Like many online shoppers, Lisa wanted to save money. She wants to get maximum value for her buck. She needed a new laptop and so, she logged into Amazon and bought a brand new 16 inch notebook computer.
Lisa was thrilled and excited when she received the package. But a few minutes later, she found out that the laptop was defective. She was furious and disappointed. She vowed never to shop on Amazon.
Amazon knows that defective products can ruin its strong and almost immaculate reputation. This is the reason why the e-commerce leader puts a lot of weight on a customer satisfaction metric called order defect rate (ODR).
Understanding the Real ODR Meaning and How it Can Help Reduce Amazon Marketplace Fraud
Order defect rate or ODR is one of the most important key performance metrics of Amazon sellers. Amazon puts a lot of weight on ODR because measures the seller’s credibility, trustworthiness, honesty, conscientiousness, and thoroughness. This yardstick also measures the seller’s quality control efforts and his ability to deliver a superior customer experience.
To put it simply, order defect rate is calculated as:
ODR = Number of orders with one or more defect
Number of orders
To maintain your Amazon seller account health and avoid suspension, you must have an ODR of less than 1%. This means that you can only afford to have 1 defective product in every 150 products sold.
Let’s say that you are selling headphones. You have 1000 orders for the month of July. But, you have sent 27 defective products. This means that you have an order defect rate of 2.7%, which is much higher than the target. Your Amazon seller account could be deactivated because of this.
But, what do you consider a defective product? How does Amazon know how many your defective products are at any given month? Well, the order defect rate metric has three components – the negative feedback rate, credit card chargeback rate, and A to Z Guarantee claim rate. We will discuss these components one by one.
Negative Feedback Rate
A rating of two or one is considered a negative feedback. Keep in mind that customer satisfaction is Amazon’s number 1 priority. So, the retail giant will not think twice about suspending or deactivating your account if you consistently get bad reviews.
The negative feedback rate (NFR) is calculated as:
NFR = Number of negative feedback for the orders made from a specific month
Number of orders from a specific month
This metric is order-correlated, which means that you should look at the date of the order and not the date the feedback was received. So, the NFR may not match the feedback that you see on your product detail page.
For example, let’s say that you have 1200 orders for the month of March and you got 4 bad reviews. This means that you have a negative feedback rate of 0.4%.
Credit Card Chargeback Rate
The Credit Card Chargeback Rate or CCCR is calculated as:
CCCR = Number of orders that received credit card chargeback
Number of orders
If you received 1500 orders for the month of December and 8 of those orders received a credit card chargeback, your CCCR is 0.53%. CCCR is order-correlated. This means that Amazon looks at the date of the order (not the date the chargeback was made) when calculating the CCCR. Let’s say that you received a chargeback on June 4, but the order was made May 21. The chargeback will be included in your May CCCR, not June.
The credit card issuer processes and approves chargeback claims when:
The shopper claims that he did not receive the ordered item.
The customer received a defective product.
The consumer returned the product, but did not get the refund.
Whenever a shopper disputes his credit card purchase, it’s considered as a chargeback request. There are two types of chargebacks – fraud and service.
A fraud chargeback happens when a customer claims that he did not make the purchase. The credit card may be stolen or used without the owner’s permission. This chargeback type is not included in the computation of your ODR.
Service chargeback, on the other hand, happens when the customer acknowledges the Amazon transaction, but argues that he encountered problems.
A to Z Guarantee Claim Rate
The A to Z Guarantee program protects consumers from defective items and fraudulent sellers. This program guarantees that the orders will be delivered to the customer’s doorstep on time and in good condition.
The A-to-Z Guarantee allows customers to file for a claim and request a refund if:
They did not receive the package after three days.
They received an item that’s completely different from what they ordered and you already returned the order.
They returned the item and the seller has not given you a refund.
The A-to-Z Guarantee Claim Rate is an important metric to look at because it impacts your ODR.
Take note that not all A-t0-Z guarantee claims can affect your ODR. The following claim types can increase your order defect rate:
Orders that you or Amazon cancelled
Handled and refunded claims
The following claim types do not affect your ODR:
Withdrawn and cancelled claims
Claims that Amazon granted and paid for
Invalid and unapproved claims
If you dispute a claim decision and you win, that particular claim will be removed from your order defect rate.
What Happens If You Are Not Hitting the Order Defect Rate Target?
If your ODR hits 1 percent, you will automatically use the buy box. This can significantly reduce your sales, revenue, and profit.
Now, if you’re consistently not hitting your ODR, your account will get suspended or deactivated.
How to Minimize Your Defective Product Amazon and Reduce Your Order Defect Rate
Now, that you know the meaning of ODR, it’s time to discuss tips and techniques that can help you stay on top of your quality control and hit the order defect rate target.
Inspect all your products before shipping them.
Before you ship your products to Amazon or your customers, you have to do extensive quality control measures. Inspect all the items and make sure that they are in top condition.
Test all the items before shipping.
If you’re selling electronics or mini-appliances, it’s best to test all your products before shipping them out to make sure that they work.
Check every order thoroughly to ensure that you ship the right item.
Double check each order to avoid shipping mistakes. Make sure that you’re shipping the right item, model, and color.
Use accurate, unfiltered, and zoomable images so your potential customers could examine your product more closely. Don’t forget to set proper expectations. Make sure that you have a detailed and precise product description. This can help you decrease Amazon complaint about order.
Make sure that you have a tight quality control process.
Create a solid quality control process even if you have a small business. Having a streamlined quality evaluation process can help reduce your order defect rate and can eventually help you grow your online business.
Try the following tips to reduce your order defect rate:
Deal with negative feedback right away.
Ask Amazon to remove the feedback if you feel that the bad review is inaccurate and unfair. You can also try to address the customer issue and once done, you can proactively ask the customer to edit his review.
Respond to all feedback- good or bad.
When you respond to every review, you’re letting your customers know that their feedback means a lot to you. It makes them feel important and appreciated. This does not only reduce your ODR, it also improves your brand’s reputation and customer loyalty.
If you’re not part of Amazon’s FBA program, make sure that you have a solid and streamlined order processing and shipping process.
Delivery delays can significantly increase your order defect rate so you have to prioritize fast shipping. It’s also best to hire a reliable product handler to minimize delays and complaints.
What to Do After Your Amazon Seller Account Gets Suspended
As previously mentioned, your seller account can get suspended or deactivated if you consistently go over your order defect rate target. You have seventeen days to present your reinstatement plan. If you fulfill your own orders, it’s a good idea to join the FBA (Fulfilled by Amazon). This will help you reduce your delivery delays and it saves you a lot of time.
Final Thoughts: Be Proactive and Keep Track of Your ODR
ODR is an important customer satisfaction metric. You could lose the buy box or get your seller account suspended (or terminated) if you’re not consistently hitting the order defect rate target.
One of the best ways to avoid these consequences is to consistently keep track of your ODR. To check your ODR, log in to your Seller Central account. Go to the Customer Satisfaction page and click on the Account Health link. You’ll then see your order defect rate. If you’re a full-time Amazon seller, check your ODR at least once a day.
But, monitoring your ODR is not enough. If you want to hit your key performance metrics, you must prioritize customer satisfaction. Make sure that all your products are in top shape. Ship the orders on time and most of all, respond to customers’ inquiries and feedback.