7 Most Critical Metrics to Track On Amazon Account Health
While it is certainly true that scaling your business on Amazon invites endless profit opportunities, the task of selling on Amazon itself is a bit trickier. It is no secret that the E-commerce giant favors a seamless consumer experience over anything else. Accordingly, the sellers are expected to strictly abide by the Amazon guidelines and standards to be able to continue operating in the marketplace. One of those requirements is maintaining a "good" Amazon Account Health.
In this blog, we shall take a closer look at the key metrics that affect your Amazon Account Health and its influence on your business's overall performance.
Amazon Account Health: An Overview
Amazon Account Health is a feature that allows sellers to review the performance of their respective business accounts. You can access your Amazon account health page on your Seller Central account, under the performance section.
As mentioned earlier, Amazon sellers are required to conduct business in accordance with the issued guidelines and practices. In this sense, the status of your Amazon account health largely depends on your adherence to Amazon’s selling policies.
Essentially, the account health page displays a number of metrics that are indicative of your seller performance. While all of them do not hold much value, certain key metrics drastically affect your account health and ultimately, your overall seller authority. In simple words, if you consistently fail to meet the minimum requirements of these particular metrics then you risk getting a warning, facing an account suspension, or even worse, account removal.
As Amazon States:
(a) Sellers need to maintain a "Good" account health rating and address all the policy violations within the specified time.
(b) An "at-risk" or "critical" account health status may result in account suspension or deactivation.
To avoid any such unfortunate circumstances, you need to persistently monitor the following Amazon account health metrics and stay on top of them.
Pay Close Attention to These 7 Metrics On Amazon Account Health
1. Order Defect Rate
The Order Defect Rate (ODR) reflects how well and how often a seller is able to ensure a satisfactory shopping experience for the customers. This involves calculating the number of defect orders as a percentage of the total number of orders within the past 60 days. Essentially, an order is considered as a defect if it results in:
(a) A negative feedback
(b) Credit card chargeback
(c) A successful A-to-Z claim
Amazon suggests that a seller must maintain an ODR of below 1% to be able to continue selling on the platform.
2. Cancellation Rate
Mainly applicable to the seller-fulfilled orders, Cancellation rate refers to the percentage of orders cancelled by the sellers themselves. It is measured for a specified 7-day period.
It is important to note that this account health metric only considers cancellations that are initiated on the part of the seller. A customer cancelling a processing order does not impact the CR metric.
Amazon expects sellers to maintain a cancellation rate of less than 2.5%.
3. Late Dispatch Rate
The Late Dispatch Rate (LDR) measures the number of orders that have their shipping confirmation posted after the expected date of shipment. The metric is calculated as a percentage of the total orders over a 10-day or 30-day period and is only applicable to self-fulfilled orders.
Tracking shipments is an integral element of the entire Amazon shipping experience. In that regard, sellers must ensure that the orders are shipped in time by the expected shipping date to facilitate a seamless tracking experience. Orders that are shipped late might result in an increased number of claims or negative reviews and overall poor customer experience.
Amazon maintains that a seller's LDR should not exceed 4%.
4. On-Time Delivery Rate
The On-Time Delivery Rate (OTDR) represents the number of shipments delivered rightly within their estimated delivery dates, as a percentage of total tracked shipments.
Since this account health metric is only applicable to self-fulfilled orders, Amazon sellers must ensure to maintain the OTDR above 97%.
5. Valid Tracking Rate
Another account health metric for self-fulfilled orders, the Valid Tracking Rate (VTR) calculates the percentage of total shipments that are given a valid tracking number in a given 30-day period. A VTR of above 95% usually contributes to "good" Amazon account health.
6. Return Dissatisfaction Rate
The Return Dissatisfaction Rate (RDR) reflects your customers' satisfaction with their return experience. The following actions indicate a poor or negative return experience:
(a) Getting negative feedback (Negative Return Feedback Rate),
(b) No seller response to the return request within 48 hours (Late Response Rate), or
(c) Incorrect refusal of the return request (Invalid Rejection Rate)
The RDR is measured as the total number of negative return requests as a percentage of total return requests. Sellers are expected to maintain the figure at less than 10%.
Currently, no course of action or penalty is announced by Amazon for sellers, should they fail to meet this performance target. However, a higher RDR may eventually result in increased negative feedback and A-to-Z guarantee claims from the customers.
7. Invoice Defect Rate
In June 2020, Amazon unveiled a new account health metric called Invoice Defect Rate. Its primary aim is to enable third-party sellers to oversee the invoicing experience it provides to Amazon Business customers who demand invoices or receipts for tax and accounting purposes.
Amazon IDR is calculated as the share of orders, placed by Amazon Business customers, for which a seller fails to provide a downloadable tax receipt (or invoice) within one business day after shipment confirmation in line with the Amazon Business invoicing policy.
Amazon asks that sellers maintain an IDR of below 5%. However, there is no specified action mentioned by Amazon if the IDR is found to be above the target rate.
Consequences Of A “Poor” Amazon Account Health
Amazon keeps a constant watch on your account health metrics and sends you a notification/warning when your performance starts to slip, giving you time to improve and/or optimize your metrics. Usually, first-time errors do not entail heavy penalties. Rather, you will be given a time limit of 60 days from the initial warning to show measurable improvement in your performance metrics.
However, if your Amazon account health has been consistently poor then you are likely to face an account suspension. In that case, you can get your Amazon account reinstated by appealing to the seller performance team and submitting a thorough plan of action.
In a simpler sense, a Plan Of Action (POA) is your written claim that you acknowledge the issues with your Amazon account and take all the necessary steps to rectify the same. It is important to draft your POA with utmost relevance and preciseness. Enter only the details that are asked and keep it straight to the point.
In most cases, submitting a well-written and authentic POA results in Amazon reinstating the sellers' accounts since the POA serves as evidence of the promise of performance improvement.
In A Nutshell
Indeed, your Amazon Account Health can decide the fate of your business on the e-commerce platform. Accordingly, a frequent health checkup of your account is of paramount importance to keep your business up & running on Amazon. You must remember that a "good" account health status is not only required for operational rights but it also adds up to certain benefits such as boosted rankings and improved Buy-Box winning chances. However, in your pursuit of a healthy Amazon account, you must not forget to focus on other aspects of your business as well.
At YourSeller, our dedicated Amazon team persistently looks after your Amazon account health so that you can entirely devote your focus to managing the core areas of your business.
We provide a comprehensive range of services to enhance the overall performance of your business on Amazon. Here are a few of them:
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To learn more about how we can improve your Amazon business in the USA and India, Contact us at +1 510 648 3933 or +91 9909513312 or mail us at contact@yourseller.in. We will be happy to assist you.
