Amazon Customer Experience Performance Metrics

This screenshot shows an overview of the calculations that, together, make up the Customer Experience Metrics. It’s taken from Amazon’s Seller Central in the Reports, Customer Metrics section. Each green box represents a particular one part of the criteria Amazon uses to gauge a seller’s performance on their site. For each criteria, Amazon also supplies a target value/percentage that a retailer should maintain.

Order Defect Rate

The first metric tracked by Amazon is called the Order Defect Rate. This metric is actually a roll-up of several statistics. The first is the Negative Feedback Rate. A few weeks after a customer on Amazon places an order, Amazon asks them to rate both the product and the retailer on a scale of 1 (least favorable) to 5 (most favorable). The feedback for the retailer determines this part of the metric. Negative feedback is any review with a rating of 1 or 2; 3 is considered neutral, and 4 and 5 are positive. The Negative Feedback Rate is the number of orders with negative retailer feedback divided by the total number of orders, all within a given timeframe. So if you sold 1000 orders, and 15 of them received negative feedback, then your Negative Feedback Rate is 15/1000, or 1.5%.

The second criteria that makes up the Order Defect Rate is the Filed A-to-z Claim Rate. Amazon’s A-to-z program is a method of resolving disputes between third-party retailers and the end customer. This rate is calculated by the number of orders that resulted in the customer filing an A-to-z claim divided by the total number of orders in the same timeframe.

The third and final portion of the Order Defect Rate is the Service Chargeback Rate. If a customer issues a chargeback through their credit card company for any reason other than fraud. Some examples are delivery of a defective or damaged product, failure to refund the money for a returned product, or the item was not received. The Service Chargeback Rate is NOT affected by chargebacks where fraud is claimed, such as the cardholder claiming that they never placed the order. Amazon absorbs any costs of fraud-related chargebacks. The Service Chargeback Rate is calculated as the number of orders with a service-related chargeback issued by the customer, divided by the total number of orders.

Any order with one or more of these problems – negative feedback, an A-to-z claim, or a service chargeback – is considered a defective order. The entire rolled-up Order Defect Rate is the number of orders with any of these defects, divided by the number of total orders within the same timeframe. If a given order has more than one defect, such as negative feedback and an A-to-z claim, it counts as only one defect. As an example, assume you had 1000 orders during December. Of those 1000 orders, 9 had only negative feedback, 2 had an A-to-z claim, 1 had both a negative feedback rating and an A-to-z claim, and 1 had a service chargeback. That results in 13 order defects, or 13/1000 which equals 1.3%.

Pre-Fulfillment Cancellation Rate

The next metric tracked by Amazon, after the Order Defect Rate, is called the Pre-Fulfillment Cancellation Rate. This represents how many orders you as the retailer cancel before shipping the order. Typically this happens when an item is sold that you no longer have in stock. If you are a multi-channel retailer, this is an easy thing to happen – the last item sells on Amazon, but before that order makes it into an order report, you sell the same last item on your own website or in your store. Since you can no longer fill the order on Amazon, you cancel it. This is a pre-fulfillment cancellation, because you cancel the order instead of shipping it. The Pre-Fulfillment Cancellation Rate is the number of canceled orders divided by the total number of orders within a given timeframe.

Late Shipment Rate

Amazon expects retailers to ship orders within a given timeframe. Additionally, they expect retailers to notify Amazon through Seller Central that the order was shipped, and to provide tracking information to the end customer. If an order shipment notification is more than 3 days later than the expected ship date, the order is considered late. The rate is calculated by the number of late orders divided by the number of total orders.

Note: the default lead time is 1-2 days. This is the number of days between when the order is placed and the time expected to leave your warehouse. If your expected lead time is greater, you can specify this in your inventory upload file in the leadtime-to-ship column, if available.

Post Ship-Confirm Refund Rate

Before you confirm that an order has shipped, if you cancel the order, that is considered a pre-fulfillment cancellation. However, after you confirm that an order has shipped, if you cancel it and issue a refund OR if the item is returned and refunded, this qualifies as a refund. Reasons for refunds tend to be more varied than reasons for cancellations (which are almost always due to stock issues). Amazon still tracks refunds as part of the overall measure of performance.

Performance Targets

Amazon Metrics and Targets

For each of these targets, except the refund rate, Amazon provides a target value that retailers should try to achieve. This image shows the rates for one merchant, with the targets displayed under the label for each row.

The target rates are:

• Order defect rate: < 1%
• Pre-fulfillment cancel rate: < 2.5%
• Late ship rate: < 5%

What difference does it make?

If you’re wondering why you should care, the answer is that these numbers can greatly affect your bottom line, particularly if you are a high-volume dealer on Amazon. Better scores raise your ability to win the buy box. Additionally, excessively poor performance may affect your ability to sell on Amazon at all. For example, toy retailers may be prevented from selling during the lucrative holiday season of November and December if their performance isn’t good enough.

Fortunately, Amazon emails these metrics to you every two weeks so that you can easily monitor your scores. They are also available in Seller Central under Reports < Customer Metrics, linked to from the top navigation.

The Add a Product Tool

When you are approved to sell your products on Amazon, you are granted access to their Seller Central web interface. Seller Central allows you to control most aspects of your business as conducted through Amazon: listing and de-listing products, managing your orders, providing shipping notices, collecting payment from Amazon, viewing statistics and reports, and managing your Amazon storefront, policies, and promotions. Under the Inventory tab, you’ll notice a link labeled “Add a Product”. This process begins with a simple form that allows you to located the product already on Amazon, which is necessary due to Amazon’s single product page per product. (If the product doesn’t already exist on Amazon, you can create a new product.)

