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Understanding the intricacies of Amazon’s algorithm can feel a little bit like playing Indiana Jones in a blockbuster Hollywood movie. It certainly has the power to create similar riches. Once you decode Amazon’s algorithm, you’re better able to boost your product rankings and increase sales.

However, several aspects of this algorithm aren’t very well understood. In this post we’re going to look at 10 lesser-known facts about the Amazon algorithm that every seller should be aware of.

1. Amazon’s Algorithm is a Moving Target

Amazon’s algorithm is a dynamic and intricate system designed to provide the best possible search results for customers. It is not a static formula that one can master once and use indefinitely. This means that the factors determining product rankings today might not hold the same weight tomorrow.

Amazon’s algorithm was long titled A9. In the last year there have been more than a few posts celebrating Amazon’s new A10 algorithm. Even though Amazon never officially released a new algorithm designation, this much is true; the Amazon algorithm is continually changing and those changes are based on a number of variables. 

One of the most influential among these is user behavior. The algorithm learns from how customers interact with the platform – what they search for, which products they view, what they buy, and even what they don’t buy. For instance, if customers consistently click on lower-priced items in their search results, the algorithm may begin to favor more competitively priced products in its rankings. 

Similarly, if a certain product gets more clicks and purchases, the algorithm will rank it higher.

Besides user behavior, changing market trends also contribute significantly to the evolution of the Amazon algorithm. These trends might include seasonal demands, new product launches, shifts in consumer preferences, global events, and more. 

For example, during the COVID-19 pandemic, there was an unprecedented surge in demand for home workout equipment and remote work tools. Recognizing these trends, the algorithm adapted to prioritize such products in search rankings.

2. Stock Availability Matters

Inventory management is an underrated aspect of mastering Amazon’s algorithm. Many sellers overlook its significance. It’s easy to overly focus on higher visbility areas like product listings, customer reviews, and sales performance. However, inventory levels play a crucial role in determining how the Amazon algorithm positions your product.

Amazon’s product search tool – their algorithm – has the primary objective of enhancing user experience by matching customer searches with relevant, high-quality products. An integral part of this process is ensuring that the products displayed in the search results can meet the demand of customers. 

This is where inventory levels come into play.

If your product constantly runs out of stock, Amazon’s algorithm perceives this as a potential shortfall in your ability to satisfy customer demand. The algorithm is designed to minimize the risk of showing a customer a product that they can’t purchase due to lack of availability.

That’s not going to make anyone happy. 

3. Sales Velocity Counts

Sales velocity is a critical metric in the world of Amazon selling and functions as the heartbeat of your product’s overall performance. It signifies the rate at which your products are sold during a specific period and provides a snapshot of how well your product is performing in terms of sales in the marketplace.

Let’s imagine two products, both with impressive ratings and a host of positive reviews. If one of them is being sold at a faster pace – it has a higher sales velocity. Amazon’s algorithm tends to favor items with higher sales velocities, as they’re indicative of high customer demand and satisfaction. Because of that, the product selling more quickly has a better chance of ranking higher in search results, leading to greater visibility and potentially more sales.

Promotions, discounts, Amazon product “bundling” and PPC campaigns are all strategies that sellers use to get their new products up to speed quickly. 

4. Impressions and Click-Through Rates Add Up

While sales are undeniably important in the Amazon marketplace, they’re not the only factor the algorithm takes into account when ranking products. Impressions and Click-Through Rates (CTR) are two vital metrics that play a significant role in how your product fares in Amazon algorithmic battles.

Impressions refer to the number of times your product listing appears in Amazon search results or other places on the platform. Each time a customer sees your product listed, that’s counted as one impression. However, an impression doesn’t mean the customer interacted with your product listing – they may or may not have clicked on it.

This is where CTR comes into play. CTR is the percentage of impressions that lead to a click on your product listing. Essentially, it shows how often people who see your product end up clicking on it. It’s a direct measure of how attractive or compelling your product listing is to potential customers.

Both these metrics are crucial because they help Amazon gauge the appeal and relevance of your products. A product generating a large number of impressions indicates that it’s showing up frequently in searches, which is a positive sign. However, if these impressions are not translating into clicks – if you have a low CTR – it may signal to Amazon that your product isn’t aligning with what customers are searching for or that your product listing isn’t compelling enough to encourage clicks.

5. Reviews (Really) Matter

OK, this might not be a complete surprise, but customer reviews continue to play a pivotal role in Amazon’s ranking algorithm. According to a lot of ecommerce pros, with its most recent update, Amazon has doubled down on its use of customer reviews as a measure of a product’s popularity and quality. 

It’s simple. Products with a high number of positive reviews are seen as reliable and well-received by customers, making them more likely to be placed higher in search results. A steady stream of recent reviews can also boost a product’s ranking, as it shows consistent customer engagement and satisfaction.

However, it’s not just about the quantity of reviews; the quality also matters. Amazon’s algorithm takes into account the average star rating of your product reviews. A product with a high average rating is perceived as superior in quality and is more likely to rank higher. Negative reviews or a low average star rating can hurt your ranking. 

Reviews that are marked as “helpful” by other customers carry more weight in the ranking algorithm. Focusing on customer satisfaction to garner positive, high-quality reviews is crucial for sellers aiming to improve their product rankings on Amazon.

6. Amazon Pays Attention to Seasonality

Seasonality is a fundamental aspect of retail and Amazon’s algorithm isn’t ignoring its effects. The algorithm understands that product demand fluctuates throughout the year based on various factors such as holidays, weather, events, and more. These insights are reflected in how it ranks products in search results.

