Cracking the Code on Amazon Sales Rank

Sales Rank is among the most misunderstood yet important elements of selling on Amazon. You scan a book. It’s ranked 700,000. How much information can you learn from this number? You can extract more meaning from it than you think…

(This post is a condensed adaptation of the Sales Rank module in my extensive video course, Amazon Altitude – Bookselling Masterclass.)

Begin:

Cracking the Code on Amazon Sales Rank

Among the biggest mistakes I see Amazon sellers make is misunderstanding sales rank: Either ignoring it altogether, or overemphasizing its role in buying decisions. I wrote this article to get down to the question of sales rank: What it is, what it’s not, and how to interpret it accurately for maximum profits.

The Definition of Amazon Sales Rank

For every category (excluding, for some reason, many consumer electronics items), there is a number in the product description called “sales rank” that aims to capture an item’s popularity.

I can define Amazon sales rank in one sentence:

“The period of time since an item last sold.” 

That’s it.

What does that mean? It means that starting from one hour after an item sells, its rank will start to rise until it sells again. The longer the gap between sales, the higher its sales rank grows. When the product sells again, it will drop significantly and then begin to rise again an hour later.

And with books steadily ranked better than (roughly) 150,000, sales rank translates to:

“The number of units an item sold that day.” 

Amazon does not disclose their algorithm that determines sales rank. This article shows how I interpret that number using other information on Amazon.

The sales rank “safety zones” for each category.

I’ll give most of my focus here to interpreting sales rank for books and media, but I made a chart (the free book at this link contains an updated sales rank chart) to help Amazon sellers of all products answer this question: Should I buy, or should I pass? Or more accurately: Is there a demand for this product?

To make this chart, I calculated the top 1%, 5%, and 15% in sales rank for each category. Once you decide your comfort zone (Are you risk tolerant? Risk averse?), you can use this chart to know at a glance if a potential purchase likely to sell sooner, or much later.

For example, the top 1% is safe territory in any category. You can read from the chart that a sales rank better than 15,000 in Patio / Lawn / Garden is in the top 1% (at least at that moment), and buy with comfort knowing it will almost certainly sell.

What’s important is to have a buying formula that works and stick to it. When I’m out sourcing, I don’t like pausing to make small decisions hundreds of times throughout a day. I like to know the numbers I need to see on my scouting app if I’m going to buy, and then go on autopilot.

That’s where your formula comes in: Are you going to be a risk tolerant buyer, and purchase items outside the top 10% (or outside the top 30%)? Or play it safe every time, aim for quick turnover, and keep it in the top 1%? That’s where this chart comes in. Know your target percentage bracket, know the sales rank you need to see in each category, and go to work.

How I made the sales rank chart

The formula for arriving at the numbers in this chart was simple:

1. On Amazon, I used the drop down menu to select a category.
2. In the search field, I entered “[]” and hit “Search.”
3. The number of results is the number of items for sale in the category.
4. From there, I determined the top 1%, 5%, and 15%.

You can print these out and keep them in your wallet (or just memorize them) so you have a quick reference for interpreting sales rank when you’re “in the field.”

Wait: It gets complicated.

How can this chart mislead you? Here’s how: The top 10% in Books means something entirely different than the top 10% in Grocery. We’re going to look at some familiar categories to illustrate.

Amazon has listings for:

• 1.5 million movies (VHS and DVD);
• 7 million CDs, cassettes, and vinyl.

Calculating the top 10% of products selling in these categories brings us to these rankings:

• 150,000 in movies;
• 700,000 in music.

This is where it gets complicated. I know I sell a lot more movies ranked worse than 200,000 (outside the top 10%) than CDs ranked 200,000 (inside the top 5%). I read this as Amazon simply selling a lot more movies than CDs, which makes a lot of sense. This is an example of how relying on a sales rank “safety zone” can be deceiving. Some sellers might fight me on this point, but in most instances I wouldn’t touch a CD ranked 700,000, but never hesitate to pick up a DVD ranked 150,000.

A book ranked 100 on Amazon could be selling 500 copies a day. However a case of vegan raw food bars ranked 100 could be selling 75 units a day. Different categories, different sales volumes, same rank.

The same holds true for percentage brackets. The top 0.01% selling DVDs on Amazon might average 200 units a day. In Lawn & Garden, that same 0.01% bracket might average 20 units. People buy more DVDs than garden hoses. Pretty simple.

