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A Lawyer Explains All About Order Defect Rate on Amazon

Fri Sep 1, 2023 General

Keeping your Order Defect Rate (ODR) low is essential if you sell on Amazon. If an Amazon seller’s order defect rate exceeds 1%, Amazon may face an amazon order defect rate suspension, reduce visibility, remove you from promotions, or limit the services you can offer to protect customers.

Keeping an order defect rate on Amazon under 1% ensures a good customer experience, protects your reputation, and helps you keep your selling privileges. Our guide explains how to keep your ODR below 1%, the factors that affect it, and the consequences of exceeding 1%.

Our guide uses simple language to explain how to calculate and reduce your ODR. We’ll also cover product selection and marketing tactics. Amazon’s ODR is one of the most crucial metrics for all sellers. 

Understanding Order Defect Rate

The Order Defect Rate (ODR) is the percentage of customers receiving defective products over a certain period. Amazon uses a critical metric to evaluate seller performance and customer service quality. A high ODR (above 1%) suggests poor operations, while a low ODR indicates good customer satisfaction. Amazon calculate ODR every 60 days. It is based on returns caused by defects. These defects include damaged or incorrect items, as well as poor customer service.

Calculation of order defect rate

The Amazon Order Defect Rate (ODR) measures the percentage of orders that get returned or canceled due to defects in the product or service. To figure out the ODR, you must divide the number of defective orders by the total number of orders placed during a specific period. This gives you a percentage, which is the ODR.

Here’s the formula for calculating the Amazon Seller order defect rate: 

ODR = (Defected orders / Total Order received) x 100

For instance, suppose you got ten orders back or canceled due to defects in the last month. And let’s say you got 100 orders during that same period. Well, that means your Amazon Order Defect Rate would be 10%.

Types of order defects (e.g., negative feedback, A-to-z claims, late shipments)

Three main factors contribute to an Amazon Seller’s ODR: chargebacks on credit card purchases, A-to-Z Guarantee claims, and negative reviews.

Credit Card Chargebacks

Chargebacks happen when customers dispute charges on their card and receive a refund from the credit card issuer. There are two types: fraud and service chargebacks.

Fraud chargebacks don’t affect your ODR, but service chargebacks and credit card chargebacks can. Credit card chargebacks happen when you give money back for orders. They can occur if the service is bad, there is fraud, the goods are damaged, or if you don’t get a refund for returning something.

A-to-Z Guarantee Claims

When you buy products on Amazon, you can choose from a wide range of third-party sellers in addition to Amazon’s own brands. Amazon wants to ensure that third-party sellers meet their obligations to customers and offers an A-to-Z guarantee. This guarantee allows customers to file a claim if something goes wrong with their order, such as if the product arrives late or in poor condition.

These claims, known as A-to-Z claims, can negatively impact a seller’s Order Defect Rate (ODR), which is a metric used by Amazon to measure a seller’s performance. However, not all claims will affect a seller’s ODR. Claims that are denied or withdrawn, or that Amazon determines are not the seller’s fault, won’t count against the seller. Additionally, claims related to property damage or personal injury fall under a different process and won’t be included in the ODR calculation.

Negative Feedback

Amazon considers it a negative review when the product receives one or two stars. Each negative review is a hit to your ODR. As an Amazon Seller, you may have noticed that various aspects can be affected, such as buying, delivery, and packaging.

Negative reviews are common when doing online business on any website. However, if you consistently get bad feedback, Amazon may start paying closer attention to your store in a negative way.

Any negative feedback, including comments and ratings. Negative feedback from your customers can reflect a poor customer experience. Poor customer experience will lead to more negative feedback and a high ODR.

Strategies for Reducing Order Defect Rate

Improve your ODR with these strategies: increase customer satisfaction and reduce returns/refunds.

Improving Product Quality

Control the Quality of your products

One of the most obvious yet often overlooked aspects of being a seller is testing your own product. Purchase your own product from Amazon and experience the buying process firsthand. Regularly examining your products’ quality is crucial to ensure that your customers always receive high-quality items.

By closely inspecting your products, you can identify and address any potential issues before they reach your customers. This step is essential in providing excellent customer satisfaction.

Create awesome listings

To improve your ODR, provide clear and honest product descriptions with detailed features, specs, and any limitations or drawbacks. Including high-quality images can also help customers better understand the product, reducing the chance of negative feedback.

Using appropriate packaging materials.

Pack your products correctly to reduce the risk of damage during shipping. This can help improve customer satisfaction and reduce negative feedback.

Use high-quality packaging materials and follow packaging guidelines if using Amazon FBA. Also, label packages properly and ensure timely shipping to meet customer expectations. Ensure secure packaging to prevent damage and partner with reliable shipping carriers.

Streamlining Order Fulfillment Process

Efficient inventory management and automated order processing can help reduce order cancellations and returns. To achieve this, it’s important to regularly update your inventory to prevent overselling or running out of stock. If you’re a seller using Amazon’s Fulfilled by Amazon (FBA) system, make sure you keep enough stock in their fulfillment centers to fulfill orders promptly.

During peak periods like the Christmas holidays, it’s easy to fall into the trap of high ODR (Order Defect Rate) due to the holiday rush. Late deliveries can increase your ODR, so it’s important to customize your order quantities to ensure you’re able to handle the right number of orders. The goal is to ensure your fulfillment process is seamless, which will help to get your products to customers on time.

If you’re struggling with managing inventory and fulfilling orders, consider investing in inventory management software. This can help you keep track of your inventory and streamline the fulfillment process throughout the holiday season. And if you’re looking to handle the entire fulfillment process, consider using Amazon FBA.

Providing Excellent Customer Service

Actively addressing customer complaints and feedback enhances ODR. It shows commitment to customer satisfaction and loyalty. Responding promptly provides an opportunity to resolve issues and improve products or services.

How to Appeal an Order Defect Rate Suspension on Amazon

Amazon closely monitors the performance of its sellers. They keep track of metrics like order defects, late shipments, and cancellation rates. This is done to ensure that sellers maintain a healthy account with Amazon. If a seller receives too much negative feedback, ships late, or cancels orders frequently, their account may get suspended.

It is very important to meet these metrics to maintain a good standing with Amazon. If your Amazon seller account has been suspended, the key to getting your account back up and running is to write a solid amazon order defect rate appeal or a Plan of Action (POA).

You need to talk to the Amazon Performance Team and send them a persuasive Plan of Action (POA) that shows you understand what went wrong, what you’re doing to fix it, and how you’ll stop it from happening again.

This demonstrates that you have thoroughly reviewed the situation and are taking responsibility for any mistakes made.

We have a great article about how to write your appeal letter or Plan of Action (POA), read it here!

Seeking Professional Help for Account Reinstatement 

Recovering from a suspension of your Amazon account can be a difficult and time-consuming task. If you want to understand how reinstatement works or need professional advice, it’s helpful to ask an expert for help.

An Amazon seller attorney can assist you in understanding the reinstatement process and what you should expect to happen. They can also guide you throughout the process of getting your business back to selling on Amazon.

Speak With an Amazon Seller Attorney at ESQgoⓇ. We can be reached by calling 866-203-0541 or via our contact page. We offer a free initial consultation.