Let’s say that you’re selling Christmas decor. Even if your product isn’t a top-seller throughout the rest of the year, the algorithm acknowledges the seasonal relevance of your product. As the holiday season approaches and customer searches for Christmas decor surge, your product may witness a significant rise in its ranking.

However, this seasonal bump in ranking is not automatic. You still need to do the work to ensure that your product listings are optimized to take full advantage of the seasonality factor. This includes using seasonal keywords in your product title and description, updating your product images to reflect the season, and maintaining a sufficient stock to meet the increased demand.

7. Shipping Performance = Selling Efficiency

Selling a product on Amazon can seem like a pretty straightforward affair right up until the point where the product doesn’t make it to its intended destination. 

Not only making the sale, but also efficiently delivering the product to the customer AND managing any subsequent returns or issues is a measure of your overall operational excellence.

It’s also of critical importance to Amazon’s algorithm. 

That’s why the efficiency of your fulfillment process should be an essential element of your Amazon selling strategy. 

One way Amazon measures this efficiency is through the Order Defect Rate (ODR). The ODR is a crucial metric that includes factors such as negative feedback, A-to-Z Guarantee claims, and credit card chargebacks. Essentially, it’s an aggregate measure of the orders that have had issues and is expressed as a percentage of your total orders.

Negative feedback is when customers express their dissatisfaction with either the product or the buying process. A-to-Z Guarantee claims occur when a customer files a claim stating they never received the product or received a product that was different from what was described on the listing. Chargebacks are instances where a customer disputes a charge with their credit card company.

8. The Impact of External Traffic

Amazon’s ecosystem is so omnipresent and powerful, it’s sometimes easy to overlook the extent to which Amazon itself values traffic from OUTSIDE of their own ecosystem. This includes visitors from social media channels, blogs, affiliate websites, email marketing campaigns, or any other online platform that drives traffic to Amazon. 

The reason behind this preference doesn’t really have to do at all with Amazon’s willingness to share the spoils of e-commerce with competitors. Instead, it has to do with Amazon’s drive to continually expand its customer base and enhance its overall growth.

When you direct traffic from external sources to your product listings on Amazon, you’re essentially introducing new customers to the platform who may not have otherwise shopped there. These new customers can increase Amazon’s overall reach and market share, something Amazon values highly. As such, the Amazon algorithm considers sellers who bring external traffic as positive contributors to its platform.

9. Another Reason to Embrace Amazon Advertising

What does Amazon advertising have to do with Amazon’s algorithm? 

Pay-per-click (PPC) advertising on Amazon is a very influential factor playing a significant role in Amazon’s ranking algorithm. When you bid on relevant keywords, you can make your products appear higher in search results. That’s going to lead to increased visibility and potential sales.

Amazon PPC doesn’t just boost visibility; it also influences the algorithm indirectly through sales velocity. As your product receives more clicks and subsequent sales from your PPC ads, it increases your product’s sales velocity—a critical factor in Amazon’s algorithmic equation. 

This can lead to a positive feedback loop: the more your sales increase, the higher your organic ranking becomes, leading to even more sales. Furthermore, PPC ads can help drive external traffic to your Amazon listings, as mentioned above, it’s another factor that Amazon’s algorithm values highly. 

10. Amazon Wants to See Unique Content

With over 9.7 million Amazon sellers across the globe, it’s no surprise that Amazon favors sellers that are willing to take the extra step to create unique content. 

It’s no surprise then that Amazon’s algorithm appreciates – and rewards – unique and comprehensive product descriptions. A well-detailed, SEO-optimized product listing can help your product rank higher. Moreover, the usage of high-quality, unique images can further influence your rankings positively.

That’s where Amazon A+ Content comes in. 

Amazon A+ Content feature offers a powerful tool for sellers to create more unique and engaging listing content. A+ Content allows sellers to add richer product descriptions with high-resolution images, comparison charts, videos, and more. 

This feature can help showcase your brand story and product features in a visually compelling way, making your listings stand out from the competition. More importantly, Amazon A+ Content can enhance the overall shopping experience by providing more informative and appealing content, which can lead to higher conversion rates, increased customer trust, and improved product rankings on Amazon’s search results. 

(A+ Content is only available to sellers enrolled in Amazon’s Brand Registry)

Amazon’s Job #1 is Customer Satisfaction 

Understanding Amazon’s algorithm might seem like an impossible task. However, by gaining insights into these lesser-known aspects of the algorithm, you should be able to more effectively strategize and boost your product rankings. 

Amazon’s job #1 is always going to be customer satisfaction. That’s also the goal of Amazon’s algorithm. As a seller, aligning with this goal through quality offerings, customer service, and strategic planning is going to make everything else you do on your ecommerce journey just a little bit easier. 

That’s also why Canopy Management is hyper focused on our own Partners’ satisfaction. If you’d like to get a better understanding of why Canopy Partners achieve an average 84% profit increase, reach out to one of our team members here.  

Canopy Management is a full-service marketing agency for Amazon and Walmart sellers. Our team consists of former Amazonians, multi-million dollar sellers, and award-winning experts. 

When you consider the many ways that Canopy Management can help you grow your business, you’ll see why selling on Amazon is much easier “under the Canopy.”

• Strategic Growth Planning
• Listing Copywriting Optimization
• Listing Photography
• Product Videography
• Advertising Management
• Customer Service
• Demand Side Platform (Amazon DSP)
• Amazon Posts
• Full Service Management
• Amazon Review Aggregation