Amazon's Add a Product Tool

After you enter your search terms, Amazon will return with a list of products in their catalog that match your search. Click the “Sell Yours” button beside it, fill in your information, and you’re off.

This is great for a couple of products, if that’s all you have. But sooner or later you realize that by the time you’ve listed all 3000 of your products, you’ll be dead – and your range of products will have changed a couple of hundred times anyway. After all, most of us have products come and go from our catalog all the time!

Seller Desktop

Amazon Seller Desktop

Seller Desktop is a free desktop application that gives you a GUI for listing your products. It is almost always quicker than doing them one-by-one through the Add a Product tool. With Seller Desktop, you can list products, create variations, and upload everything to Amazon when you’re ready. However, if you work on a Mac you’re out of luck: Seller Desktop is for Windows only. It’s also pretty slow when you upload your listings, especially if you have a large catalog.

So while Seller Desktop is much better for larger merchants than doing products one-by-one, you’ll also want to take a look at the flat-file upload.

Upload Products via a Flat File

Here’s where my saving grace came in when we first starting selling on Amazon. I realized that with the first two methods, I was basically reinventing the wheel when it came to my data. I already had almost every piece of data already in my shopping cart catalog. If I just made some custom fields to fill in the missing data (like a certain format for recommended ages, the UPC code, and the vendor SKU) then I could export everything from my catalog into a tab-delimited flat file and upload that to Amazon in one fell swoop. Hallelujah!

The flat-file format is pretty daunting, so this might be easier than it sounds. The format depends on the category of items that you’re selling and the revision number of the flat file format. The format I use has 92 (yes, NINETY-TWO) individual columns. And many columns have a very limited set of allowed values. But we used a feed module to easily generate this file. Once the definition was originally set up, the click of a link was all it took to produce the file. Then we logged into seller central, uploaded the flat file, and waiting while Amazon processed it. (Usually inside of an hour.)

Moving to True Automation

A single pain point still existed for us, though…inventory management. When the holiday shopping season begins each year, our own website and our sales on Amazon start competing with each other for our inventory – and if something sells out on one site, we want to make sure we don’t oversell it on the other site! Up through last year, we were uploading inventory-only flat files and just dealing with errors when they occur. This year, (warning: plug coming) we’ve got an automated feed management service call FeedExact, something NetBlazon has developed in house, that will sync up the inventory on a schedule we determine. Perfecto!

Obviously, the method you choose for managing your products on Amazon will depend on the size of your catalog, how frequently it changes, your budget, and your patience level. Fortunately, we have options, so it’s just a matter of finding the one with the fewest pain points for your business. Here’s to happy retailing on the world’s largest e-commerce site.

Stay tuned, our next post will be about understanding seller metrics and how they are affect your ability to reach customers on Amazon.

One of the most important things you need to do as a third-party retailer on Amazon is referred to as “winning the buy box”. To understand this concept, let me back up and explain how products are sold on Amazon. Let’s say we have a product such as the Human Body Floor Puzzle (shown below) that is sold by a number of different retailers, and possibly also by Amazon themselves. Instead of having an individual product page for the same item for each retailer, Amazon combines them into a single product page .

Amazon Product Page

When a customer visits a product page, the most obvious thing about making the purchase is the “buy box” on the right side of the page near the top. It features a quantity dropdown box and an “Add to Shopping Cart” button. Most customers who wish to purchase the product will make that simplest selection. When they do, the sale is given to the retailer who is currently “winning the buy box” – in the case of this example product, that retailer is The Clanton Company (as seen in the middle of the screen under the green “In Stock” status).

So how do you win the buy box? According to Amazon:

Customers can add products into the shopping cart through multiple paths. One of those paths is by using the Add to Shopping Cart button (in the “Ready to Buy” box, or the “Buy Box”). One merchant “wins” the Buy Box. There are multiple factors that we take into account when we select the winner of the Buy box these can include Price, Availability, Volume, Refunds, Customer Feedback and A-to-Z guarantee claims. You can take steps to increase your chances of winning the Buy Box.

In most cases, it appears that the buy box for a particular product rotates among different vendors who currently have the item in-stock, so unless you’re the only one selling the item, you’re shooting for a win “percentage” – the number of times you win the box divided by the number of pageviews for this product.

There are some key things you can do as a retailer to increase the percentage of times you win the buy box:

1. Focus on your pricing. The ability to win the buy box is based on the combination of the product price and the shipping price. Simply lowering your price for the product and raising shipping costs to cover the difference won’t help you win the box.
2. Make sure you keep the item in stock! If you are out of stock, you can’t win the buy box.
3. Maintain good customer feedback. This is mainly your basic customer service considerations. Ship quickly, keep your customer informed of the status, make sure you ship the correct item, and don’t accidentally list a product as in-stock if it’s not.

That’s basically it. Certain categories have lots of retailers, so if that’s the case, you may need to keep an eye on your competition daily. When you manage your inventory and look at listings, you can see the lowest price being offered by your competition. Amazon also provides tips on encouraging feedback. With practice and diligence you can increase your percentage of buy-box wins.

Watch for our next installment when we discuss different ways to listing your products on Amazon.