Amazon has always been concerned about the well-being of its customers and wants to reassure them about the status of orders placed with third-party sellers. To aid in its efforts, Amazon has changed the way it calculates sellers' Late Shipment Rate (LSR), a metric factored in to their Order Defect Rate performance standings. Now what do we mean by Late Shipment Rate (LSR) and what changes have been incorporated?

Amazon measures each seller’s performance using customer metrics in a variety of categories that assess sellers’ timely fulfillment of orders, responsiveness to buyer feedback, buyers’ cancelled orders, and so on. One significant measure is the seller’s late shipment rate. Prior to this change, an order was considered late when the ship confirmation was overdue by three or more days. However, to help better set customer expectations, an order will now be considered late if shipment is not confirmed by the expected ship date. The number of orders that are confirmed to be late divided by the total number of orders in the given time period provides the late shipment rate for that time period.

Amazon also integrated the sellers' LSR metric for August under the new system. Sellers who go into their account to check their Late Shipment Rate metric now see the metric computed both ways. Amazon displays the raw numbers of orders the seller received over the past 7 days, 30 days, and 90 days. It then displays the seller's performance next to the targets for those same periods:

• Their Pre-fulfillment Cancel Rate (which has a target of under 2.5%);
• Their Late Shipment Rate NEW;
• And their Old Late Shipment Rate.

What do these changes mean for Amazon Sellers? First of all we have to clear out the confusion. Most of the retailers were unaware of such policy changes until they received an email recently from Amazon. Some of them even believed that they might have been singled out to receive the letter and worried Amazon had flagged their account. But the fact is the letter has gone out to all the sellers to inform them about the changes to its seller potency necessities.

Improved Customer Service

No matter how you look at it, late shipments are a significant customer service issue, not to mention the costs involved as well. Each mistake results in a retailer not delivering the products in time required to satisfy its customers' shopping needs. According to the new rules, sellers require to maintain a late shipment rate below 4%. That is why Amazon has explained the new policy as a way to help better set customer expectations. "We have found that if sellers confirm after the expected ship date, it raises customer anxiety, resulting in increased negative feedback and claims."

It'll Take Awhile to Come Into Full Effect - so don't panic!

For sellers who are unprepared – they do have a few months to get ready. In its FAQs, Amazon clarifies the question "Will this impact my selling privileges?" with this reply: "We ask sellers to maintain their late shipments below a target rate of 4%. We understand that changes to your shipment process may take time, so for the next few months, if you don't meet the target based on the updated metric, it will not affect your account status." Besides this, if retailers need more time for shipping or confirming orders, they do have the facility to increase the handling time for their offers in the “Manage your Inventory” section of their seller account. Amazon has kept this provision for retailers that will give them some leverage.

Use SkuVault!

With this new policy in place, eCommerce businesses will invariably look for better solutions and make relevant changes to their shipping procedures to avoid any negative consequence in the future. This is where SkuVault can be a huge help! Our software offers powerful online inventory management tools for your unique business needs, which aims to reduce order processing mishaps, fulfill your customer requirements and enhance your business image. SkuVault integrates with Amazon, Amazon Webstore, and Amazon Fulfillment (FBA), so that you're always on top of your quantities.

Buyers may view the status of their orders online, and late shipment detracts from the positive buying experience that Amazon seeks to provide. By implementing the new stringent policy, sellers are therefore encouraged to make sure that their late shipment rate is within the acceptable limit.