If there’s one thing all Amazon sellers should be concerned with, it’s the Order Defect Rate (ODR). This metric is one of the most important measurements tracked by Amazon, used to gauge your health as a seller.
It can determine who will win (or lose) — the all-important Amazon Buy Box.
It sometimes gets accounts deactivated.
It always keeps tabs on which sellers are providing positive consumer experiences — and who’s failing to meet consumer expectations.
It’s strict and scary, but not at all impossible to master. Once you have a strong understanding of how the Amazon Order Defect Rate works, it can become remarkably easy to excel at this all-important metric.
Here are the basics that every seller needs to know:
How does the Amazon ODR work?
Your Order Defect Rate is used by Amazon to measure your performance based on the percentage of orders that receive negative feedback. It’s calculated using three components:
- Your A-to-z claims, which are made by consumers when orders are unsatisfactory or delivery is too slow
- Any negative feedback, including comments and ratings
- Your credit card chargebacks, or the number of times you refund orders
These three factors come together to determine your overall Order Defect Rate. Amazon takes into account your A-to-z claims, negative feedback and credit card chargebacks, and then divides it by the total number of orders during a given 60-day period.
So if you received one A-to-z claim and two negative customer feedbacks across a total of 100 orders placed in June, your ODR is 3%.
Which, for the record, is far too high. To continue selling on Amazon, sellers have to maintain an ODR under 1%.
However, there is a bit of silver lining. Any time you receive one A-to-z claim and one negative feedback for the same order, these are counted as one factor; not two. So if you notice a slight difference between your ODR and the total number of A-to-z claims and customer feedback, it’s likely because the same consumer made an A-to-z claim shortly before posting negative feedback.
Still, each piece of negative feedback is one more claim you can’t afford.
Breaching that 1% threshold is more than a little treacherous. So before we dig into strategies for improving your ODR, it pays to understand what makes this single metric so critical.
What happens if your ODR reaches 1%?
First, you lose the Buy Box automatically for any products you’re responsible for shipping. Amazon’s goal is to protect the consumer experience and preserve buyers’ trust in the Buy Box. If your orders are faulty, Amazon’s reputation is at risk.
Second, Amazon can suspend or terminate your account straight away, holding payments in order to refund customers. Amazon is very strict on Order Defect Rates, so your relationship with Amazon is at risk the moment your ODR reaches 1% — no matter how big or successful you are.
Suspensions occur when your Order Defect Rate is slightly above 1%. After seller privileges are removed, you have 17 days to come back with a plan of action to be reinstated.
But if your ODR is dramatically above 1%, Amazon views it as an indication that serious issues are at play — things like excessively late deliveries and numerous cancellations, which have a direct impact on how consumers will view the marketplace itself.
This is why that 3% we mentioned earlier could be more than a little catastrophic. Instead of a temporary suspension and appeals process, your account could be terminated altogether.
How should you monitor ODR?
If you’re using ChannelAdvisor’s Amazon Dashboard, you can review your performance at any time by looking at Marketplaces > Amazon: Overview in ChannelAdvisor. The Order Defect Rate is shown on the right, below your Amazon Seller Reputation.
You can also monitor your “performance over time” trailing 12 months, in both percentage and value. Because this is how Amazon monitors your performance, it’s a valuable way for sellers to understand exactly how they’re viewed by Amazon.
How can you improve your Order Defect Rate?
While there’s a wide range of marketing, selling and fulfilling activities to consider, a couple of key elements will always be at play when it comes to your Amazon Order Defect Rate.
First, assess and address feedback. We strongly recommend carefully reading ALL A-to-z claims and customer feedback — the primary drivers of your ODR — to discover what’s causing them. Is it late shipments, cancellations or mismatched expectations?
If you find a recurring problem, make it a top priority. The sooner you overcome any issues, the less chance they’ll have to impact your rating. If you sell overseas, make sure you can translate and understand all A-to-z claims and customer feedback.
From time to time, you may come across customer feedback that includes obscene language or personally identifiable information. Or you might find a misplaced review that’s intended for the product itself, or that addresses issues around an order fulfilled by Amazon. In these instances, simply ask Amazon (via Seller Central) to edit the feedback so it won’t impact your ODR.
Second, make fast and free shipping a top priority. If there’s one thing that’s bound to result in negative feedback, it’s delivery delays. Whether you fulfill orders in-house or rely on third-party logistics, take pains to ensure minimal handling times and reliable shipment tracking.
Some sellers opt to use FBA (Fulfilment by Amazon) after an ODR-induced suspension, since it guarantees Amazon’s strict requirements will be met and can help products reappear in the Buy Box quickly. You can even use it for a small selection of your best-selling products, for a limited period of time.
Keep in mind, too, that many customers post A-to-z claims and negative feedback in January due to late deliveries during Christmas. Your Order Defect Rate could be well below 1% all year, and then suddenly skyrocket if you fail to plan ahead for the end-of-year holiday rush. For this reason, it’s especially imperative to optimize your fulfillment during the holidays.
In conclusion: There’s never a time to stop prioritizing your Order Defect Rate on Amazon. Whether you’re working to reverse a high ODR or are being proactive about keeping it under 1%, the above tips will help.
Looking for more recommendations from the e-commerce experts? You can find all the latest Amazon advice on our blog.
Editor’s note: This blog post was originally published on August 15, 2017. It has been updated for accuracy and comprehensiveness.