For sellers who are just starting to operate Amazon US site and doing Amazon operations, in addition to understanding the backend operations, they also need to know the performance. However, many sellers operating on Amazon are not clear about how their performance is evaluated, and many choose Amazon agency companies with industry experience to help them.
Today I will briefly introduce the definition and function of Amazon performance. I hope it will be helpful to novices in Amazon operations!
1. What is performance?
What we usually call performance is the standard that Amazon uses to evaluate a store's performance. To a certain extent, it is also a measure of the quality of a store.
II. Indicators for Performance Assessment
Amazon's performance evaluation indicators mainly include the following: order defect rate, order cancellation rate, late shipment rate, effective order tracking, on-time order delivery rate, return dissatisfaction rate, and customer service dissatisfaction rate.
3. The role of each indicator
1. Order defect rate: The order defect rate refers to the percentage of orders that received negative feedback, Amazon Marketplace Transaction Guarantee claims, or service credit card declines. Amazon officially stipulates that the order defect rate must be less than 1%.
2. Order cancellation rate. This indicator can measure the inventory rate of the products you sell on Amazon that are delivered by sellers themselves.
3. Order late delivery rate. On-time delivery is Amazon’s commitment to all buyers. Seller-fulfilled orders that are confirmed after the estimated delivery date will be considered late orders. Amazon stipulates that it must be less than 4%.
4. Valid tracking rate: Calculate the number of packages that were provided with valid tracking codes at the time of shipment, and then divide it by the total number of packages shipped and confirmed. A tracking number is considered valid only if it has at least one carrier scan record. Amazon requires that 95% of the packages you ship yourself have valid tracking numbers.
5. On-time delivery rate: The on-time delivery rate shows the percentage of buyers who receive packages shipped by Amazon Global Sellers before the estimated delivery time. This value is calculated based on confirmed tracking information. Since Amazon uses shipment tracking to calculate on-time delivery rates, Amazon also displays the valid tracking rate for all packages.
6. Return dissatisfaction rate: The return dissatisfaction rate is used to measure buyers' satisfaction with the way their returns are handled. It is the percentage of valid return requests that were not responded to within 48 hours, were incorrectly rejected, or received negative feedback from the buyer. The official recommendation is <10%. There are no hard penalties if it is not reached, but sellers still need to pay attention to it, because this data will eventually be hardened to ODR (order defect rate), and in serious cases, the seller’s sales rights will be revoked.
7. Customer service dissatisfaction rate: This indicator is used to measure customer satisfaction with the responses to buyer messages you provide. When you respond to a buyer through the Buyer-Seller Messaging Service, Amazon will provide a survey for buyers below your response: "Did this solve your problem?" Buyers can choose "Yes" or "No", and the customer service dissatisfaction rate is the percentage value obtained by dividing the number of votes with a reply of "No" by the total number of replies.
4. The indicator that needs the most attention: Order Defect Rate
Amazon is a platform that places great emphasis on buyers' purchasing experience, and the order defect rate is the main indicator for measuring sellers' ability to provide a good buyer experience, so Amazon will focus on the assessment.
This metric covers all orders that had one or more defects as a percentage of total orders within a given 60-day period. It mainly consists of three parts:
1. Buyer Messages
2. A-to-Z Guarantee Claims
3. Chargeback Claims
An order is defective if it has negative feedback, an A-to-z Guarantee claim (that was not declined), or a credit card chargeback. Amazon’s policy states that sellers should maintain an order defect rate below 1% in order to be able to sell products on Amazon. An order defect rate above 1% may result in account deactivation.
Therefore, if sellers operating on Amazon want to maintain good performance, they must improve their service quality from the customer's perspective.
