Today’s post is a guest post by Izabella de Souza of Appeagle – am Amazon repricing service.
Leveraging Sales Rank to Formulate Amazon Selling Strategies
By Izabella De Souza of Appeagle
Selling on Amazon is a marathon, not a sprint. There are numerous factors and idiosyncrasies that play into selling effectively online, and it can take years to acquire all of the expert-level knowledge that’s out there. When deciding whether an item is worth the investment to sell on Amazon, sellers often factor the item’s existing sales rank into their decision.
Sales Rank Defined
As defined by Amazon, sales rank refers to the current selling performance of an item. A lower sales rank (higher numerical value) indicates a drop in sales for an item, while a higher sales rank (lower numerical value) denotes higher, more active sales for an item. Amazon doesn’t disclose its algorithm, but we know the retailer updates an item’s sales rank every hour in their effort to reflect recent sales trends and maintain a current ranking system. The idea of sales rank sounds simple enough, but much like selling online in general, there are complex elements that go into understanding the full scope of sales rank.
What Does Sales Rank Really Mean
Many sellers have a hard time grasping the true notion of sales rank. Some may believe it is a cumulative representation of a product’s sales standing overall, while others consider it a permanent grade that doesn’t change. In layman’s terms, sales rank can be thought of as representing sales velocity or the duration of time since the item was last purchased. A product’s sales rank will begin to rise until it sells again. The longer the period of time between sales, the higher that product’s sales rank will be. When a new sale for the product occurs, the sales rank drops—often significantly.
Sellers tend to either overemphasize or ignore sales rank. Sales rank shouldn’t be ignored because its data that comes directly from Amazon—which is hard to come by. Amazon is very selective in sharing data and anything that the marketplace provides should be taken into account. However, while sales rank provides valuable data, it only represents a product’s most current standing—not a history of the SKU’s sales position which should also be weighed.
Some sellers think that product reviews can be used to measure sales rank accuracy. The idea is that a greater number of reviews denotes a precise sales rank, while little to no reviews represents the opposite. This is incorrect. While both reviews and sales rank can technically be manipulated—reviews by sellers posting fake evaluations, and sales rank by sellers placing fake orders—reviews and sales rank still do not correlate even when neither is manipulated. Additionally, a manipulated sales rank will return to its true value over time while reviews will not.
Much like with product reviews, many sellers may be under the impression that stock quantity affects sales rank. This misconception is derived from the idea that if a seller has many of an item in stock, it may be likely that the item’s sales are infrequent. Because of all the factors that contribute to every individual seller’s replenishment methods, this is an arbitrary argument that does not contribute to sales rank at all.
Category Is Everything
One of the most important factors to recognize about an item’s sales rank, is that it is entirely relative to other items in that product’s category. In highly saturated categories like Health & Personal Care or Home & Kitchen, a higher sales rank means less competition for sales. Likewise, in a category less inundated with SKUs—such as Electronics or Jewelry—a lower sales rank can mean the opportunity for sales, but with much stiffer competition.
Paying close attention to popular sub-categories is also important. There is a general sales rank among parent departments and depending whether or not a product can be found in different sub-categories, the sales rank may change. Sales rank ties directly into search in the sense that even a good rank in a sub-category is only useful if that is how people are searching for an item. So while the fixed blade knife you’re selling may rank high (#33) in the sub-category of Hunting Knives, it can rank a bit lower (#89) in a sub-category like Knives & Tools, and much lower (#3,212) in the parent category of Sports & Outdoors.
Finding the Balance
With so many factors influencing sales rank, it can be difficult to decide how best to weigh the components that affect sales rank. We’ve compiled a checklist to help eliminate some confusion…
- Understand Which Department/Sub-Categories Your Products Fits In. As mentioned, depending on the item’s department or sub-category, the sales rank can mean different things. The nature of your product will determine whether or not the parent department sales rank or the sub-category sales rank should be weighed more heavily.
- Know Your Budget. What really matters is your decision to risk selling with high competition (low sales rank) and perhaps making a smaller profit, or with low competition (high sales rank) and maybe not making a sale. Deciding how much of your own money you have to spend on inventory for a specific SKU should be your ultimate deciding factor.
- Use Google Trends to Gauge Public Interest. If an item has a high sales rank in a saturated department or category but you still wonder if there’s a market demand for it, you can use Google Trends to see if people are searching for that particular item. Google Trends will show recent search results, as well as results spanning years back and regional interest. In other words, if you’re an international Amazon seller and you see that the item in question is not popular in the U.S. but is widely sought after in Europe, you may choose to list it on Amazon France, Germany, Italy, UK or Spain.
This is one of the best explanations of sales rank I have seen. After reading this I felt like I had a college course in Sales Rank 101. If you are interested in learning about Appeagle’s’ repricing service, please click here.
If you would like to learn how to sell on Amazon professionally, please read about The Complete Amazon Marketing System – it’s a two volume training program that covers all aspects of learning how to sell like a pro on Amazon.