Spring is here and suspensions are in full swing. So, what better time to brush up on your Amazon seller metrics? Let’s look at what Amazon metrics are, how you can tackle them, and what else you can do to keep your business running smoothly.
As we explained in our post titled “Performance Metrics and Suspensions”, most seller accounts are suspended for violating Amazon’s policy. But for some, the reason is poor performance. And these suspensions are especially unnerving because they’re preventable.
till, if Amazon flags up performance issues, don’t take it personally. The fact is buyers’ expectations change. And so do Amazon’s. They’re stricter by the year. That’s why it’s a good idea to bookmark our Account Rescue page, in case you ever need us to step in.
To avoid having your account suspended, we recommend that you keep up with any changes in how Amazon assesses your performance. We’ve shown you some of the ways Amazon seller metrics have changed over the years, but here’s a recap:
- Seller Rating (score from 0 to100) was removed in 2015.
- Perfect Order Percentage and Product Performance were phazed out in 2016.
- Amazon launched the FBA Inventory Performance Index (IPI) in 2017.
- Contact Response Time (CRT), Refund Dissatisfaction Rate (RDR), and
- Customer Service Dissatisfaction Rate (CSDR) were also removed in 2018.
- The Account Health Dashboard featured some performance metrics in 2018.
- In July 2018, Amazon introduced storage limits based on IPI scores.
- By 2019, ODR was calculated on a 60-day basis only. Before that, it was two-fold (‘short ODR’ for the past 60 days and ‘long ODR’ referenced the last 90 days).
- In early 2019, the Voice of the Customer dashboard was rolled out. It featured two product-specific metrics, NCX and CX.
- By July 2020, sellers were told of a new Invoice Defect Rate requirement for Business orders. This requirement will extend to all orders on Apr. 21, 2021.
- In Sep. 2020, Amazon launched the color-coded Account Health Rating (AHR) tool – more or less a rehash of the ‘seller rating’ tool of 2015.
But if you were to google ‘Amazon seller metrics’ today, you’ll still find old metrics referenced in blog posts as recent as last month. So, if you don’t want outdated and recycled information, please follow our blog. Let’s see what Amazon metrics really look like in 2021.
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13 Amazon Performance Metrics Explained
As an Amazon seller, you’ve probably come across the initialism KPIs (Key Performance Indicators). Well, ‘performance metrics’ are Amazon’s version of KPIs. Except Amazon metrics are usually mandatory. You either pass the threshold, or your account gets suspended.
We discuss Amazon metrics in greater detail in our eBook, “How to Sell on Amazon”. You can download it for free and browse at your leisure. But here are some of the highlights, with a few handy visuals:
A. Fulfillment Metrics (MFN and SFP)
There are 4 major metrics every Amazon seller must monitor daily, depending on the type of fulfillment you use. Three of these metrics apply to all sellers who fulfil their own (MFN and SFP) orders. They refer to shipping and data entry efficiency:
1. Pre-Fulfillment Cancel Rate
PFCR is the rate at which you cancel orders before confirming dispatch.
2.Late Shipment Rate
LSR is the number of times your shipment confirmations are untimely or missing, over the total number of orders you receive.
3. Valid Tracking Rate (not mandatory)
VTR is the rate at which the tracking numbers you upload turn out to be timely and valid.
4. Buy Shipping Label Rate (SFP only)
If you sign up for Seller-Fulfilled Prime (SFP), you need a near-perfect record for on-time dispatch and delivery, order acceptance and tracking, and data entry in your seller account. But you also need to buy nearly all your shipping labels through Amazon’s Buy Shipping tool.
5. Order Defect Rate (MFN only)
For MFN orders, your first 3 baseline goals are less stringent. But you also have a fourth metric related to customer service – Order Defect Rate. ODR is the percentage of orders with which buyers have a negative experience.
If it’s over 1%, you get an automated warning email from Amazon. If it’s close to 1.19%, you’re teetering on the brink of suspension. There are ways to lower your ODR. But you should try to focus on the formula above. Here are 7 ODR tips:
- An order will only count once, even if the buyer pulls a triple whammy (negative feedback, claim, and chargeback).
- There’s a difference between ‘negative feedback rate’ and overall ‘feedback score’.
- If the buyer retracts the negative feedback, they also remove its effect on the ODR.
- A-to-Z claims still affect the ODR after they’re withdrawn.
- You have 2-3 days to resolve a claim before Amazon issues a refund anyway.
- Chargebacks issued through a bank don’t affect your ODR.
