Understanding Order Acquisition Cost

OPEN IMAGE IN ” Open image in new tab”.

Order Acquisition Cost = Cost Per Click / Conversion Rate

Understanding Order Acquisition Cost in any eCommerce business is instrumental to profitability, be it On-Amazon or Off-Amazon.

As long as your Order Acquisition Cost is below or equal to your Profit Margin, the search term (advertising campaign) is fruitful.

Lets say a product is priced at $20 with a profit margin of 25% ($5). As long as your OAC is equivalent to $5, you are breaking even.

If its more than $5, the search term (advertising campaign) is not profitable.

If its lower than $5, its a profitable search term (advertising campaign) to keep working on.

This very important Metrics is missing in Amazon Advertising Reports, so if you want to make it possible for you to know if search term is profitable at a glance, manually add this metrics at the end of your Search Term Report and see if a certain search term breaks even or is profitable.