Earlier in the Pre-registration chapter, we first introduced some of the key issues surrounding Seller Performance, the Amazon organization that is responsible for policing third-party behavior on the Amazon marketplace.
In this chapter, we delved into the details on what can actions or inactions put you at risk of trouble with Seller Performance, and what to do to recover from these troubles.
We also address pre-emptive actions that you can take to prevent problems from happening in the first place.
But first, let’s spend a few moments and define some useful terminology:
As shown in the top-left corner of the Seller Central homepage, Account Health is a summary of your Seller account’s performance on the six main criteria on which your seller account is evaluated by Amazon: Order Defect Rate, Cancellation Rate, Late Shipment Rate, Policy Violations, On-Time Delivery, and Contact Response Time.
If your account isn’t “healthy”, it should be your immediate priority to diagnose the cause or causes of the problem, and figure out how to take immediate action to rectify the issue.
If your account is in poor health for too long, you should expect that your account will get suspended, or in a worst-case situation, terminated.
If your Account Health suffers for too long on the same issues, or you get hit with a serious violation (like selling counterfeit products, or trying to divert traffic away from Amazon to your own website), your account is likely to be suspended.
During that time, all of your offers on Amazon get suppressed, and you won’t get any sales or disbursements from Amazon (ouch!).
An effective appeals process will involve the seller sending Seller Performance a clear, detailed plan of action that explains the cause of the problem, as well as the specific actions that the seller is taking to fix the problem going forward.
Depending on the nature of the problem that led to account suspension, the seller may have to pull certain products or brands, change its internal ordering or shipping processes, explain that it has hired new personnel specifically to focus on a deficient process, or potentially moving products to FBA (a good solution for most problems involving late shipment, or pre-order cancellation).
In some cases, especially those involving accusations of selling counterfeit products, a seller will be expected to produce extensive documentation proving the legitimacy of product.
Even with ample documentation, it’s not uncommon for sellers to remain suspended for 30 days while Amazon provides the seller with a “cool-down” period to get its house in order.
The repercussions of account suspension can be significant – inadequate cash flow to pay suppliers or employees, resulting in the seller needing to layout staff or to ask suppliers for unexpectedly extended payment terms.
Or worse yet, if the suspension happens at a critical sales time of the year for the seller, the seller could miss out on the largest sales opportunities, resulting in a poor overall year for the seller.
We do want to mention that the Seller Performance team is greatly aided by computer programs, and as such, many seller notifications are sent automatically without much human review.
As a result, most sellers have been through suspensions where they don’t ever get to talk with an Amazon employee to explain the situation – only emails to a general Amazon email address are accepted.
This process of getting unsuspended can be extremely grueling and frustrating, as the seller is typically in the dark as to what Amazon is doing and when a resolution will be achieved.
We reiterate the need for sellers to be pre-emptive in attempting to avoid problems or potential problems that could result in Account suspension.
Under severe circumstances, Sellers will get kicked off the Amazon marketplace, and their accounts will be terminated.
It could take months to get the final disbursement from Amazon and to get FBA inventory returned to the seller. Even worse, the seller won’t ever be able to return to Amazon again under the same or other seller.
It is rare to hear about Amazon changing its mind on terminated seller accounts – once terminated, you’re gone for good. Circumstances resulting in termination can include actions like trying to cheat Amazon customers, repeated failure to explain counterfeit product accusations, demonstrated attempts to file false feedback against competitors, or efforts to collude with other sellers on Amazon.
As most of these activities are actually illegal, it’s certainly understandable why Amazon seeks to keep its marketplace free of such poisonous influences, for sake of customers, other sellers, and Amazon.
We talked about the six major categories included in the Account Health measure. Each has a minimum bar that you are expected to hit as a seller. Be sure to review those minimums in Seller Central.
For any notification involving accusations of counterfeit or questionable product, it’s critical that you have all of the documentation from your suppliers that you can share with Amazon to show where you got product.
If you are a gray market seller, it can be tough to be 100% that your product is authentic or eligible for sale in this country.
Our advice is if you can’t get good paperwork from your supplier, or your supplier can’t explain where it got the product, don’t buy for the Amazon marketplace – it’s just too risky.
We’ve mentioned this issue before. If you send product to FBA, and you’ve selected to have it comingled with other sellers’ inventory, it becomes near impossible to ensure that product that you sent into FBA is actually used for an FBA order that you get.
Another FBA seller’s actual product could be used to fulfill that order, leaving you exposed to the possibility that any product defect derived from some other FBA seller’s inventory will be tied to you because of this product comingling. We’ll discuss later some appropriate ways to manage this risk.
