Detailed explanation of Amazon store operations and product selection strategies
Detailed explanation of Amazon store indicators
The success of an Amazon store depends largely on whether the store’s various operational indicators meet standards. These indicators include order defect rate, order cancellation rate, order delay rate, order effective tracking rate, return dissatisfaction rate, customer service dissatisfaction rate, etc.
Late Shipment Rate (LSR)
The order late delivery rate must be less than 4%. A high proportion of orders that are confirmed to be shipped 10 or 30 days after the estimated delivery date will affect the buyer experience.
Cancellation Rate (CR)
The order cancellation rate must be less than 25%, and out-of-stock is a common reason for cancellation.
Valid Tracking Rate (VTR)
The effective tracking rate must be greater than 95%. Uploading correct tracking codes can help increase buyer confidence.
On-Time Delivery Rate (OTDR)
The on-time delivery rate must be greater than 97%. Timely delivery can improve customer satisfaction.
Order Defect Rate (ODR)
The order defect rate must be less than 1%. Negative feedback, non-rejected transaction guarantee claims and credit card chargebacks may cause ODR to increase.
Return Dissatisfaction Rate (RDR)
The return dissatisfaction rate must be less than 10%. Negative buyer feedback, delayed responses, or incorrectly rejected returns may cause an increase in RDR.
Amazon platform fee overview
In addition to paying attention to store indicators, it is also crucial to understand the fee structure of the Amazon platform. The main expenses include platform monthly rent, advertising fees, commissions, logistics and distribution fees, return/refund management fees, FBA warehousing fees, etc.
Platform monthly rental
Taking the US site as an example, the monthly store rent is US$39.9.
Advertising fees
Promote products through in-site CPC advertising and charge based on clicks.
Commission
Depending on different product categories, the commission rate is between 8% and 15%.
Logistics delivery fee
Calculated based on product properties and volume size.
Return/Refund Administration Fee
Amazon charges an administrative fee of approximately 20% when processing returns or refunds.
FBA warehousing fees
Calculated based on the space occupied by the product and storage time, it is divided into monthly and long-term storage fees.
Amazon product selection analysis
Product selection is the key to Amazon’s success. You can start the analysis from the following aspects:
Market competition
Use keyword tools to analyze the level of competition in your target market.
Brand concentration
Be careful to avoid entering categories that are monopolized by a single brand or Amazon’s own operation.
Competitive product analysis
Observe competitors’ prices, number of reviews, and features.
Price analysis
Choose products with higher unit prices and large profit margins.
Search popularity analysis
Understand buyer needs based on search trends.
Shelf time
Avoid direct competition with products that have been on the market for a long time.
Product categories
Ensure product classification is accurate.
Number of sellers
Choose products with fewer sellers but potential.
Notes on product selection on Amazon’s US market
Market analysis
The US site has a huge user base and Prime membership group, and has broad market prospects.
Product filter
Avoid red ocean markets and choose products that have potential but are not yet saturated.
Product research
In-depth research on the target market, taking into account consumer needs, holidays and other factors.
To sum up, the operation management of Amazon stores not only needs to pay attention to internal operating indicators, but also requires detailed analysis of the external market environment to formulate reasonable product strategies. At the same time, reasonable cost control is also the basis for ensuring the long-term and stable development of the store.