Are you struggling to grow your Amazon or any other e-commerce business? Are you tired of jumping into decisions based on intuition without fruitful results?
If your answer is yes to either of these questions, this blog is for you. By tracking and monitoring the right Amazon Business KPI’s, you can take your business to new levels of success.
Amazon Business KPI’s: Optimizing Your Sales and Profitability on Amazon and E-commerce Platforms
The e-commerce industry has become apparent and has had a significant impact on businesses and consumers worldwide. As e-commerce or Amazon business owner, you have a fantastic opportunity to tap into this vast audience and generate significant revenue and profitability.
However, succeeding on any e-commerce platform is a challenging feat. You need to understand the platform’s ins and outs, create optimised product listings, and drive traffic to your online store. But how to measure the effectiveness of your online business strategies?
This is where KPIs come in. In this blog, we’ll delve into essential business KPIs you need to track to improve your business’s sales and profitability.
Amazon Business KPI’s: Conversion Rate
Conversion rate is a critical Amazon business KPI that also applies to other e-commerce businesses. It refers to the percentage of visitors to your online store who complete a desired action, such as making a purchase.
Your conversion rate directly impacts your revenue and profitability. To improve your conversion rate, you should focus on optimising your product listings, improving the user experience, or adjusting your pricing strategy.
Amazon Business KPI’s: Average Order Value (AOV)
Average Order Value (AOV) is an essential Amazon business KPI that refers to the average amount of money customers spend on each transaction on your Amazon store. It can also be used for any other online business platform.
Increasing your AOV can help boost your revenue and profitability on the platform without necessarily attracting more customers. You may need to offer or cross-sells, bundle products together, or offer free shipping above a certain threshold to do that.
Amazon Business KPI’s: Customer Acquisition Cost (CAC)
Customer Acquisition Cost (CAC) is another crucial KPI that refers to the money you spend on marketing and advertising to acquire a new customer on the platform.
Tracking your CAC can help you determine the effectiveness of your marketing campaigns and whether they are delivering a positive return on investment (ROI).
To lower your CAC, you may need to optimise your targeting and ad spending, improve your product offerings, or improve your customer service.
Amazon Business KPI’s: Gross Profit Margin
Another Amazon business KPI that can also be applied to other e-commerce businesses is the gross profit margin. It is the percentage of revenue you make after paying for the direct cost (cost of goods sold).
It is an important KPI for any business because it indicates the profitability of your products. You want to aim for a high gross profit margin since it means that your business generates more revenue than it spends on producing or purchasing and delivering products.
You can negotiate better deals with suppliers, optimise your pricing strategy, and reduce operational costs to improve your gross profit margin.
Amazon Business KPI’s: Inventory Turnover
Inventory turnover is an Amazon business KPI that measures the number of times your business sells and replaces its inventory within a specific period, typically a year. Inventory turnover applies to any other businesses, whether online or physical in nature.
A high inventory turnover indicates that your business efficiently manages its inventory and sells products quickly.
To increase inventory turnover, you can implement a just-in-time inventory system, monitor and adjust your stock levels regularly, and optimise your product offerings based on demand.
Amazon Business KPI’s: Days Inventory Outstanding (DIO)
Days inventory outstanding (DIO) is one of Amazon’s business KPIs and refers to the average number of days it takes for your business to sell its inventory.
A high DIO indicates that your e-commerce business is holding onto inventory for too long, which can tie up capital and reduce profitability.
To reduce DIO, you can improve your inventory management processes, implement a more accurate forecasting system, and prioritise selling slow-moving inventory.
Other Amazon Business KPI’s: Summary Table
|Cost per Order (CPO)||The cost of fulfilling an order, including the cost of goods sold and operational expenses.|
|Burn Rate||The rate at which your business is spending its cash reserves.|
|Cash Conversion Cycle (CCC)||The time it takes to convert inventory into cash for your business.|
|Quick Ratio||A measure of your business’s ability to pay its short-term liabilities with its current assets.|
|Debt-to-Equity Ratio||A measure of the proportion of debt and equity financing used to fund your business.|
|Working Capital Ratio||A measure of your business’s ability to meet its short-term financial obligations.|
|Customer Churn Rate||The percentage of customers who stop buying from your ecommerce or Amazon store.|
|Customer Retention Rate||The percentage of customers who bought again to your ecommerce or Amazon store to make a purchase.|
|Average Revenue per User (ARPU)||The average amount of sales generated per user or customer.|
|Stock-to-Sales Ratio||The ratio of inventory on hand to the number of sales generated over a specific period.|
Focus on the Amazon Business KPI’s most relevant to your specific goals and objectives for your e-commerce business. Regularly tracking and analysing these Amazon Business KPI’s can help optimise business performance, increase profitability, and stay competitive in a rapidly evolving market.
Consult Sterlinx Global for further advice for your Amazon or online business.
Frequently Asked Questions
How do I determine which Amazon business KPI’s to track for my e-commerce or Amazon business?
The KPIs you need to track will depend on your business’s specific goals and objectives. Start by identifying what areas of your business are most important to you, such as sales, marketing, inventory management, or financial performance.
From there, select the KPIs most relevant to those areas and that will provide you with the most valuable insights.
How often should I review my KPIs?
It is recommended that you review your KPIs regularly, such as weekly, monthly, or quarterly. The frequency of your reviews will depend on the nature of your business and how quickly things change.
For example, if you have a high-volume e-commerce business, you may need to review your KPIs more frequently than a small Amazon store.
What should I do if my KPIs show that my business is underperforming?
If your KPIs indicate that your business is underperforming in a particular area, it’s important to take action to address the issue. Review your business processes, marketing strategies, and financial performance to identify areas for improvement.
Make changes as necessary and continue to monitor your KPIs to ensure that you are making progress.