Earlier, we’ve mentioned the buybox, and the importance of managing your business to win the buybox.
When your account is eligible to win the buybox (which is done on a product category by product category basis), your account is said to have “featured merchant status”, so your items in these categories are eligible to win the buybox (and hence, get the customer’s sale).
When your account has too many performance issues, you can lose your featured merchant status for a period of time, greatly impacting your ability to get the customer’s sale. This is all part of Amazon’s effort to put “safe” offers in front of its customers.
Let’s begin our discussion of Seller Performance by sharing our seven-pronged philosophy of how to manage sellers should manage their accounts:
Remember that the number one priority here is to serve Amazon customers – all of your actions should be in line with what customers want – authentic, properly represented, fairly-priced products delivered on-time to customers. And if a customer asks you a question, answer it honestly and in a timely manner.
If in doubt, contact Seller Support to get clarification before you take action. Seller Support has seen it all before, so use that group as a resource when you’re in doubt.
If you’re thinking of doing something shady or possible unethical, DON’T GO THERE, because Amazon will eventually catch you. Many of small or stupid action has resulted in account termination for too many sellers on Amazon.
While some Amazon customers may try to cheat you, there is only so much you can do to protect yourself. You have to accept certain losses no matter how customer-oriented and fair you try to be. Always take the high road with customers.
Keep organized all of the purchase order and shipping paperwork for your products. Such documentation will be critical if any questions arise about your products.
What looks like too good a deal on product from someone you don’t know is probably not a good deal.
If you are seeing problems with particular SKUs, make sure to loop in the relevant supplier to see if the problem goes all the way back to production or up-stream distribution.
Every minute of every day, Amazon is watching your performance as a seller. Amazon evaluates your performance on every order, and tracks your every email you send to or receive from customers.
While it may look a little big-brother-ish, Amazon wants to make sure that the sellers it allows on the marketplace are all meeting specific requirements focused around keeping Amazon customers informed and happy. And so, Amazon tracks sellers’ performance on a series of customer service metrics.
As Amazon says “Failure to meet these targets does not necessarily put your account in negative standing, but failure to improve may negatively affect your account”.
Some level of “defects” are allowed, but there are minimum performance levels required for each of these metrics.
While failure to succeed on these performance metrics can get your account in trouble, the flip side is also important: if you do well on these metrics, that will help the likelihood that your “featured merchant status” remains in good-standing, thereby making you eligible for winning the buybox on your products.
Some sellers are constantly in various trouble with some of the performance metrics, and while their account might not be suspended, it is likely that they will lose their featured merchant status, as Amazon deems them high-risk and so not as deserving to have their offers given top billing to customers.
Next, we will go through these metrics one at a time, and discuss what’s involved in measuring that metric. While we covered some of these details in the pre-registration chapter, we will now review the six types of metrics that Amazon tracks across the 7-day, 30-day and 90-day windows:
A combination of three measures, the Order Defect Rate metric is tracked to make sure the seller have no more than 1% of its orders falling into “defect” mode.
Negative Feedback Rate
The negative feedback rate is the number of orders that have received a negative feedback (i.e., a 1 or 2) divided by the number of orders in the time period of interest.
Filed A-to-Z Claim Rate
The A-to-z Guarantee claim rate is the number of orders that have received an A-to-z Guarantee claim divided by the number of orders in the time period of interest.
When computing the A-to-z Guarantee claim rate, we consider all claims, in any status, filed by buyers. [It’s like calling in Amazon as an arbitrator… you don’t want them to be called in often, as it’s a sign of failure to work out problem with customer directly].
So you ask, what is an A-to-Z claim? If a customer isn’t happy with something about an order purchased through a third-party seller, and the customer and seller haven’t been able to resolve the issue through emails between the two of them, the customer has the fall-back option of contacting Amazon direclty to get the issue resolved.
Basically if a customer isn’t happy with the condition of a product, or the amount charged to the customer isn’t what the customer agreed to, or a customer seeking a refund didn’t get his/her refund from the seller, then that customer can file an A-to-Z claim directly with Amazon to get the issue resolved.
Amazon usually asks the customer to try first to resolve with the seller.
A-to-Z claims are bad news for sellers, as they are viewed as an indication that the seller isn’t able to resolve problems by itself with Amazon customers.
Although a customer may try to abuse the system by submitting an A-to-Z claim, Amazon does look at all communications between the seller and customer to see if appropriate attempts to resolve the issue have been taken by the seller beforehand.
Service Chargeback Rate
The service chargeback rate is the number of orders that have received a service credit card chargeback divided by the number of orders in the time period of interest.
