Amazon Vendor Central — The KPIs That Define Your 1P Business Health

Vendor Central: a complex retail model full of insights

Operating on Amazon Vendor Central means working within an ecosystem that is fundamentally different from the Seller (3P) model.
Here, Amazon acts as a direct retailer, purchasing from the brand and handling resale to the end customer.
This offers advantages in terms of volume and visibility, but reduces control over pricing, margins, and promotions.
For this reason, accurate KPI (Key Performance Indicators) measurement becomes essential to maintain a balance between growth and profitability.

In the current context—where Amazon is streamlining the number of active vendors and rewarding performance—knowing how to read Vendor Central data is not a bonus; it's a necessity.

1️⃣ Net Receipts and Shipped COGS—your compass for real revenue

The first indicator to monitor is the difference between:

• Ordered Revenue: the total value of purchase orders issued by Amazon.
  
  

• Shipped COGS (Cost of Goods Shipped): the actual value of products shipped.
  
  

• Net Receipts: the final amount collected, after shortages, cancellations, and returns.
  
  

A delta greater than 5–7% between ordered and shipped indicates operational inefficiency or misaligned forecasting.
Monitoring this metric helps understand how much of the potential sales turn into actual revenue—and how much is lost along the logistical or contractual chain.

2️⃣ Shortage Rate—the most underrated (and costly) KPI

The Shortage Rate measures the difference between what Amazon claims to have received and what the vendor claims to have shipped.
A shortage rate above 2% is considered abnormal.
Every unresolved shortage means lost credit, but also a reduction in the vendor's reliability score.

In 2024, Amazon introduced stricter controls on dispute windows (up to 24 months) and the traceability of shipping documents, prompting companies to structure internal audit processes.
In a performing account, proactive shortage management can recover up to 3–5% of annual net revenue.

3️⃣ Net PPM (Pure Product Margin)—the real economic health indicator

The Net Pure Product Margin is the actual operating margin after discounts, deductions, and program costs.
Many brands look at Vendor revenue, but few calculate the effective margin.
The Net PPM considers:

• MDF (Marketing Development Funds)
  
  

• Contra-COGS
  
  

• Co-op Advertising
  
  

• Freight Allowance
  
  

• Chargeback & shortage adjustments
  
  

A PPM below 5% indicates an unsustainable business in the medium term, even if sell-in is high.
In a 1P model, profitability is not built on sales, but on governance of contractual conditions.

4️⃣ Sell-Through and Demand Forecast Accuracy—measuring market speed

Amazon constantly measures stock turnover (Sell-Through Rate) and the alignment between your forecast and actual demand (Forecast Accuracy).
A sell-through below 70% or a forecast accuracy below 80% reduces the likelihood that Amazon will increase reorder volumes (POs).
In other words, the more accurate your prediction data, the more your brand is considered “reliable” by the Vendor system.

Brands with high rotation, accurate forecasts, and healthy stock benefit from greater visibility in campaigns and replenishment algorithms.

5️⃣ Net Received Defect Rate and Chargebacks—the dark side of margin

Chargebacks related to packaging, labeling, routing, and timing are among the most impactful hidden costs for vendors.
A Defect Rate > 2% can translate into thousands of euros of unforeseen annual losses.
For structured brands, control of these KPIs involves continuous technical monitoring of feeds and the supply chain, often automated through internal APIs and dashboards.

6️⃣ Sell-Out and Market Share—the metric of external performance

Vendor Central provides visibility on sell-in, but not always on sell-out.
The most advanced brands cross-reference Amazon data with external analytics tools or proprietary dashboards to measure market share and compare results with competitors in the same category.

Having a clear picture of how and where demand is generated allows for precise planning of pricing, availability, and advertising investments, avoiding solely reactive strategies.

7️⃣ COOP, MDF and Program Fees—costs or strategic levers?

Often perceived as “contractual burdens,” marketing contributions and cooperative expenses can become negotiation tools.
An annual review of agreements, based on data and performance, can reduce the total cost impact by up to 5%, freeing up resources to reinvest in visibility or catalog optimization.

A model requiring governance, not just sales

Vendor Central is a powerful, yet complex platform:
it's not enough to sell; you need to govern.
Each KPI is linked to the others: a logistical error impacts margin, a compressed margin reduces investment capacity, and an incorrect forecast limits automatic reorders.

Managing a Vendor account is not just a commercial activity, but an analytical discipline that combines supply chain, finance, and operational marketing.
Brands treating Vendor Central as a retail channel experience its complexity;
those managing it as a data structure maximize its potential.

In summary

Vendor Central remains a strategic channel for structured brands, but sustainability doesn't depend on order volume—it depends on KPI control.
Only constant monitoring of shortages, margin, sell-through, and compliance can transform a retail relationship into a measurable and scalable asset.

In a marketplace that measures everything, the difference between “selling” and “performing” is encapsulated in a dashboard.