4 Essential Metrics for Success on Amazon: It’s Not Just Revenue

Amazon sellers chase revenue, but it's not a true measure of success. Junglytics provides detailed insights on profit, conversion rates, TACoS, and more.

Tom Rohlf

September 13, 2023

As Amazon sellers, we all love to see our revenue go up. But truth be told, revenue is a vanity metric. It doesn’t necessarily lead to profit. Why? Because revenue is just the total amount of money generated through sales. It only represents the top-line income, but doesn’t factor in deductions. Profit, on the other hand, represents income minus expenses and is a far better indicator of Amazon seller success. Yes, loss-leader champion Jeff Bezos is proud that Amazon isn’t very profitable. But he’s playing a different game than most sellers.

Unless you’re aiming to implement a loss-leader strategy, Amazon sellers need to balance revenue generation with other metrics. Profit is a prime example. Other essential Amazon seller metrics include conversion rate, total advertising cost of sale (TACoS), and your advertising conversion rate compared to your overall conversion rate.

Admittedly, pulling these metrics from Amazon Seller Central is tedious. What’s worse is that Seller Central only provides high-level data or ultra-granular data, making it super tedious to understand what’s happening in your business at the product line, variation, or any other group of ASINs that make sense for your business. But that’s where the really valuable insights live.

Junglytics provides the catalog filtering Amazon sellers need to succeed. Our highly customizable Amazon seller dashboards are easy to create and filter to any subset of your product catalog—making it simple to track and explore the metrics most important to accomplishing your business goals.

Here’s a quick look at four essential metrics for success on Amazon.

#1 Profit

There are a number of reasons why someone decides to sell on Amazon. Sometimes you have a great product you believe in, and Amazon provides access to a massive digital marketplace, full of eager customers. Others are attracted to the ease provided by Fulfillment By Amazon (FBA), saving them the hassle of handling fulfillment themselves. But no matter the case, Amazon sellers want to make money.

Profit is the clearest metric for determining whether your Amazon business is making money because it accounts for all expenses associated with selling on the platform. Profitability is the ultimate goal of any business, and monitoring profit ensures that sellers are not just driving sales but also managing their operations effectively to generate sustainable earnings.

Moreover, tracking profit allows Amazon sellers to make informed decisions about pricing, inventory management, advertising strategies, and overall business expansion.

What Junglytics Includes in Our Profit Metric

Junglytics automatically pulls real-time data, so you always have the critical information necessary to make smart decisions for your Amazon business. Here’s the equation we use to calculate your profits:

Revenue - ad spend - Amazon FBA fees - Amazon referral fees - COGs = Profit

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A Junglytics card showing the profitability of two products over a 30-day period.

As you can see, revenue is just the top-line income. Factoring in three types of advertising spending is crucial since most Amazon sellers rely heavily on ads to bring in customers. For sellers leveraging Fulfillment By Amazon, FBA fees are a basic cost to factor in. Likewise, referral fees and your cost of goods (COGs) should be subtracted from revenue so you can truly assess your profits.

It's possible to add additional variables to the model for even deeper granularity. These include returns, order cancellations, FBA storage fees, and a number of other smaller considerations. Junglytics plans to include these line items in future product updates. In the meantime, our current approach emphasizes the most critical expenses and revenue representing the foundational components for any profit model.

#2 Conversion Rate

Conversion rates are a big deal for Amazon sellers. Think of this metric as a scorecard for how capable you are at turning browsers into buyers.

Even if you have customers landing on your product detail page, your images, bullet points, reviews, and descriptions are crucial for convincing shoppers to convert. A high conversion rate indicates that your detail page is resonating with customers, while a low conversion rate indicates that you are falling short.

Here’s where Junglytics can help. Our business intelligence tool tracks conversion rates by product, product variation, region, customizable timeframes, and more. Deep dive into your conversion rate and see how they’re changing over time with our customizable dashboards.

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A graph showcasing conversion rate by product line.

