Amazon Vendor Central is a great platform to sell products, but it can also be a challenging one especially when you start experiencing problems like low sales and purchase orders.
Knowing the root cause of decreasing sales is essential in fixing them. After all, you can’t improve what you can’t identify & measure, right? Luckily, vendors can use reporting tools that allow them to diagnose issues and inform future business decisions.
In this blog, we will discuss:
Top Causes of Low Sales & Purchase Orders on Amazon Vendor Central
The success of an Amazon vendor is dependent upon the number of sales and purchase orders they receive. However, there are times when these may not match up to expectations due to different factors.
Here are some of the most common causes of low sales and purchase orders on Amazon Vendor Central:
Changes in Consumer Demand
One major factor that can affect a business’s order count is changes in consumer demand. As new products come out, and as styles and trends change, customers may switch their preference to another vendor or product type, which could result in a decrease in orders from your company.
Price Competition
Price competition with other vendors can also lead to lower sales for your business if you set prices too high relative to competitors, or offer inferior products at similar prices. Moreover, increasing competition in a particular product line can dilute your market share.
Outdated Product Listings
The quality and accuracy of product listings play a huge role in how many sales vendors generate. If your listing is outdated, inaccurate or not using the right keywords, your listing won’t be properly indexed and it will affect search performance.
Stock Availability Issues
Stock availability can also be an issue for vendors who are unable to meet demand because they didn’t have enough supplies stocked up or experienced delays with shipments from suppliers. Having inventory management problems like this can also affect a business’s profitability.
The reason behind low sales and P.O. varies greatly from vendor to vendor. So to accurately diagnose key causes of poor sales performance, vendors can leverage data analytics to their advantage through Amazon Vendor Central sales reports.
What is an Amazon Vendor Central Sales Report?
The Amazon Vendor Central Sales Report is an essential suite of data that helps 1P sellers better understand their revenue performance and operations so they can optimize for maximum profitability.
The reports section of Amazon Vendor Central houses vital analytics that can help inform a business’s strategies and decisions. It is divided into three main categories:
The first refers to Amazon Retail Analytics which gives you five key reports pertaining to a vendor’s sales performance on the platform. While the two other categories refer to market insights and other aspects of the business such as account health & finances.
Out of the three, it is imperative for vendors to spend the most time understanding sales reports and then combine their analysis with other reports to come up with a more holistic recovery plan.
Understanding Amazon Retail Analytics
Learning how to properly interpret your sales data is vital to the success of your business. Giving shipped COGS, shipped revenue, ordered revenue and other forms of data a quick look can tell you exactly how well your product fares in the market and if it needs extra investment.
However, even experienced vendors may find this task daunting — that is why it is important to have a good understanding of the five main reports in the Amazon Retail Analytics table: Sales, Traffic, Inventory, Forecasting, and Net PPM.
Amazon Vendor Central Sales Report
One of the reports under retail analytics is the Amazon Vendor Central sales report which monitors six key metrics:
Shipped COGS (Cost of Goods Sold)
Shipped COGS is a great marker for product profitability because it relates directly to the cost of goods sold by Amazon. This number reflects true revenue generated separate from the vendor’s cost, allowing brands to see exactly how much they have made when investing in their product.
It is computed by the number of shipped units multiplied by the average wholesale unit price, giving you a total revenue figure.
Ordered Revenue
Ordered Revenue is a useful metric to inform your business strategy. It captures the potential amount of revenue that is expected from orders that have been made, but which may not have been shipped yet.
Knowing Ordered Revenue can help you make decisions about what products to prioritize for production and shipping, as well as how profitable particular product lines are. This information allows businesses to adjust their strategies in a timely manner and capitalize on their opportunities right away.
Shipped Revenue
The importance of shipped revenue to vendors should not be underestimated, but it is less vital than the shipped cost of goods sold (shipped_cogs). In comparison to shipped COGS, which specifically refers to the revenue directed towards the vendor, shipped revenue does not provide that same guarantee.
While it is revenue – however, it is revenue going directly to Amazon rather than the vendor themselves. Therefore, it is understandable why vendors prioritize shipped COGS over shipped revenue when perceiving success in their business.
Ordered Units & Shipped Units
The Ordered Units and Shipped Units metrics are important measures that signify the number of products ordered and shipped, respectively.
It is important to keep track of these units because they will tell you how much stock you need to order in the future to meet customer demand. Additionally, these metrics provide insight into how well the logistics team is meeting demand, enabling you to make adjustments when necessary. You do not need to know revenue when tracking these items as they solely focus on actual units. Monitoring these metrics can help companies stay ahead of what their customers want.
