What’s Good for Amazon is Good for Your Business
Amazon’s unwavering commitment to customer service sets high standards for Amazon sellers. Amazon Performance Metrics are designed to set those expectations. Failure to meet them will put your account under review and possibly jeopardize your business.
Even the best and most scrupulous Amazon sellers can inadvertently stray off the beaten path. In this post, we take a look at what you need to do to stay on the right side of Amazon seller performance.
Understand Amazon Policies
Understand Amazon Seller Metrics
Track important Amazon Key Performance Indicators (KPIs)
Aim for high conversions
Get help to manage Amazon metrics
Get investment to grow your business
Amazon Policies
Everything sold on Amazon must comply with its Program Policies. Read them. It’s a long list and is continually updated. Even large veteran Amazon sellers have received an account under review notification because of something they didn’t realize was in the fine print. Ignorance of the law is never an excuse.
Amazon Seller Metrics
Amazon Seller Metrics serves a couple of purposes. For Amazon, it is how they rank sellers in its search results and, perhaps most importantly, determines who wins the Buy Box. For sellers, metrics can help you understand the rules to follow to optimize search ranking. On top of this, these metrics help you improve your business in areas such as inventory performance, product ranking, invoice defect rate, and order fulfillment performance.
Key KPIs
While all the Amazon Seller Metrics provide important insights into business performance, paying particular attention to these helps you stay on Amazon’s right side. Most importantly
Product Ranking. Maybe the most important KPI for sellers to gauge their business performance on Amazon. Product ranking is calculated by the number of sales made alongside your reviews and is updated hourly. The better your product ranking, the higher your ranking on Amazon searches and the higher potential sales.
Policy Violations Metric (VPM). A green indicator means you are in good standing, yellow that you have account notices. A red cross means your account is under review; take immediate action to get back in Amazon’s good graces.
Order Defect Rate (ODR). This is a measurement of customer satisfaction and must be less than 1 percent of total orders fulfilled. An order is rated defective if a customer makes a(n):
A-to-Z Guarantee claim
Chargeback
Negative review of two stars or less
Pre-Fulfillment Cancellation Rate. Calculated as the number of cancellations divided by the number of orders you cancel due to insufficient inventory. This ratio must stay below 2.5 percent.
Late Shipment Rate (LSR). A shipment more than two days past the promised delivery date is considered late. LSR is calculated every 7 to 30 days; an LSR approaching 4 percent gets a dunning. Besides risking an Amazon account notification, late shipments prompt bad customer reviews, which is bad for your business reputation as well as Amazon’s.
Valid Tracking Rate (VTR). This applies only if you are not an FBA seller. As soon as the tracking number of an order you are shipping is scanned, it is considered valid. VTR is a measurement of whether you are dispatching products on time. VTR should stay below 5 percent.
Buyer-Seller Contact Response Time (CRT). Measures the number of messages responded to within 24 hours, regardless of what day of the week. Amazon is pretty inflexible here that all messages are responded to in 24 hours; in fact, Amazon notifies you of any messages waiting in your Seller Central account. Just make it a practice to check periodically throughout the day, every day.
Paying attention to all of these will keep you on the right side of Amazon Seller Performance. However, the most important from Amazon’s perspective are ODR, LSR, and Pre-Fulfillment Cancellation Rate. Failure to stay in compliance with all these three can result in losing your selling privileges on Amazon.
Conversions
Conversions—also called Unit Session Percentage Rate—is simply the percentage of visitors that land on your product page that actually purchase it. Amazon doesn’t have a standard for conversions because it is actually a relative term. A seller with only 4 sessions on 2 products that sold would have a 50 percent conversion rate, while a product listing with a hundred views that sold 20 items would have a 20 percent conversion rating. In all probability, the latter seller is making more money, selling more products, even with the lower conversion rate.
Still, while Amazon isn’t going to ding you for a low conversion rate, it is a measurement for you to consider. Chances are if you have a high conversion rate with most of your products and you are satisfying other seller metrics, you are not only in good standing with Amazon, but you are running a profitable business.
Get Help to Manage Amazon Metrics
While all these metrics are provided in Amazon Central, there are a variety of third-party software programs that help you monitor them as well as provide tools to increase your performance. You may also want to consider a consultant who can work with you to improve your metrics; they can also help you respond to any Amazon notifications and potential account suspensions.
Investment to Grow Your Business
Put simply, if you are providing excellent customer service, you are staying on the right side of Amazon seller performance standards. But there comes a point where hitting the marks for customer satisfaction by itself isn’t growing your business. To take your Amazon selling business to the next level, you need additional capital.
Unfortunately, most of the ways to acquire that capital can be costly. High interest rates, the burden of monthly payments, and possible loss of control of your business are sufficiently risky to make any Amazon seller hesitant.
There’s a better way that avoids high-interest rates and/or high monthly payback amounts, with no need to cede control of your business. AccrueMe funding partners with your business, investing money with zero monthly payments without any ownership stakes. In return, AccrueMe asks for a percentage of your profits, but only if you have profits. It’s funding without liabilities or debts.
To learn more, visit AccrueMe. To grow your business and increase profits, apply here.