Introduction

Amazon provides a sea of data—but not all of it is equally important. Successful sellers know which numbers to track, how to interpret them, and how to connect them to profitability.

This guide covers the essential metrics every Amazon seller needs to know, the pitfalls of misusing them, and how to build a system for data-driven growth.

Advertising Metrics

  1. ACOS (Advertising Cost of Sales)
    • Formula: Ad Spend ÷ Ad Sales
    • Shows efficiency of ads, but not the full picture.
    • Example: A 20% ACOS may look good—but if organic sales don’t increase, you may not actually be scaling.
  2. TACoS (Total ACOS)
    • Formula: Ad Spend ÷ Total Sales (Ad + Organic)
    • Key for measuring long-term growth and brand building.
    • A declining TACoS means ads are fueling organic ranking.
  3. CTR & CVR
    • Click-through rate signals listing appeal.
    • Conversion rate signals listing quality and trust.

Profitability Metrics

  1. Contribution Margin
    • Selling Price – (COGS + Amazon Fees + Ad Spend + Shipping).
    • This is the true profit per unit, and it’s where most sellers fall short.
  2. Refund & Return Rates
    • High return rates hurt both profits and account health.
    • Amazon’s Returns Processing Fee can quietly eat margins.

Inventory Metrics

  1. IPI (Inventory Performance Index)
    • Determines storage limits.
    • Keep it high by maintaining sell-through, fixing stranded inventory, and removing aged stock.
  2. Sell-Through Rate
    • Units sold ÷ Units held in inventory.
    • Critical for avoiding aged inventory surcharges.
  3. Aged Inventory
    • Inventory older than 181 days incurs surcharges.
    • Proactive removals and pricing strategies reduce penalties.

Sales & Buy Box Metrics

  1. Buy Box %
    • The percentage of time your listing wins the Buy Box.
    • Directly tied to sales—without it, your offer is invisible to most shoppers.
  2. Unit Session Percentage (Conversion Rate)
    • Shows how many listing visitors buy.
    • Strong indicator of listing optimization quality.
  3. Sales Velocity
    • Rate at which products sell.
    • Amazon uses velocity as a signal for ranking.

Common Seller Mistakes

  • Obsessing over ACOS while ignoring TACoS.
  • Measuring revenue growth without factoring contribution margin.
  • Ignoring IPI until storage limits hit.
  • Not connecting Buy Box % with pricing and fulfillment strategy.

Real-World Example

A home brand ran ads with a strict ACOS target of 15%. Sales grew slowly, but profits lagged. After shifting focus to TACoS and contribution margin:

  • They allowed ACOS to rise to 25%.
  • TACoS dropped from 20% → 13%.
  • Contribution margin improved by 18% overall.
  • Sales velocity increased, boosting organic rank.

Building a Metrics Dashboard

  • Weekly: Track TACoS, contribution margin, IPI, Buy Box %.
  • Monthly: Review aged inventory, refund rates, and storage costs.
  • Quarterly: Recalculate profitability by SKU and adjust ad budgets.

Tools to use: Seller Central reports, Amazon Attribution, and 3rd-party dashboards (Helium 10, DataDive, SoStocked).

Conclusion

Amazon success isn’t about watching every number—it’s about focusing on the right ones. By tracking ACOS, TACoS, contribution margin, IPI, and Buy Box %, you can make better decisions, protect profitability, and scale sustainably.

The bottom line: metrics tell the story—but only if you know how to read them.

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