Service chargebacks include any charge back dispute which is not a claim of unauthorized or fraudulent use.
Amazon guarantees sellers they will not be responsible for such problems. Typical Service Chargebacks are for Non-receipt or damaged/improperly described merchandise.
This is the proportion of orders cancelled by the seller before the orders were ship-confirmed.
Basically, if you received 100 orders but cancelled 5 of them before you got around to ship-confirming them, you would have a 5% cancellation rate, which is very bad.
Amazon doesn’t look at favorably on sellers that have to cancel orders, usually because the seller actually didn’t have available inventory to fulfill the order, or because the seller decided not to sell units it did have after the seller noticed a pricing error.
We have seen a simple pricing error turn into plenty of unexpected orders that sellers don’t want to have to honor.
So the seller may end up cancelling all of these orders, resulting in a significant spike in its cancellation rate.
We have seen sellers be sloppy about updating their available quantity only to discover that customers place orders for actually nonexistent inventory.
To make problems worse, cancelling orders often results in negative feedback from customers too, so the seller gets hit twice for the same single cancelled order.
And if the seller is having to cancel multiple orders due to a pricing error or an inventory error, the seller can quickly find itself in hot water with Amazon.
The late shipment rate is the proportion of orders with a ship confirmation that is completed after the expected ship date.
It is important to confirm the shipment of orders by the expected ship date so that customers can see the status of their shipped orders online.
Orders that are ship-confirmed late may lead to increased customer claims, negative feedback and/or customer contacts and negatively impact customer experience.
Amazon requires its sellers to maintain a late shipment rate of no higher than 4%.
Orders might actually be late being shipped – the person in charge of fulfilling orders might be out sick one day, and the seller can’t get the orders out on time.
Too bad, customers don’t care, and neither does Amazon.
Unfortunately, sellers sometimes run into problems getting orders shipped out on time because they can’t handle increased demand of orders that spike unexpectedly.
Or orders might have been shipped, but not properly confirmed: All too often, sellers don’t get around to confirming that shipments have been sent.
Not only are shipment confirmations required for sellers to get paid, but customers want to know that their orders are soon to arrive.
The Policy Violations column indicates you may have communications on the Notifications page that you need to read. The Notifications page contains copies of all key emails sent to you by the Seller Performance team. This includes warnings for performance or policy violations, as well as notices of account block or suspension. It is important that you read all the notices on the Notifications page.
The bigger type of problem for a seller is when it gets notice that it may be selling counterfeit products. This usually is driven by one of two activities: either Amazon gets a complaint from a customer, so Amazon’s Seller Performance software programs troll for physical reviews of your seller feedback and product reviews, where the customer submits feedback stating your product is or may be “fake” or “counterfeit”.
In many situations involving OEM products, Amazon often will ask the seller for proof of authenticity before ruling on this claim of non-authenticity. Unfortunately, Amazon isn’t always right about its own physical inspections, or if your FBA inventory is comingled with other sellers’ inventory, you may be guilty of offering fake product because the inventory Amazon selects for testing is inventory of a dishonest FBA seller, comingled with your FBA inventory.
Depending on the severity of the issue, and how many units of inventory are involved, a seller can get its account terminated for selling counterfeit product very quickly, and there is little path to recovery, or opportunity to contest your situation with Amazon.
It is our STRONG recommendation that you keep all order documentation from your suppliers so you can produce quickly the necessary materials to show where you got your product, thereby hopefully tying your product to a reliable source. Nonetheless, as you are responsible for all of the product you sell, you might still have fallen victim to an unscrupulous supplier or bad inventory – this is your problem to address.
The Policy Violation is often a big surprise for sellers – sometimes you get an initial email from Amazon regarding a change in policy, and if you haven’t read the email and act on it quickly, Amazon treats that as a Policy Violation.
So you wake up one day to see you have a Policy Violation, and all because you might not yet have read some Amazon announcement about a change. It’s not really a “violation”, but Amazon wants to confirm that you’ve read about the change. Once you read the email, the policy warning will disappear usually in 24 hours. These sorts of violations don’t go on your record to cause you long-term problems.
Throughout the year, Amazon will send you many information-based emails – they aren’t performance notifications, but they are updates on products or rules. And you are selected to receive these notes because of some product you have in your catalog – we said “catalog”, not “inventory” – because you are responsible for all of your catalog including inactive products that you might not have sold in years. If you don’t plan to sell a product anymore, DELETE it from your catalog, as that will no longer tie you to products that may be subject to legal or procedural changes.