#3 TACoS: Total Advertising Cost of Sale

Are you getting good returns on your advertising investments? TACoS is a critical metric for Amazon sellers because it provides a clear picture of how effective your advertising efforts are at generating sales.

TACoS includes both organic and sponsored purchases. Many advanced sellers find this metric more useful than advertising cost of sales (ACoS) because they understand that ad-supported sales have a halo effect on organic search rank and therefore sales. As a general rule:

Use ACoS when you want a quick measure of how efficiently your ad campaigns are converting spend into revenue.
Use TACoS when you want to consider the full cost impact of advertising, especially when analyzing the profitability of a product after factoring in all associated costs.

To calculate TACoS, you divide your total advertising spend by the total sales generated from those products, then multiply by 100 to get the percentage.

For instance, if you spent $500 on ads and those ads generated $5,000 in total sales, your TACoS would be 10%. This means for every dollar you invested in advertising, you earned $10 in revenue. A lower TACoS percentage indicates a more efficient advertising strategy.

Junglytics helps Amazon sellers regularly monitor TACoS over time. For instance, you might notice a decrease (indicating a move in the right direction) or an increase in TACoS (which might signal the need to reallocate advertising budgets, tweak campaigns, or reevaluate your product details page).

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A Junglytics card showing TACoS by product line.

#4 Advertising Conversion Rate Compared to Your Overall Conversion Rate

Are you overspending on advertising? Or is your product details page simply failing to convert customers coming in through your ads? It’s a bit of a balancing act, and without the right data, it’s hard to know which of these areas needs your attention. This is where Amazon sellers should zone in on ad conversion rates in comparison to overall conversion rates.

Here’s an example of what advertising conversion rates versus overall conversion rates look like in a Junglytics dashboard:

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A snapshot of ad conversion rate, conversion rate, and profit.

From here you can make a few inferences. If your overall conversions are dramatically outperforming your ads, it might mean that something is not resonating with your paid audiences. Maybe you need to change your advertising strategy to focus on more specific keywords to avoid overspending on generic keyword ads.

Conversely, if your ads consistently outperform your overall conversion rate, you might want to update your listing to include more of the keywords that are converting in your advertising. Common issues include bad content on your listing page, a lack of relevant content, shoddy product descriptions, or a lack of appropriate backend keywords.

Then again, there are times when it simply does not make sense to pursue certain keywords. Search terms that result in 20+ clicks but no conversions are known as “bleeders,” as in they bleed your advertising budget for no good reason. Check your search term report to identify possible bleeders and new keyword opportunities.

Bonus: Gain Smart Insights by Segmenting Your Catalog

One of the reasons Amazon sellers love Junglytics is that it puts sellers in the driver’s seat. Our business intelligence and analytics tool lets Amazon sellers focus on the metrics most important and relevant to their business.

While there are lots of possible examples, drilling down into specific products, product variations, or regions is extremely beneficial for lots of sellers.

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Junglytics provides an unparalleled level of granularity for Amazon sellers.

For instance, a Junglytics user might sell three products on Amazon. The first is highly profitable and a runaway success, the second performs moderately well, and the third consistently underperforms. Data coming out of Seller Central only shows you the “pretty good” performance across all three products, obscuring the fact that your business would be much more profitable if you eliminated the third product entirely.

The same thing can be said for selling in different regions or offering several product variations. You can’t make wise decisions if you can’t filter down to the information you need.

Junglytics: Giving Amazon Sellers Your Data, Your Way

For whatever reason, you decided to become an Amazon seller. You are here now. And there are places you want to go and goals you want to meet. Good data can help you get there.

Explore your Amazon metrics like never before with Junglytics.

Want even more practical tips for selling on Amazon?

Check out our content.

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And explore a live demo of the Junglytics business intelligence platform.

ABOUT THE AUTHOR

Tom Rohlf

Tom has been selling on Amazon since 2014 - He exited his first business (Playerten.com) in 2019 and is the CEO and Co-founder of Cuddle Club an Amazon native children's clothing brand.

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