February 13, 2023

What is Amazon Order Defect Rate (ODR) and How to Improve It

Selling on Amazon? Discover everything you need to know about improving your Order Defect Rate (ODR). This complete guide will help you make smart decisions to enhance your Amazon business, from product selection to marketing tactics.
What is Amazon Order Defect Rate (ODR) and How to Improve It
What is Amazon Order Defect Rate (ODR) and How to Improve It

What is Amazon Order Defect Rate (ODR) and How to Improve It

One of the most important metrics that Amazon monitors to determine your account health is your Amazon Order Defect Rate (ODR). 

To stay on top of your game while selling on Amazon, it is important to keep an eye on your Amazon order rate.

If your order defect rate falls flat, your Amazon seller account could get deactivated. 

But not to worry, we have a complete guide to help you know what the Amazon Order Defect rate is, how to calculate it and ensure it stays good. 

Amazon Order Defect Rate (ODR) Definition

An Amazon Order Defect Rate is a percentage or ratio of returned orders due to a defect in the product or service. This could be a damaged item, a missing item, or bad customer service.

In other words, an Amazon Order Defect Rate gauges how well a seller can fulfill orders without any issues. 

Amazon uses this metric to measure the quality of customer service a seller provides. Amazon measures your Order Defect Rate every 60 days.

A high Order Defect Rate (which is above 1%) indicates poor operations and customer service.

How do you calculate your Amazon Order Defect Rate? 

how to calculate amazon defect rate

As we mentioned earlier, your Amazon Order Defect Rate is a percentage of returned orders due to defects in the product or service.

To calculate your Amazon ODR, you simply divide the number of returned items due to defects by the total number of orders placed within a period. 

This is represented as [Defected orders / Total Orders received] x 100

If you had 5 orders returned out of 100 within a month, your Amazon Order Defect Rate will be 5%. 

What is a good Amazon Order Defect Rate? 

To avoid suspension or deactivation of your Amazon seller account, you must maintain an ODR of less than 1%. 

If your Amazon ODR exceeds 1%, it means that you have a large number of negative feedback and complaints on your orders. 

When this happens, Amazon can take action on your account. This could be limiting your visibility, limiting your ability to offer some promotions, or suspending or terminating your account. Once your account is suspended, Amazon gives you 17 days to come up with a Plan of Action (POA) before reinstatement. 

If your account is drastically above 1%, your account could be terminated altogether. 

Amazon takes these measures to ensure that customers have the best shopping experience. 

How to check your Amazon Order Defect Rate 

check your amazon defect rate

How can you check your Amazon ODR to ensure it stays healthy? Here are simple steps to follow: 

  • First, go to your Amazon Seller Account and find your way to the Performance tab.
  • Next select Account Health from the menu
  • Lastly, analyze the information.

If your ODR is rising steadily, begin to take corrective measures to address the root causes. Ensure you maintain good customer service and deal with any negative feedback. 

Factors that affect your Amazon Order Defect Rate 

Let's look at factors that directly impact your Amazon Order Defect Rate: 

  • A -to-Z Guarantee 
  • Credit Card Chargeback
  • Negative Feedback  

A -to-Z Guarantee 

Amazon provides an A-to-Z Guarantee which includes late, incorrect, missing, or damaged orders. It also includes orders that don't match their description.

The A-to-Z Guarantee helps to protect customers with defective orders. Customers can easily file a claim if something goes wrong with their order. Amazon will then investigate the claims and issue a replacement or refund. Ultimately, this can negatively affect your Amazon ODR. 

Credit Card Chargeback

When a customer disputes a charge on their credit card and processes a refund, this is a credit card chargeback. This could happen if a customer is not satisfied with the service or if they are sold a defective product. 

If a customer requests a refund, Amazon will have to investigate, and depending on the outcome, Amazon may need to replace or refund the product to the customer. This can ultimately affect your Amazon ODR. 

Negative Feedback  

Negative feedback can affect your Amazon ODR. While negative feedback is inevitable when selling on Amazon FBA, consistently getting negative feedback could mean that customers are unhappy with your product or service. 

Amazon may investigate the reason for the consistent negative feedback and could issue a replacement or refund which could ultimately affect your ODR. 

Does your Amazon Order Defect Rate affect your ranking on Amazon? 

The simple answer is yes. Your Amazon Order Defect Rate is one important factor that can affect your ranking on the Amazon marketplace.

If you have a low ODR, Amazon will reward you with better visibility and higher placement on the search results. Also, it means that customers are satisfied with your service and will buy from you again. 

On the other hand, a high ODR indicates poor seller operations and customer service which leads to lower rankings and visibility on the Amazon marketplace. 

To build a good reputation with customers, improve rankings and increase sales on Amazon, it is crucial to maintain a low ODR. 

How to improve your Amazon Order Defect Rate 

improve your amazon defect rate

Perhaps your Amazon ODR is already taking a turn for the worst. How do you improve this? 

Here are simple but effective strategies to help you improve your ODR and stay on top of your game: 

  1. Address all negative feedback
  2. Ensure you provide fast and free shipping 
  3. Monitor your product listing
  4. Optimize your fulfillment processes for peak periods
  5. Use high-quality packaging

Address all negative feedback

Let's face it. Negative feedback can be quite discouraging as an Amazon seller. But the sooner you address those negative feedback, the better for your Amazon ODR and business. 

Go through the negative reviews and look for patterns. Ensure you understand all the A-to-Z Guarantee claims to find out what's affecting your ODR. 

Are customers constantly complaining about late deliveries? Is your product appearing bigger or smaller than expected? 

Once you find out what the problem is, make it a top priority to improve on them. Be committed to offering quality products and customer service.  

Ensure you provide fast and free shipping 

Delays in product delivery can lead to negative feedback. You want to ensure you provide fast shipping and free shipping if you are self-fulfilling your orders or using third-party logistics. Ensure you provide accurate and minimal handling times.

Alternatively, you can simply switch to Fulfillment by Amazon (FBA) to ensure your products are delivered swiftly and to improve your Amazon ODR.

Monitor your product listing

Your product listing is also one aspect that could be affecting your ODR. Go through your product listing and ensure it contains accurate information that customers need to make a purchase. Do your product images and description accurately match your product? Having incorrect information can lead to customers feeling confused and unhappy. Ultimately, these customers will drop a negative review. 

Even after reviewing your listing, continue to monitor it and look for ways to improve your customers’ shopping experience. 

Optimize your fulfillment processes for peak periods

Peak periods like the Christmas holidays can be major traps for a high ODR. Due to the holiday rush, you may fall prey to late deliveries which could increase your ODR. 

To avoid any delays, it is important to customize your order quantities to ensure you're handling the right amount of orders.

Overall, ensure your fulfillment process is seamless to ensure your products get to customers on time. You can invest in inventory management software to help you track your inventory and fulfillment process throughout the holiday season.  

You can use Amazon FBA to help you handle the entire fulfillment process. 

Use high-quality packaging 

One of the causes of a high ODR is damaged items. If your customers receive their products already damaged, they are very likely to drop negative feedback which can impact your ODR. If you are self-fulfilling your orders, ensure you use high-quality packaging to avoid any damage during shipping and to ensure they receive their orders intact. If you are using Amazon FBA, you will need to follow some packaging guidelines and requirements before they can be accepted at the fulfillment centers. 

Final thoughts

The key to maintaining a good ODR is to prioritize customer satisfaction. Invest in Amazon services and tools that help you reduce your Amazon Order Defect Rate and ensure you run a successful business. You can work with a team of experts to offer guidance and provide the best recommendations for your Amazon business. 

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