How relying on sales rank alone can be deceiving.

There is debate about how much sales rank should factor into a buying decision. On one end, those who say that the only thing that matters is your profit margin, meaning if a book costs 25¢ and it’s going for $25 on Amazon, they’re buying it — even if the sales rank indicates it hasn’t sold a copy in five years. On the other end are those who need solid proof a book is in heavy demand before they’re spending one cent, no matter if a book is selling on Amazon for $500.

What do I think? Operating in either extreme is just a function of laziness. Particularly in books and media, there is a (somewhat subjective) formula you can apply to determine if a book has a small but steady niche demand, or it is merely obsolete. It’s not all left to the whims of “the market.” By asking a series of questions one can ask to assess if that copy of “Algorithmic Architecture” ranked 3.2 million is just steadily selling one copy a year, or is so irrelevant it will literally never sell another copy for the rest of time.

I developed eight factors I use to separate the obscure and valuable from the merely obsolete. Going into that formula may be outside the scope of this post, but the message here is: Sales rank isn’t everything. Look at ALL of the available evidence to make a determination as to the potential for an item to (eventually) sell.

How I was a victim of sales rank myths for years.

I started out selling books on Amazon very part time in 2007. For literally the first four years I considered any rank worse than 500,000 to be the black abyss of sales into which books would vanish and never be seen from again. Fact was, I didn’t know how to interpret that number, and how often a book ranked 500,000 was actually selling.

This myth was reinforced by most of what I’d read, which advised not to touch anything ranked beyond 1 million at the absolute worst, if not 500,000.

The reality check came when I started a small side business publishing. This allowed me to see exactly what a sale of a single copy did to sales rank, and track exactly what one, two, and three days without a sale did. What I learned was mind blowing.

A single sale will cause any book to jump to a sales rank of approximately 130,000. Maybe 70,000, maybe 150,000. Two sales in a day will bring it up to around 30,000. The actual rank can be on either end of these estimates, depending on how many other books have sold that day on Amazon.

None of what I publish sells well enough for me to be able to offer personal tes­timony beyond what two copies sold in a day translates to. But the available info says that a book ranked steadily at 5,000 is selling about 11 copies per day. A book with a steady rank of 100,000 is averaging a little more than one copy per day.

After a sale, the rank starts its downward decline. If no other copies sell, the next day the rank will be approximately 250,000. After two days, the rank will hit somewhere around 400,000 (again, ballpark figures here).

Most Amazon sellers still believe in the “sales rank abyss” I spoke of, and put it somewhere around 1 million. As in: “Anything ranked worse than 1 million will never sell and is a waste of your time.”

If 500,000 means that a book sold three days ago, what does 1 mil­lion mean? Keep in mind almost none of the Amazon literature I read will advise you to buy books ranked worse than 1 million. Let’s take a closer look. How long ago did a book ranked 1 million sell?

Have a seat.

A book ranked 1 million sold about ten days ago. That’s it.

Picture holding two books. According to your scouting app, the book in your right hand has a rank of 100,000. The book in your left, a rank of 800,000. Both will cost you 50¢, and sell on Amazon for $10. Most sellers would run to the counter with the 100,000-ranked book. Most would pass on the 800,000-ranked book. But the only thing that separates them is about five days.

The folly here is that there is no such thing as “a book ranked 100,000” or “a book ranked 800,000.” There are only books with those ranks at that moment. That 100,000 book could be 800,000 in a week. And that 800,000 book could be 100,000 in five minutes. Sales rank only tells you one thing: How long it’s been since an item last sold.

In conclusion

This is a brief look at demystifying sales rank. Both ignoring and being a slave to sales rank will hurt you as an Amazon seller. Print the charts, study them, then read the feedback (as expressed in your sales) to know what works for each category.

Endnote I

To oversell my point, four weeks ago I sent in a shipment of 110 books (salvaged from a university library dumpster) with an average sales rank of 4 million (only four were ranked better than 2 million). From this shipment, I’ve sold four books in four weeks – books that most sellers will tell you “will never sell.”

Endnote II

Two places to learn more about Amazon sales rank:

1. An updated (for 2017) version of the sales rank chart can be found in my (free) book Online Book Arbitrage.
2. I dedicate an entire video to decoding sales rank in my massive Amazon bookseller training, Amazon Altitude.