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Amazon Seller Performance Metrics

Amazon is customer-obsessed and is committed to maintaining customer trust. This means that simply making your first sale on Amazon isn’t enough. If you want to sell more and keep growing your revenues as an Amazon seller, you must perform at the highest standards Amazon sets.

Amazon strives to provide a seamless shopping experience to customers, which is only possible if Amazon sellers like you offer better products, better prices, and a better shopping experience to customers.

Customers seek a platform they can trust to buy a wide range of goods and services. That is why sellers like you play a critical part in adding value to customers. But, how can you become one of the trusted and successful Amazon sellers?

You can achieve this by meeting the seller performance targets set by Amazon. To know if you are meeting these targets, it is imperative to track key Amazon seller performance metrics that highlight if your Amazon seller account is healthy.

Monitoring and improvising seller metrics can help you become a trusted seller and boost your Amazon sales. Do you want to grow your Amazon sales? Don’t know where to begin?

Don’t worry as we have got you covered. In this article, we will define what are Amazon seller performance metrics, why is it important to track Amazon KPIs, and what are the key seller metrics you must track to grow your sales on Amazon.

Also Read: Amazon Seller Central vs Vendor Central: What Should You Choose?

What Are Amazon Seller Performance Metrics?

Amazon Seller Performance metrics also called Amazon KPIs (Key Performance Indicators), are quantitative measures that Amazon tracks to claim your seller account as Healthy, At Risk, or Unhealthy. These measures tell sellers about the overall health of their accounts and warn them of areas that need improvement on a priority basis.

These are easy-to-understand metrics that give insights into the performance of your seller accounts and whether you are meeting the highest standards set by Amazon.

Also Read: How To Boost Sales On Amazon?

Why Should You Track Amazon Seller Performance Metrics?

As mentioned above, Amazon seller performance metrics provide you with information about how well you are performing as a seller. Your seller performance is based on several factors including the extent to which you adhere to the Amazon seller code of conduct, the number of unresolved policy violations, the level of severity of these violations, order cancellations and return handling, on-time delivery, accurate order tracking, and your ability to provide a great customer experience.

Failing to monitor Amazon seller performance metrics can put your seller account at risk of deactivation or your products being taken down due to non-performance. This can adversely affect your Amazon sales and business growth. Amazon has set higher performance targets for sellers, defined certain seller performance metrics, and requires sellers to maintain their performance metrics at the targeted levels.

Those who fail to meet the targets are warned about their non-performance via notifications and given time to work on the potential areas on a priority basis. In case sellers fail to make the necessary improvements, they run the risk of account deactivation which can negatively impact their Amazon seller business.

Additionally, Amazon assigns an Account Health Rating (AHR) to each seller account based on the accounts’ seller metrics numbers. This is revealed on each seller’s Account Health Page. It is highly recommended to monitor your AHR at least once a day as it is prone to change given orders, shipments, and returns or cancellations changing with every new transaction.

AHR is a numeric score ranging from 0-1000 indicating a seller account’s risk of deactivation due to non-adherence to or violation of selling and performance targets by sellers. Accordingly, your seller account could be –

a. Healthy

If your key Amazon seller performance metrics meet the targeted performance set by Amazon, your AHR score will fall between 200-1000. This is denoted by a green color indicating that your account is far away from the risk of deactivation as you comply with Amazon seller policies and performance targets set for all Amazon sellers.

b. At Risk

Your seller account is at risk if your AHR is between 100 and 199. This is denoted by the yellow color on your account health page signaling that some areas of your order and fulfillment process need immediate attention to avoid account deactivation. Amazon sends you performance notifications warning you of the policy violations and areas needing improvisation on a priority basis. You as a seller must take immediate action to overcome these violations and ensure that you are well within the seller performance targets.

c. Unhealthy

You will have an ‘Unhealthy’ seller account if your AHR score is below 99. This is denoted by red color and is an intimation that your seller account can be canceled anytime due to some serious violations.

Therefore, sellers need to constantly perform well beyond the targeted levels to become trusted sellers on Amazon.

Also Read: What Is Amazon FBA And How Does It Work?

Alan Chen, CPA at Freecashflow.io, helping eCommerce businesses with their tax and accounting

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Amazon KPIs You Must Monitor To Track Seller Performance

Here are some of the key Amazon seller performance metrics you can leverage to grow your sales and become a trusted Amazon seller.

I. Amazon Account Health Metrics

Amazon displays your seller account health metrics on your account health page. This page provides sellers about where they stand as far as their seller performance is concerned. It gives them insights into the overall health of their seller account and highlights the areas that need their immediate attention.

This not only helps them to improve customer experience but also tells them how well are they complying with the Amazon seller policies.

Now, there are mainly three factors that influence your seller account health and reveal if you are adhering to selling policies and performance targets set by Amazon. These include:

a. Customer Service Performance

This section of your Seller Account Health Page tells you how satisfied your customers are with your products and services on Amazon. Further, your customer service performance is measured with the help of one of the Amazon Seller Performance metrics called Order Defect Rate or ODR.

Order Defect Rate (ODR) determines the number of defective orders out of the total orders you receive over a given 60-day period.

Target ODR: Amazon requires sellers to maintain an ODR of < 1%. It is calculated as follows:

ODR = No of Defected Orders/Total No. of Orders Received

For instance, if you received 500 total orders in the last 60 days out of which 4 orders had defects, your ODR is 0.8%.

