Amazon's New OTDR Policy: What Sellers Must Know About the 90% Requirement

Amazon's New On-Time Delivery Rate (OTDR) Policy: What Sellers Need to Know

As of September 25, 2024, Amazon has implemented a significant change to its delivery standards for seller-fulfilled products. Sellers are now required to maintain a minimum 90% On-Time Delivery Rate (OTDR) to continue listing their products on Amazon. This policy is part of Amazon's broader efforts to improve delivery accuracy and customer satisfaction, a key focus for the platform as it competes in the fast-paced eCommerce market.

What is the OTDR Policy?

The On-Time Delivery Rate (OTDR) measures the percentage of orders that are delivered on or before the promised delivery date, without any extensions. Under the new guidelines, sellers must achieve at least a 90% OTDR for their seller-fulfilled listings. Falling below this threshold could result in the removal of products from the Amazon marketplace.

Amazon also recommends aiming for an OTDR of 95% or higher to ensure an optimal customer experience and to reduce the risk of penalties. This policy applies only to seller-fulfilled products, and orders fulfilled through Amazon's Fulfillment by Amazon (FBA) program are exempt from this requirement since Amazon controls the delivery process for FBA items.

Why Did Amazon Implement This Change?

Amazon’s decision to tighten its delivery requirements stems from its commitment to providing a seamless and fast shopping experience for its customers. Delivery speed and accuracy are crucial factors that influence a buyer's decision to shop on the platform. Amazon hopes that by enforcing stricter OTDR requirements, it can reduce instances of late deliveries, enhance customer satisfaction, and maintain its competitive edge in the marketplace.

What Happens If Sellers Fail to Meet the 90% OTDR?

Sellers who fail to meet the 90% OTDR risk having their seller-fulfilled products delisted from Amazon. Initially, Amazon will target sellers with the lowest OTDR performance and may issue warnings or take action to restrict product listings. These sellers will need to reassess their shipping and handling processes to ensure compliance with the new policy.

Amazon has provided several tools to help sellers meet the OTDR standard, including:

• Shipping Settings Automation (SSA): This tool calculates transit times based on selected shipping services to ensure accurate delivery date predictions.
• Automated Handling Time (AHT): Introduced in August 2024, this feature automatically adjusts handling times based on a seller's past performance, ensuring that estimated shipping times are accurate.
• Amazon Buy Shipping: Sellers using this service benefit from additional OTDR protection when they choose "OTDR Protected" shipping labels.

Key Takeaways for Sellers

The new OTDR policy represents a shift towards stricter enforcement of delivery standards on Amazon, which could significantly impact sellers who handle their own fulfillment. Those who fall below the 90% threshold will need to adjust their processes or risk losing access to Amazon’s vast marketplace.

Sellers can improve their OTDR by taking the following steps:

• Use Amazon’s Shipping Settings Automation to ensure accurate delivery date predictions based on reliable carriers.
• Leverage Automated Handling Time to streamline internal processes and avoid delivery delays.
• Consider switching to Fulfillment by Amazon (FBA) if maintaining a high OTDR becomes too challenging for your current fulfillment setup.

While the new policy aims to improve customer satisfaction, it also poses challenges for sellers, particularly those who do not use FBA. It’s essential for sellers to monitor their OTDR performance closely and make adjustments where necessary to comply with Amazon’s requirements.

Need help navigating Amazon’s OTDR policy changes? Contact AMZ Sellers Attorney® today for expert legal guidance on how to protect your business from policy violations.