Optimize Seller Performance, Minimize Order Defects


August 15, 2017

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Whether you're selling on marketplaces or on your own webstore, understanding and optimizing your seller performance metrics is the key to your success.

Here are the core seller performance metrics we advise our sellers to focus on:

  • Order defect rate
  • On-time Shipment Rate
  • Valid tracking rate
  • Customer service response time
  • Feedback rating

Below is a comparison of the key performance metrics and how they compare across major marketplaces.

<table class="tg">  
   <th class="tg-9hbo"></th>
   <th class="tg-9hbo">Amazon</th>
   <th class="tg-9hbo">eBay</th>
   <th class="tg-9hbo">Jet.com</th>
   <th class="tg-9hbo">Walmart Marketplace</th>
   <td class="tg-yw4l">Order Defect Rate</td>
   <td class="tg-yw4l">&lt; 1%</td>
   <td class="tg-yw4l">&lt; 0.5%</td>
   <td class="tg-yw4l">&lt; 2%</td>
   <td class="tg-yw4l">&lt; 2%</td>
   <td class="tg-yw4l">Pre-fulfilment cancel rate</td>
   <td class="tg-yw4l">&lt; 2.5%</td>
   <td class="tg-yw4l">&lt; 0.5%</td>
   <td class="tg-yw4l">&lt; 1%</td>
   <td class="tg-yw4l">&lt; 2%</td>
   <td class="tg-yw4l">Late shipment rate</td>
   <td class="tg-yw4l">&lt; 4%</td>
   <td class="tg-yw4l">&lt; 3%</td>
   <td class="tg-yw4l">&lt; 0.7%</td>
   <td class="tg-yw4l">&lt; 1%</td>
   <td class="tg-yw4l">Valid tracking</td>
   <td class="tg-yw4l">&gt; 95%</td>
   <td class="tg-yw4l">&gt; 95%</td>
   <td class="tg-yw4l">&gt; 95%</td>
   <td class="tg-yw4l">&gt; 95%</td>
   <td class="tg-yw4l">Response time</td>
   <td class="tg-yw4l">&lt; 24 hours</td>
   <td class="tg-yw4l">&lt; 24 hours</td>
   <td class="tg-yw4l">&lt; 12 hours</td>
   <td class="tg-yw4l">&lt; 24 hours</td>

Order Defect Rate

Also known as Order Defect Rate (ODR), this metric takes into consideration the number of orders with one or more defects as a percentage of the total number of orders you receive.

Order Defect Rate = # of orders with one or more defects / total # of orders

What constitutes an order defect may vary slightly from channel to channel, but these are the most important defects to avoid:

  • Cancellation by seller
  • Product returns
  • Late delivery
  • Customer complaints
  • Poor item rating

Best Practices

  1. Implement a system to ensure product data and inventory is accurate and up-to-date on all channels.
  2. Identify, address or discontinue listing of individual SKUs that have higher than acceptable order defect rates.
  3. Use reliable fulfillment methods; ship from your own warehouse or a reliable 3PL. Do not use dropship for more than 20% of your orders. Avoid using FBA for multichannel orders -- Amazon logistics tracking is not considered valid tracking.

Manual vs. Automated Management

When you're selling on a growing number of channels, you need a reliable system that ties everything together. This system can be manual or automated, but it needs to be consistent.

Manual Management

We've seen sellers implement a highly manual process with remarkable success. These sellers tend to focus on not more than 2-4 channels since complexity and manual inefficiencies become overwhelming as channel count increases. Nevertheless, it is possible to run a highly successful online retail business in a manual manner. This means listings, inventory and orders are updated manually on each channel.

Automated Management

The problem with manual management is that it's not scalable. Successful manual sellers reach a ceiling in the number of orders, listings and channels they can reasonably manage without compromising their listing accuracy and fulfillment performance. Further, due to the sensitivity of manual management, owners of manually managed ecommerce businesses tend to spend the majority of their time deeply involved attending to these manual processes -- steering the ship 7 days a week, holidays included. When manual sellers adopt the right automated system (multichannel management platform), the sky is the limit.

When you have the ability to centrally manage your product listings, inventory and orders in a highly automated manner, you set your business up for scalability, and you free yourself from the shackles of manual management.

Regardless of how you manage your online retail operations, please be sure to understand and optimize your key seller performance metrics.

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