Customer Returns
Keeping a close eye on customer returns is crucial for companies to determine the success and quality of their products.
By tracking the number of product ASINs being returned by customers within a certain time frame, businesses can accurately identify any recurring issues with certain products, as well as potential improvements that could be made. With this critical information in tow, companies can work towards reducing customer returns and ultimately deliver higher quality, more successful products to the market.
Other Relevant Data Points
As a vendor, the Amazon Vendor Sales Report is by far the most important set of data to look at. Because it gives you all the relevant information you need to come up with strategic moves to improve sales & profitability.
However, other reports under Amazon Retail Analytics such as traffic, inventory, forecasting and net PPM can provide supplemental data. Here’s a quick rundown on the abovementioned reports:
While much can be learned by examining the sales report, there is added value to delving into the traffic data. The different product views can provide more detailed insight into which products are getting traction and where there may be tappable potential.
The inventory report gives manufacturers relevant insights needed to stay on top of the stocks. It provides key metrics such as showing the total amount of inventory Amazon holds, what is on open purchase order, what’s sellable versus non-sellable and how old any existing inventory is.
With this data, manufacturers can easily assess the viability of their current stock volumes and adjust accordingly. In addition to providing visibility into Amazon’s own inventories, it also shows other sources that Amazon ordered from to keep up with consumer demand. This allows for more informed purchasing decisions and greater control over production flow.
Amazon uses a three-tiered forecasting system in order to predict the number of products that will sell.
They have categorized the forecast into P70, P80 and P90 report. These numerical codes indicate how confident Amazon is that this much of a product will sell: 70% for a P70 report up to 90% certain for a P90 one. Because Amazon tends to purchase items at the P70 level, vendors must ensure that their forecast numbers meet this criteria or else be in danger of lost sales.
Net PPM
Net PPM is an essential metric in understanding the profitability of products. By taking into account not only product revenue and COGS but also vendor-funded coop, it provides a comprehensive picture of true margins, rather than merely gross revenues.
This data is especially useful to Amazon since it allows them to understand the actual profits associated with each product, allowing them to better negotiate deals with vendors and make more strategic pricing decisions.
How To Analyze Reports For Business Recovery
Amazon Vendor Central provides valuable insight into sales and purchase orders that can help businesses make informed decisions and maximize their profits. Here is an overview of how to best analyze the data from your Amazon Vendor Central reports:
Step 1: Identify & Interpret Your Most Important Metrics
It is important to identify the most important metrics that relate to your business goals. In this case, following the key metrics we’ve initially discussed would give you a good view of your business.
Step 2: Analyze Performance Changes Over Time
Next, review these metrics over time in order to identify trends or changes in performance. You should look at both long-term patterns, such as changes in average number of orders per month, as well as short-term movements for more immediate feedback.
Fair warning though, the dashboard only lets you filter daily data by day, and snapshots like week-to-date, and month-to-date. It also lacks the flexibility required to perform any kind of customizable time-range reporting.
Step 3: Track Competitors’ Performance & Prices
It is also beneficial to compare your performance with competitors in order to gain an advantage or spot opportunities for improvement. This can be done by analyzing their prices, product selection and ratings, amongst other metrics.
Vendors can truly benefit from the help of professional consultants in this department. Lab 916’s Vendor Consultants take the grunt work of analyzing and leveraging data analytics to pave your business’s way forward.
Step 4: Monitor Keywords & Search Volume Trends
Monitoring keyword search volume trends on Amazon Vendor Central can help you understand what customers are looking for and what they wish to purchase – this will give you valuable insight into how to optimize your listings and provide a better service overall. You may need third-party tools to get accurate data on this one or seek the services of Lab 916 for better Amazon search expertise.
Lab 916 uses a myriad of platform-based and proprietary tools to derive the best keyword and content development strategy for your products.
Step 5: Adapt Quickly To Market Change
Finally, take all the data you’ve gathered, synthesize them and devise an actionable plan so you can stay ahead of these market changes. To ensure that business operations remain competitive and profitable – analyzing key metrics regularly will allow businesses to quickly adapt and make changes when necessary before they become costly mistakes down the line.
In conclusion, being a vendor is no easy task. It requires time, effort and a different level of strategic and analytical know-how to run a successful Amazon Vendor Central business.
While it is not entirely impossible to learn everything on your own, you can skip the learning curve by partnering with Lab 916. Lab 916’s Amazon Vendor Consultancy services can help new and existing vendors identify sales issues with ease and position your business toward recovery.
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