enables the seller to reach the most valuable Prime customer group.
Now how does the shipping method influence your chances in the Buy Box battle? FBM is enough for Buy Box qualification, however, the cards are stacked against FMB items, since Amazon’s Buy Box algorithm is known to favor FBA and SFP products.
Final Price
The final price includes both the item price as well as the shipping costs and defining it may turn out to be tricky in the context of the Buy Box battle. First, the lowest price does not guarantee you winning the Buy Box, since further metrics are involved in Amazon’s algorithm as well. Moreover, you might have noticed that your competitors frequently change their prices. In this case, they most likely use an automated repricing tool, making it extremely difficult for you to be competitive.
For the above reasons, if you wish to get a given product to be placed in the Buy Box, it is recommended to use a dynamic repricer. The repricer constantly adapts your price to the current prices of your competitors and picks out the best possible price to get the Buy Box and hence to win as an Amazon seller.
Shipping Time
Dealing with the shipping time is of particular interest for sellers who manage the shipment using their own resources. Short shipping times improve the seller’s ratings and hence his or her chance to win the Buy Box. However, the shipping time depends on the product type. For instance, a memory card can be quickly prepared for shipping and delivered, while shipping a sofa may take several days. That’s why it’s essential to screen the competition for indicated shipping time of a similar item in order to figure out an optimal solution. Moreover, when thinking of the seller’s rating, it is important to keep delivery promises and thereby prevent negative feedback (see below).
Further Relevant Metrics
Although the shipping method, final price, and shipping time play the most important role in the Buy Box battle, there are further metrics, each of which also contributes to the final algorithm’s outcome.
Customer Service Performance
Invoice Defect Rate (IDR) refers to Business customers who depend on invoices for their tax and accounting management. IDR represents the percentage of orders for which the seller did not provide an invoice on time related to the total order number. In particular, “on time” implies that the invoice has to be handed in by midnight on the first weekday after the day of shipment confirmation. IDR has to remain under 5%, otherwise, the account may be deactivated. An IDR of 0% would be ideal in the context of the Buy Box battle.
Negative Feedback Rate is implicated in ODR and describes the percentage of orders which resulted in negative feedback relative to the total order number within a given time period. Negative feedback includes one- and two-star ratings. Sellers are recommended to keep their negative feedback rate as low as possible, however, Amazon does not disclose an exact threshold. Since a perfect feedback rating increases the chance of getting the Buy Box, it would be beneficial to figure out the reasons for negative feedback and to improve the ratings in the long term.
Shipping Performance
Cancellation Rate (CR) or Pre-Fulfillment Cancel Rate represents the percentage of orders canceled by the seller relative to the total order number during the last 7 days. CR reflects the seller’s inventory management and should not exceed the threshold of 2,5%. When thinking of the Buy Box algorithm, CR should be as close as possible to 0%.
Late Shipment Rate (LSR) is the percentage of orders confirmed for shipment after the expected ship date relative to the total order number within the last 10 or 30 days. Amazon defined a threshold of 4% which should not be exceeded. It is noteworthy that delayed shipment may result in negative feedback or increased A-to-Z Guarantee claims thereby further harming the overall seller performance. Again, to get the Buy Box, LSR should be as close as possible to 0%.
Valid Tracking Rate (VTR) describes the percentage of shipments displaying a valid tracking number relative to the total shipment number within the last 30 days. According to Amazon’s policies, VTR should be kept above 95%. What about the Buy Box? Sellers with a VTR close to 100% have definitely better chances to win the battle.
On-time delivery rate (OTDR) represents the percentage of shipments delivered according to the expected time scale relative to the total shipment number which can be tracked. Amazon’s recommendation is to keep the OTDR above 97%. Although there is no consequence due to an OTDR under 97%, for the Buy Box algorithm it is still an important metric and should ideally equal 100%.
Key to the Buy Box: Constant Optimization of the Metrics