There was a situation in the summer of 2014 where hundreds of Health & Beauty sellers on Amazon got suspended due to repeatedly ignoring Amazon’s product notification emails related to ingredient restrictions. Most of these sellers didn’t have the necessary knowledge of which of their products contained which ingredients. Then when the Federal Drug Administration (FDA) outlawed certain ingredients, Amazon sellers didn’t know that some of their products contained these ingredients, so they were now selling outlawed products unbeknownst to themselves. The process of getting re-instated onto Amazon is one that some sellers still haven’t been able to manage successfully.
Your on-time delivery score shows the percentage of packages that buyers received by the estimated delivery date. This number is based on confirmed tracking information. Since we use shipment tracking to calculate on-time delivery, we also show the percentage of packages shipped with tracking.
Buyers tell Amazon that receiving their orders on time and having the ability to track their packages are important contributors to their overall satisfaction with an order. Amazon research shows that tracked orders have 60 percent fewer order defects and that tracking also helps reduce order inquiries from buyers.
Failure to meet Amazon’s target for this metric generally does not result in the suspension of your selling account. However it could also cause negative feedback or claims, which could impact your selling account status.
When Amazon shoppers send you emails, you are required to respond within 24 hours (or at least notify Amazon that the specific emails do not require a response from you).
If you don’t respond within that time frame, Amazon takes note, and may lower the likelihood that you earn featured merchant status in the future.
Equally important, if Amazon prospective buyers can’t get their questions answered by you, it’s much more likely that those customers aren’t going to be buying your items.
Amazon also tracks a seller’s Refund Rate – which looks at what proportion of orders get refunded.
While different categories of products typically average different levels of customer returns (e.g., softlines are typically higher than hardlines), it’s good to keep an eye on refund rates to see if any of the products you are selling at spiking on refunds; this can be an early warning that there are manufacturing defects with specific products.
When I was a seller, I had my account suspended once because of a sudden spike in the return rate of one specific SKU – when I pulled all of the FBA units of this product, I quickly discovered that there was a manufacturing defect on all of these units. While my supplier replaced all of these units for me, I lost 3 days of sales as well as incurred all of the negative feedback and return shipping costs of these items. While I hadn’t gone looking for trouble, it found me, and this experience reminded me just how important it is to keep an ever-close eye on product quality, as well as keep good and constant communications with my suppliers.
During the initial start-up period of a new seller, the seller is very exposed because it has built up very little history with Amazon across the very few orders it has received. So that seller can get warned/suspended by Amazon as a result of a single “defect” or error.
While we want to see sellers doing their best to deliver on the inherent promises made to customers when receiving an order, it is *EXTRA* important for a new seller to double-check its work in an effort to avoid errors:
For new sellers to Amazon, this is one of the more confusing puzzles to solve: what does Amazon want me to do now?
Amazon’s Seller Performance team doesn’t want to hear stuff like:
The bottom line is Amazon wants you to explain what happened to cause this problem, then explain what specific actions you are taking to eliminate this root cause (so the problem doesn’t happen again), and what you are doing to make any affected customers right.
Our advice to sellers that have been suspended – if you know you’ve done something wrong, admit it, and then explain exactly what you are doing to correct the issue immediately – rarely will you have provided “too much” detail for Seller Performance – that team wants to know you are serious about fixing the root cause of the problem once and for all.
And if you actually don’t know what has happened to cause the problem that got you the performance notification, be clear that you don’t understand, and ask for more specifics from Seller Performance (such as, when you say I did a-b-c, do you mean I did this, or I did that?).
Be aware that Seller Performance often does not provide enough specifics for you to fully diagnose a confusing situation, and you may be left trying to guess or rule-out root causes of the Amazon notification.
As you get more seasoned as a seller and read the Amazon seller blogs, you will learn how different sellers have addressed suspension issues.
So back to when you craft a response for Seller Performance. The more specific you can be about your plan of action, the better. That might involve saying things like:
I have hired someone new whose specific responsibility is to double-check all outgoing shipments and make sure each has a ship-confirmation on it.
Our failure to act on previous Amazon product notifications was because I had not assigned the responsibility of reading and acting on these notifications to a specific person on my team.
That has changed as of today, and I now have 2 specific people whose responsibility is to read these notifications, notify me of ones affecting our products, and then act immediately to make catalog changes to fall into compliance with any changing rules.
We shipped out the wrong products to customers because we did not have a proper cataloging process in our warehouse. Today, I hired an outside consultant who will be developing a cataloging system to be rolled out in the next 3 weeks.
In the meantime, my team is contacting all of our Amazon customers that may have received one of the mistaken products, and offering them a full refund in order to make them whole [it’s critical to mention any specific steps you are taking to take care of any affected Amazon customers right now, even if it’s at a great expense or nuisance to yourself].
