01 September Amazon FBA Coach: Ecommerce Buzzwords and Acronyms
Don’t know your ACoS from your SKU?
Veterans of the Amazon FBA space will tell you: it’s a business of buzzwords. If you’re just getting started, it can be overwhelming to keep track of all the acronyms being thrown around. Our Amazon FBA Coach is here to help with that. By dividing the most commonly used acronyms into four sections, we’ve made it easy to see how each term relates to your business.
This portion of the Amazon FBA Coach is devoted to the transactional side of running your business: payments, turnover, and order values.
AOV (Average Order Value) or ATS (Average Transaction Size)
As you probably guessed from the names, this refers to the average monetary value of customer orders. Sellers using best practices should see this value increasing with time, as customers develop an affinity for your brand and place larger orders of their favorite products, or purchase additional products from your shop.
Brick and Mortar and Brick and Click
Brick and Mortar refers to the physical presence of a business or organization. High street retailers and office buildings that sell to customers face-to-face are examples of brick-and-mortar businesses. Brick and Click refers to the integration of e-commerce and brick-and-mortar shops to allow customers a wider range of delivery methods (shipping to store, reserving items for collection) as well as checking a specific store’s inventory online.
Amazon Hubs are also an example of this – these are lockers strategically placed in high-traffic areas such as shopping malls, that receive and hold packages for customers. Customers are sent a unique code they can use to open the locked compartment at their convenience.
The rate at which specific units of stock (aka SKUs – more on that in a minute) sell, sometimes also referred to as frequency.
POS (Point Of Sale) Systems
These are the systems that process ecommerce transactions. Most solutions like Shopify have these systems integrated for ease of use but are often customizable to allow different payment methods like PayPay, Apple Pay, Google Wallet, or BNPL (buy now pay later) options like Afterpay or Klarna
Amazon’s Fulfillment by Amazon is an ecommerce platform that operates by storing businesses’ stock and covering all handling, packaging, shipping, returns, and customer service. Your business, in return, pays a fee and a percentage of every sale to Amazon.
This part of the Amazon FBA Coach is all about how you present your business to potential customers. This means everything from keywords to getting noticed and how to optimize your advertising spend.
A broad term used for how products are presented and merchandised on either direct-to-consumer (DTC) sites or brand shops on marketplaces like Amazon or Walmart.com.
This covers specific layouts for product detail pages (PDPs) and category-level pages (E.g. Shop All Bedding). Some of these are predetermined by individual marketplaces or influenced by promotional items: free shipping or XX% off individual SKUs.
Sitewide sales and market basket promotions (E.g. Save $50 when you spend $200) also play a part here.
ACoS (Advertising Cost of Sales) and TACoS (Total Advertising Cost of Sales)
In short, this measures the effectiveness of your advertising campaign. The term refers to the percentage of attributed sales spent on advertising. The formula for calculating ACoS is dividing your total ad spend by your total sales.
An Amazon program for sellers that allows you to create particularly rich and compelling item descriptions, including embedded graphics and video.
The Amazon A-Z Guarantee promises buyers a complete reimbursement or cancellation of their authorized payment, should they be unsatisfied with the condition or delivery time of a product from a third-party seller. Customers can file an A-Z claim against a seller, provided they first contact the seller and allow two days for them to resolve the issue. If claims are made, this can be highly detrimental to your business.
Essentially, the number of eyes that view your ad. This is determined by the number of times a page is located or loaded.
A model of advertising in which the seller is only charged for the ad placement when the ad is clicked.
This section of the Amazon FBA Coach looks at the logistical side of your business – stock, storage, and suppliers.
SKU (Store Keeping Unit)
A unique code is used to differentiate different products based on size, color, quantity per pack, etc. For example, if your shop sold towels, hand and bath towels would have different SKUs, as would blue and yellow hand towels, potentially. This allows you to monitor your inventory.
ASIN (Amazon Standard Identification Number)
Somewhat relatedly, this is a unique ten-digit alphanumerical barcode Amazon assigns to every product sold on the platform.
This is buying discounted from brick-and-mortar shops to resell at full price on Amazon.
This refers to a grouping of SKUs that share a supplier or manufacturer. Returning to our towel business analogy, a program for this may contain 6 colorways and include forms like washcloths, hand towels, bath towels, and bath sheets. A candle program may come in forms like various sizes of jars, pillar candles, tapers, and wax melts.
Inventory Carrying Cost
This refers to the costs of inventory storage and maintenance over time, including potential fees from Amazon FBA for slow-turning inventory.
Inventory Velocity/Time to Market
This is the time that elapses from sourcing and/or receiving raw materials to when the finished, assembled product is available for sale.
A broad term used to describe companies your business might source products or raw materials from, as well as packaging materials.
This refers to the box located on the side of a product’s detail page, that lists the price and shipping options. This is the go-to spot for customers to make a one-click purchase, and the seller featured in the buy box will likely make the lion’s share of sales on that product. For this reason, your business should always be working to win the buy box spot.
The final segment of the Amazon FBA Coach is all about being proactive: what concepts do you need to be aware of to ensure your business has the best shot at success?
Market Basket Analysis
This term is related to AOV but gets more granular in terms of which SKUs are ordered in tandem with each other or which SKUs are added in tandem with others. Ideally, this analysis presents opportunities for bundling or selling items packaged assets, so it’s useful for understanding how to successfully upsell to your customer base.
Amazon IPI (Inventory Performance Index)
This is a metric to determine your inventory performance over time. Your IPI score reflects how successfully you’re managing your FBA inventory.
COGS (Cost Of Goods Sold)
The value of goods sold over time. Essentially, how much you paid for your stock. It’s useful to always have this number on hand for accounting.
Amazon FBA Strategy
As you move through the FBA space, these terms and acronyms will quickly become part of your day-to-day vocabulary. This Amazon FBA Coach is a great reference to return to if you ever need a refresher.
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