Understanding Amazon’s Order Defect Rate
Amazon uses its Order Defect Rate to help them provide a good customer experience, measuring how many items your business sells that has a defect.
Those defects are defined in a detailed manner by the site, falling under there main categories. They are:
• Your Negative Feedback Rate
• Your A-to-Z Guarantee Claim Rate
• Your Credit Card Chargeback Rate
Here Thompson and Holt’s managing partner Craig Gedey breaks down those reasons and explains what you need to do to avoid account deactivation.
Gedey explains: “Amazon’s policy is that sellers maintain an Order Defect Rate (ODR) under 1% in order to carry on selling on the site.
“Once the figure rises above 1% the possibility of suspension begins. This is what you need to know to help keep that measure of your customer experience to the desired levels.”
Negative Feedback Rate
“Amazon want sellers to have as low a percentage of negative feedback as possible, reflecting their customer-centric approach,” Gedey says. “One and two star ratings are considered as negative.
“Amazon Negative Feedback Rate is the number of orders that have received that negative feedback, decided by total number of orders over a certain period, represented as a percentage. Amazon uses the date of the order, not the feedback, when compiling this data.
“If a buyer withdraws negative feedback, it is not counted as part of ODR. However, it might take up to 48 hours after a buyer has removed it to disappear from the metric.
“Don’t ignore the negative feedback that you do receive, because it is invaluable information for avoiding repeats in the future. Take on board what is written and look at ways that you can improve the customer’s experience in future sales.”
A-to-Z Guarantee Claim Rate
“This is is the number of orders with a relevant claim divided by the number of orders in a given 60-day time period, again shown by a percentage,” Thompson and Holt’s Gedey explains.
“You can manage and take action on claims via the A-to-Z Guarantee Claims page on your account.
“Amazon lists the following types of complaints as impacting on your ODR: Claims that are granted and debited from your account, Claims for which you refunded the customer after the claim was filed. Claims for which you or Amazon cancelled the order and Claims that are pending a decision.
“Those that do not count are: Claims that are granted and paid for by Amazon, Claims that were denied to the customer and Claims that were withdrawn by the customer.
“Also, if you win an appeal on a Claim decision, it will be removed from your ODR.
“Again, keeping a detailed record of everything that happens on your account is invaluable, both in preventing repeats and also in compiling a Plan of Action should the worst happen and your account be suspended.”
Credit Card Chargeback Rate
“A credit card chargeback is similar to an A-to-Z Guarantee claim, except that the credit card issuer processes the claim and makes the decision, not Amazon,” Gedey says.
“The percentage number is calculated by dividing the number of orders that have received a credit card chargeback by the number of orders in the relevant period.
“This can occur for a whole host of reasons. It may be that the buyer returned an item but did not receive a refund, or a claim that they didn’t receive the item in the first place. They may have received a damaged product, or disputed a purchase that has been charged to their credit card.
“There are other issues that can arise. A fraud chargeback occurs when a buyer claims not to have made a purchase at all, which is often related to stolen credit cards. Amazon does not count fraudulent transaction chargebacks towards your ODR.
“There is also service chargebacks, where a buyer acknowledges a purchase, but indicates to their credit card issuer that they experienced a problem.
“Detailed records of your sales are crucial in dealing with these issues if they should arise, and having as much information at your disposal about your products also gives you an advantage should the worst happen and a suspension be implemented.
“Amazon also allows you to view your Order Defect Rate at any time by going to your Account Health page, then in the Customer Service Performance Section clicking on ‘view details’. Select the Order Defect Rate tab, scroll down and click on the Download Report button.
“Keeping a regular track of your ODR is also very useful.”