- Chargeback claims made through Amazon count toward your ODR.
6. Invoice Defect Rate (mandatory for all from Apr. 2021)
The Invoice Defect Rate (ITR) is the share of orders for which you didn’t provide a VAT invoice or a receipt that the buyer can download. It should be under 5%. The rule used to apply only to Business orders. From Apr. 5, 2021, it will apply to all orders, as seen here.
B. Inventory Metrics (FBA)
7. Inventory Performance Index (IPI)
This is a number from 0 to 1,000. It’s used to assess your FBA inventory management and limit your stock levels if you’re underperforming. Amazon will assess you twice before the start of a business quarter, as explained in this video.
IPI is calculated based on 4 factors. They take in data from the past 3 months, but they don’t all update at the same time. So, even though your IPI score will update weekly, it might not be a true reflection of your performance. Still, these are the 4 aspects you should monitor:
Excess inventory. It estimates the proportion of units deemed to be excess stock.
Stranded inventory. It reflects the number of units stored, but without an active listing.
FBA sell-through rate. This is the number of units sold, versus units usually in stock.
FBA in-stock rate. This indicates how efficient you are at replenishing stock levels, as explained in this video. And unlike the other 3 metrics, it only goes back 60 days.
The IPI requirement keeps changing. For Q4 2020, the threshold was 500, and the assessment weeks were July 13 and Aug. 10. Anyone with an IPI score of 500 or more on either occasion passed. The rest were hit with stock limits and overage fees for any excess units from Aug. 17.
In 2021, Amazon’s quarterly review schedule should return to normal. The minimum IPI score is once again 450. As before, if you pass at least 1 of the 2 reviews for the next quarter, you’re in the clear.
There are several ways to boost your IPI before review week. Assuming the events of 2020 don’t reoccur this year, here’s when you should expect your IPI reviews to take place in 2021, give or take a few days:
C. Experience Metrics
8. Negative Experience Rate
This metric is displayed in the Voice of the Customer dashboard as the NCX rate. It shows the share of orders for a specific product that lead to a negative customer report. Unlike ODR, it takes buyer messages, returns, refunds, and negative reviews into account.
9. Customer Experience Health
The color-coded CX score goes from Very Poor to Excellent. It compares your NCX rate with that from similar offers. To check a listing Amazon flagged up with an orange (Poor) or red (Very Poor) label, simply click ‘View listings’ and hit the label in the table below.
D. Seller Account Metrics
10. Account Health Rating
Similar to CX and IPI, the AHR is a three-tier color-coded index shown in the Account Health dashboard. It’s designed to let you know how well you’re following the rules. Any slip-ups are flagged up below it in the Policy Compliance section with a red danger sign.
For the time being, AHR only shows one of three things: Good (green label), At Risk (yellow), or Critical (red). For ways to improve your AHR, please check our recent post about the Account Health Dashboard.
E. Listing Metrics
11. Sales Rank
A product’s sales rank indicates its popularity relative to other items in that category. It’s based on the number of orders per hour, regardless of units sold. The best-selling item in a category has a sales rank of 1. For more on this, please read this post.
12. Unit Session Percentage Rate
This metric is your conversion rate on Amazon. So, you can think of it as total sales out of the total number of views your listing got. There’s no threshold for it, but according to Digitalcommerce360, it can be anywhere from 10% to 20% on Prime Day.
F. Campaign Metrics
13. Advertising Cost of Sale
ACoS shows your PPC campaign’s performance. It’s the ratio between ad spend and targeted sales. According to Ad Badger, the average daily spend is $381 and the average ACoS is 34.42% on Amazon. For ways to lower your ACoS, please read our PPC post.
As a seller you may find that other KPIs are more relevant to your business model. For instance, Return on Ad Spend (RoAS) and Total Average Cost of Sales (TACoS) are also good indicators of your campaign’s performance on Amazon.
But we hope that our list of Amazon metrics provides a bit more clarity as to which metrics sellers must keep an eye on in 2021. And now that you’ve had your Amazon performance metrics explained so neatly, why not follow our blog?
We’ll keep you up to speed with new Amazon seller metrics, fees, policies, and expert interviews. And should you ever need a fresh pair of eyes to watch over your metrics and keep you on-track for success, our helpful Account Monitoring team will step up to the challenge.
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Melanie takes an active interest in all things Amazon. She keeps an eye on the latest developments and keeps Amazon sellers up to speed.
The post 13 Amazon Performance Metrics Explained for 2021 appeared first on SellerEngine.
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