Your order has a defect if it –

(i) Receives Negative Feedback From Customers

Amazon treats customer feedback negatively if you receive a product rating of two stars or less. Customer feedback plays a critical role in the overall shopping experience on Amazon. It provides you insights into problems in your product listing so that you can fix them immediately to avoid any negative impact on your Amazon sales.

Thus, it is highly recommended to describe your products accurately, with clear images and correct condition of your products to steer clear of any negative feedback from customers.

(ii) Results in an Approved A-to-z Guarantee Claim

An A-to-z claim gives the right to the customers to request Amazon to investigate their disputed orders. The customers can even submit a claim to Amazon if they feel that you as a seller have not dealt with their negative experience appropriately as per your or Amazon’s policies. Such a claim allows Amazon to regain customer trust in the event of product condition or the time of delivery not meeting expectations.

To avoid A-to-z guarantee claims, you must provide clear product images and descriptions. Additionally, be accurate in describing the true condition of your products.

Furthermore, make sure you confirm shipments in Seller Central before reaching the order’s expected shipping date and aim to confirm them the moment you ship the order. Finally, cancel the out-of-stock orders and inform your customers that you won’t be able to fulfill them. Make sure you are replying to customer queries within 24 hours.

(iii) Results In a Credit Card Chargeback Claim

The final factor that impacts your AHR is credit card chargebacks. Chargebacks are nothing but customers’ money being refunded due to a dispute or return. It is suggested to reduce the number of credit card chargebacks via proper packaging and trackable shipping methods.

Also Read: What’s Better: Dropshipping Or Amazon FBA?

b. Policy Performance

This section highlights issues regarding intellectual property violations, customer authenticity complaints, food and product safety issues, and other policy violations. These policies ensure safety for buyers and fairness to sellers. You can use the search bar on the account health page to review the details of each policy mentioned under the ‘Policy Performance’ section.

Target Policy Issues: Your target as a seller is to maintain ‘zero’ policy violation issues.

Therefore, you must track the ‘Policy Performance’ section regularly and respond to any violations highlighted by Amazon on your account health page. For instance, if you are warned of an intellectual property right violation, you may follow the appeals process by providing all relevant documents. You can see the ‘Product Compliance Request’ section on your account health dashboard to see what documents Amazon requires you to submit.

c. Shipping Performance

Shipping performance is one of the Amazon Seller Performance metrics that tells you about how well you are providing the requisite information your customers need after they place an order with you. Several metrics determine your shipping performance.

(i) Late Shipment Rate

Late Shipment Rate (LSR) is the percentage of shipment confirmations occurring after the expected ship date. The LSR applies only to seller-fulfilled orders, also called Merchant Fulfilled Orders (MFN).

Target LSR: Amazon requires its sellers to maintain their LSR < 4%.

The LSR can be calculated as follows:

LSR = No. of Orders That Are Ship-Confirmed Late/Total No. Of Orders

For instance, if you received 200 orders in the last 10 days and 2 of them were shipped after the expected ship date, then your LSR is 2/200 = 1%

Make sure your LSR is below 4% as anything above 4% can result in seller account deactivation. You can see the LSR for the last 10 and 30 days being displayed on your Account Health Page under the ‘Shipment Performance’ section.

It is extremely important to confirm your shipments by their expected ship dates as not doing so will lead to negative customer experience. You may end up receiving negative customer feedback, A-to-z claims, and chargeback requests, which may increase the risk of account deactivation.

Therefore, if your LSR is above 4%, you will be notified by Amazon and given 30 days to improve your LSR. To improve your LSR, you should list only those products that you can ship by or before their expected ship date. Additionally, you can collaborate with your carriers and come up with ways in which they can scan your items in time. Finally, make sure you confirm shipments with correct tracking information the moment you hand over packages to your carriers

(ii) Cancellation Rate

Order Cancellation Rate is one of the other Amazon Seller Performance metrics that tells you about the seller-initiated cancellations out of all the orders received during 7 days. Remember, pending orders or orders canceled by the buyers do not count while calculating the Cancellation Rate.

Thus, if a buyer initiates a request for order cancellation and the order is yet to be shipped or isn’t confirmed as shipped, you can cancel the order without negatively impacting your Cancellation Rate. Amazon will inform you of all the official cancellations through e-mail, your API, and in Seller Central through order reports and the ‘Manage Orders’ page.

Also, there can be times when you as a seller may have to initiate order cancellations due to product listing or offer issues. However, make sure these are done less frequently to avoid your cancellation rate getting negatively impacted.

Furthermore, there may be instances where Amazon will cancel orders automatically. This may or may not impact your cancellation rate, depending upon the reason for order cancellation by Amazon.

For instance, if you haven’t confirmed shipment within 7 days of ship-by-date. This will negatively impact your cancellation rate.

However, if Amazon cancels the order due to a fraudulent buyer or

Target Cancellation Rate: Amazon requires all sellers to maintain their Cancellation Rate <2.5%.

Therefore, you must make all the effort to keep your cancellation rate below the target level to maintain your seller account health and avoid account deactivation. You can maintain your cancellation rate below the targeted level by:

  • preventing out-of-stock inventory,
  • contacting the customer if his address is undeliverable
  • maintaining accurate pricing at all times
  • turning on the ‘Vacation Mode’ if you can’t fulfill orders
  • not accepting unofficial cancelation requests

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