Learn How Amazon’s Order Defect Rate Effects Buy Box Performance
As an online retailer, one of your biggest achievements would (or at least should) be to win the Buy Box on Amazon. Not sure why? Let’s break it down:
Buy Box makes up nearly 70% of Amazon’s sales and has proven to be an impressive revenue machine for sellers.
But it’s not easy winning the Buy Box. There are a few values Amazon measures to determine Buy Box eligibility; one metric used to measure your performance is your Order Defect Rate (ODR).
If your ODR reaches 1%, you’ll lose the right to win the Buy Box and will have to wait 30 days (with your ODR consistently below 1%) before you’re eligible again.
In other words, you’re better off never letting your ODR reach 1%, so let’s get started.
Calculating Your Order Defect Rate (ODR)
Here’s how Amazon calculates your Order Defect Rate:
It takes into account your A-to-z claims, any negative feedback, and your service chargeback, divided by the number of orders that occurred during a given period (such as 30 days).
Let’s use real numbers to make it easy for you:
Let’s say you received one A-to-z claim and two negative customer feedbacks over 100 orders in June. Your ODR is then 3% and, sorry, that knocks you out of eligibility for Buy Box.
If you receive one A-to-z claim and one negative feedback for that same order, it’s only counted as one.
The Aftermath – What Happens If You Reach 1%?
When your ODR reaches or surpasses 1%, you’ll automatically lose the Buy Box for all of your products (but not your Fulfillment by Amazon (FBA) products, as FBA products are shipped by Amazon, thus are eligible for Buy Box regardless).
Why does Amazon strip you of Buy Box?
Simply put, Amazon wants to protect the customer experience. If your ODR reaches 1%, there’s enough reason to believe that your orders may be faulty. Amazon does not want to stake its reputation (and that of Buy Box) on your inconsistencies.
Amazon might also suspend your account. Once suspended, you have 17 days to return with a plan of action to be reinstated. During this reinstatement effort, Amazon will examine your performance over the past 12 months. If your ODR was over 1% over a series of a couple of months – or if you’re known to have had several cancelations or late deliveries, then your account may (or likely will) be terminated.
Improving Your Order Defect Rate
Your ODR is heavily influenced by your A-to-z claims and negative feedback, which is why it’s imperative that you carefully examine every A-to-z claim and customer feedback and filter them. Figure out what’s leading to these claims and feedbacks. Is it late shipments? Cancelations? Expectations that weren’t met?
The goal is to try to unearth recurring problems and remedy them quickly, before long-term damage is done.
One pro-tip is to use Excel to filter out claims. This will help you prioritize your actions and discover the root causes.
You might discover that some of the feedback you receive includes foul language, personal information, references an order fulfilled by Amazon, or is a product review rather than feedback. If you experience these types of issues, we encourage you to ask Amazon to edit the feedback, which means it might not impact your ODR.
You can do this by going to your Amazon’s seller interface, click on Contact Seller Support, then Orders: Customer feedback problems.
Factoring In Higher Volume During The Holidays
What we see regularly is that many sellers experience a spike in A-to-z claims and negative feedbacks in January, because of late deliveries during the holiday season. This results in suspensions and terminations that could have been avoided.
One thing we often recommend sellers do is use Amazon’s holiday mode, or set up quantities to zero in December. This will result in products not being live from around Dec. 12 to Dec. 25 (since it’s difficult to guarantee delivery dates during this time).
Other sellers use FBA only during this period.
So, Should I Consider Using Fulfillment by Amazon (FBA)?
Yes, but as we’ve highlighted before, Amazon has some pretty tough expectations that many sellers struggle to meet. One way to meet these expectations is to use Fulfillment by Amazon. There are different ways to use FBA; for example, if you lose Buy Box eligibility, you can decrease your ODR pretty quickly by shifting to FBA for a limited time.
OperationROI can help you figure out not only how to become eligible for Buy Box but, more importantly, how to stay that way. Call us today at 1-888-277-5429 or by filling out our contact form to learn more.
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