If you have any supporting documentation to provide Amazon, scan it and attach it in your response to Seller Performance. Keep in mind that when you send an email to [email protected], you aren’t likely going to hear any response unless Amazon wants something more from you or they decide to shut you down. So it’s best to get your response altogether at once, and provide a coherent explanation all at once.
You will likely feel like you have thrown your response over the wall and you’re waiting to hear back, not sure if and when you hear back… and unfortunately, that’s basically how it works with Amazon. There is no human interaction, no phone call, nothing like that.
Keep in mind that Amazon Seller Performance may make mistakes, and you need to have your evidence or data ready to do. So if something doesn’t make sense to you, try to figure out what’s going on, come up with hypotheses of what might be going on, and then rule out the issues one at a time. That’s how Amazon works, and you need to be clinical in your responses too.
And if you really did do something you’re not allow to do – something illegal like sell knowingly counterfeit product, or something inappropriate like offering money to a customer to remove negative feedback – it may be a long road to getting back onto Amazon as an active seller in good standing.
While there are some lawyers that specialize in helping get suspended or terminated Amazon sellers back onboard, the much easier path is to avoid high-risk behaviors, and try to keep your nose clean as much as possible!
Let’s talk about specific pre-emptive actions you can take to reduce the likelihood of getting yourself into trouble with Seller Performance:
This issue all comes down to how well you can track your inventory in real-time. If you’re selling on multiple marketplaces, this can get hard without using software to track all inventory with regular updates. If you don’t want software or sell only on Amazon, think hard about using FBA for all of your products – that way, only inventory in FBA is made available for Amazon, and the process of tracking available inventory becomes exclusively Amazon’s responsibility (and they are pretty good at this, believe us!). If you don’t want FBA or don’t use it for all products, make sure to post realistic inventory levels on Amazon: maybe you have actually 10 units available, but you post that you have 7 available, just to give yourself some buffer. You can play with buffers, depending on how good you are at monitoring real-time inventory, but the best option still is using FBA.
This metric has to do only with non-FBA orders. So if all of your orders ship through FBA, you don’t have to worry about this issue. For non-FBA orders, what is likely your biggest driver of late shipment will be a sudden increase in orders that your staff can’t handle, or a sudden reduction in staff available to handle order fulfillment.
Either way, it makes sense to cross-train your staff so many people know how to do order fulfillment, even if not all of them do this on a regular basis. That way, if you get a sudden increase in orders, you can move more people to help with fulfillment short-term while you work through the orders.
Another option to consider is moving some products to FBA during known peak periods when you might otherwise need more staff to do order fulfillment but don’t want to hire any more people for a short-term need. Amazon fulfillment centers know very well how to bring in extra staff to handle extra demands – make it Amazon’s problem, not yours.
We have a number of recommendations here:
Even if you do all of these things, you may still get a Policy Warning for something else that seems outside your control. If that happens, be logical and unemotional in the documentation/ explanation you provide Amazon in your effort to solve the problem.
While you aren’t personally delivering packages to customers, you can protect yourself by using low risk shipping options like USPS, UPS, Fedex and DHL.
In addition, if you find some problems with late deliveries, then add a day or two to your promised delivery date on Amazon, making it easier for all orders to get to customers within the promised timeframe.
Packages with tracking info: pretty simple here, you should avoid shipping options where you go without a tracking number.
USPS, UPS, FedEx and DHL all offer the option of tracking numbers, while Amazon lets all professional sellers define their shipping rates.
Unless you are planning on gauging customers on shipping rates, you should be able to offer tracking info while inside the normal range of shipping costs that most customers are prepared to pay.
And if you are offering free shipping as part of your Amazon offers, you simply need to find a way to factor in tracking info option as part of your shipping costs.
This is one of the harder ones for new sellers to accept. You have 24 hours to respond to every seller’s email, which means you need to have a point person who has this responsibility.
This “on-call” responsibility may change across staff, but you simply need to have someone checking in regularly.
And if you somehow miss the 24-hour window, answer as quickly as you can after that. Too many strikes here, and you will get a warning, as Amazon doesn’t like to see customer inquiries going unanswered.
So in summary, given that all of these performance metrics can affect your featured merchant status, it’s important to understand the tradeoff between some sloppiness and losing that critical featured merchant status.
Basically, you need the featured merchant status in the long-run to make your business a success. So try to run a clean business, and stay out of trouble as much as possible – taking a few risks here and there in order to make a little more money is rarely worth it in the big picture.