Amazon Team KPI Setting Guide and Precautions

For Amazon teams, in order to ensure efficient operations, it is crucial to set reasonable key performance indicators (Key Performance Indicators, KPIs for short). Whether you choose KPIs or another popular assessment method – Objectives and Key Results (OKR), finding the right reference indicators and setting them appropriately are the basis for success.

KPI settings for different positions

Account Operation Post

In the premium mode, the KPI setting of the account operation post needs to focus on the following aspects:

• Gross profit: This is one of the important factors in measuring the effectiveness of operational work. Gross profit is equal to the balance of sales receipts minus various expenses.
• Return On Investment (ROI): The calculation formula is the gross profit divided by (product cost + domestic freight + first-leg freight). It is a comprehensive indicator that measures corporate profitability and team operating efficiency. By optimizing procurement prices and reducing logistics costs, the ROI value can be continuously improved.
• Inventory-to-sales ratio: This indicator is used to check whether the inventory level is reasonable. It is calculated as the monthly average inventory divided by monthly sales or the annual average inventory divided by annual sales. A inventory-to-sales ratio that is too high or too low indicates potential problems.

In addition, in order to accurately calculate the above indicators, operating personnel need to record and track relevant store data on a daily basis, which is a tedious but essential task. Using a tool like ShopReport can help simplify this process.

Product development position

The responsibilities of product development positions vary depending on the type of company (trade or factory), and are also affected by the main category and operational strategy. Some organizations may focus on quantity of products, while others are more focused on quality.

Factors to consider when setting KPIs

When determining KPIs, the following points require special attention:

• Industry Current Situation: KPI goals should be formulated based on current industry standards and the company’s specific circumstances to avoid setting standards that are too high or too low.
• Time factor: Taking into account factors such as seasonal fluctuations, such as during Amazon’s peak sales season (such as the fourth quarter), KPIs should be adjusted accordingly.
• Human resource allocation: When resources are limited, priority should be given to the “28/20 principle”, that is, focusing on activities that contribute the most to business output.

To sum up, correctly setting KPIs can not only help Amazon teams better manage daily operations, but also promote long-term development. Through a carefully designed KPI system, an enterprise can ensure that every member is working towards a common goal, while also being able to detect and solve possible problems in a timely manner.