Amazon Best-Seller Rank is Revenue-Based

Amazon ranks every one of the hundreds of millions of products that are sold through its websites (How Many Products Does Amazon Sell?). Each one of those products is allocated to a department, such as Clothing, Toys, Baby, or Grocery, and every product that has sold at least one unit is ranked from 1 downwards within that department.

Amazon also maintains for product categories and subcategories within each department. The Amazon best-seller rank appears in the Product Details or Product Information section of each product detail page on Amazon.com, usually the fourth or fifth section down from the top.

Today the top-ranking New Zealand product on Amazon.com is novel “The Luminaries,” winner of the 2013 Man Booker Prize.  Right now it’s ranked as the #23 literary fiction title and #59 overall in the entire Books department.

The Luminaries best-seller ranking on Amazon.com

This is an extraordinarily good ranking; there must be good sales occurring today to achieve a ranking in the top 1,000 of the 700,000 literary fiction titles offered on Amazon, let alone the top 100.

Mumi&Bubi Solids Starter Kit

In Amazon’s Baby department the top ranking New Zealand product right now is the Mumi&Bubi Solids Starter Kit, one of the products exported to the USA with World Wide Access. Today it’s ranked #363 amongst the half-a-million products in Amazon’s Baby catalogue, and #9 in its specific product subcategory.

Solids Starter Kit Amazon sales rank

How are Amazon best-seller rankings calculated?

How are these best-seller rankings determined, and what do they mean?

Amazon doesn’t disclose exactly how the ranking is calculated, and I imagine the method of calculation changes from time to time, but we can deduce the main factors affecting the ranking by careful observation. Certainly the rankings are recalculated frequently and can change hour-to-hour.

Based on four years monitoring products we export to the USA and sell through Amazon, I can confidently state that the Amazon best-seller rankings are determined by sales revenue, that is price multiplied by number of units sold. Not total revenue per se, but a composite of revenue within the last few hours, within the last few days, and historically.

The most recent sales carry by far the most weight; a product that is selling quickly today will outrank a product that might have sold more last year, last month or last week.

Revenue is more important than units sold.”

I have two examples to substantiate my assertion that Amazon’s best-seller ranking is revenue-based.

Example 1: Two products, same number sold, different ranking

Product A and Product B are both in Amazon’s Baby department. As importer, we are the sole seller on Amazon which means we know the precise number of units sold and the prices at which they sold.

Product A sells for $12. Product B sell for $24. For any given number of units sold, Product B generates twice as much revenue.

Today, in a happy coincidence for this experiment, we’ve sold the same number of units of Product A and Product B, and we’ve sold the same quantities of each in the past couple of hours. Amazon’s product detail pages report Product A ranked at #921 in the Baby department. Product B, with the same number of units sold and twice the revenue, is ranked at #552 in the Baby department, 369 places higher on the list.

This shows that sales revenue is more important than units sold in determining the Amazon best-seller ranking.

Example 2: Two products, one selling now, one sold out last year

Product C and Product D are two colours of the same product, selling at the same price, and classified in the same subcategory within Amazon’s Clothing & Accessories department.

Product C sold 720 units between 2009 and the first part of 2011. In  early 2011 it sold out, the product is no longer manufactured in that colour, and there have been no sales on Amazon in the past 18 months.

Product C appears at #94 in the Best Sellers list for its subcategory. This shows that historical sales count in determining the Amazon best-seller ranking.

Historical sales count.”

Product D is the same product in a new colour that was introduced earlier this year. It has sold 210 units to date, 50 of those last month and 30 so far this month, including four in the last 24 hours.

Product D appears at #5 in the same Amazon Best Sellers list that carries Product C at #94, even though Product C has sold more than three times as many units and generated more than three times the revenue.

This shows that recent sales are much more heavily-weighted than sales in prior periods in the calculation of the Amazon best-sellers rank.

Recent sales count more.”

Anecdotally, sales revenue in the past few hours is the single most significant factor determining the ranking. On that basis, the top-ranking items on Amazon’s best-seller lists are snapshots of what’s generating the most sales revenue right now, and can be affected by brief spikes in popularity.

The ‘real’ best-selling products show consistent high rankings over weeks, months and years.

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