Strategy

eBay Defect Rate - Everything You Need to Know

With the 14.1 Seller Release eBay introduces the eBay Defect Rate, abbreviated eDR (not to be confused with Amazon's ODR, or Order Defect Rate). It will go into effect on the August 20, 2014 monthly seller evaluation.

So you're desperate because eBay is changing their feedback system for yet another round? Don't be - we're here to help. This article covers all the information you need to know:

 

What is the eBay Defect Rate?


The eDR is the percentage of transactions that were labelled "defect" as compared to your total transactions. A formula for it would look like this:

Number of defective transactions / number of transactions * 100 (to get a percentage)

So for example, if you have 5000 transactions a month on eBay, if 10 of them had an eDR 'defect' you would have: 10/5000*100 = .2% eDR

This calculation is done over a 90 day period for most large sellers. The eDR is a meta-metric, meaning it is derived from several other metrics that you are already familiar with, like feedback and Detailed Seller Ratings (DSRs).

These metrics are included in the eDR:

  • Item as described DSR – If you get a 1,2 or 3, that transaction will hit your eDR.
     
  • Ship time DSR – If you get a 1, that transaction will hit your eDR.
     
  • Feedback – If you are left a non-positive (negative or neutral) feedback, that transaction will hit your eDR.
     
  • Returns – If an item is returned and the reason is ‘not as described’ (SNAD in eBay-speak, or "significantly n ot as described"), that transaction hits your eDR.
     
  • eBay Money back guarantee / Paypal purchase protection cases opened for INR (Item not received) or SNAD.
     
  • Seller-cancelled transactions – E.g. if you say you have 10 of something, sell them and then cancel 5 unique transactions, that equates to 5 eDR ‘hits’.

 

Restrictions: What to Keep in Mind


  • Only sales with a US buyer count towards eDR – so if you have 1000 sales to the UK, they are excluded from the eDR calculation.
     
  • You must have at least 8 unique buyers for this to kick in (doesn’t matter for larger sellers) for Top Rated Sellers (5 for Above Standard Sellers).
     
  • Global Shipping Program (GSP) – For US sellers these transactions are not included (see first bullet). Please note, we are getting a lot of mixed messages from sellers about GSP, suggesting that it is negatively impacting their TRS, hopefully this will clear that up.
     
  • Fast and Free (FnF) – When buyers choose fast free shipping as calculated and offered by eBay, the seller is still automatically given 5 stars for both the ship cost DSR and shipping time. Since shipping time is in eDR, FnF can help your eDSR. However, remember that you still have the item as described DSR and other components that aren't 'helped' by FnF.
     
  • Only one of these can ding you per transaction. For example, if an individual buyer leaves you all 1 DSRs, leaves neutral feedback, hits you with a SNAD return and a money back guarantee, that’s only 1 strike against your eDR, not multiple strikes.

 

Influence on eBay Seller Status


The eBay Defect Rate influences what type of Seller Status "label" you'll receive:

  1. Top Rated Seller – You must have an eDR that is < 2% or 2 / 100 or 20 / 1000 or 200 / 10,000 transactions to be a Top Rated Seller (TRS).
     
  2. Above Standard Seller – If you have > 2% and < 5%, you are still a good seller, but you lose TRS benefits. For this bucket there are no ‘consequences’ other than being disadvantaged in search.
     
  3. Below Standard Seller – If you have > 5% eDR, then you are a below standard seller and will face increasingly severe consequences from limits to all-out account suspension. In numbers, that’s 5 / 100, 50 / 1000, 500 / 10,000 transactions.

To have your eDR applied there is a minimum of 5 unique buyers for below standard sellers and 8 for top rated sellers. Also, unique buyers are applied at these tiers, but they are filtered out over the 90 day period. For example, maybe you have a persistent bad customer that buys 90 items from you over a 90 day period and files a negative each time. Those 90 eDRs would be calculated as 90, but tallied as 1 over that period. You will see the total number in your dashboards, but not the unique-buyer number. (Of course, if you actually had a buyer that filed an average of 1 negative per day, you would probably block them before they reached 90 eDRs.)

The eDR will have an effect on how your items are ranked in the eBay search results. If you and your competitor are Top Rated Sellers and you've sold the same amount of an item, the one with the lower eDR will appear higher in the search results.

 

How to Protect Against High eDR?


  • Describe your items accurately – By doing so, you're already addressing the cause of possible returns. Clear descriptions with images will set customer expectations regarding the products condition. The occasional return can still happen, but you minimize your risk of returns. Also provide clear return policies to inform the customer of the process - this keeps them from opening a case with reason "item not as described" without further thinking. If they do open an "item not as described" case, and you disagree, you still have the chance to intervene and report an issue to eBay.
     
  • Ship quickly – Process shippings quickly. If you aren't able to do this yourself consider using a fulfillment service. Of course this is an investment, but one that's worth it. Update your transactions in ChannelAdvisor with shipping information such as the tracking number. ChannelAdvisor transfers this data to eBay, who will in turn inform the buyer.
     
  • Provide a positive buyer experience – Provide flawless customer support. If you see an uptick in neutral or negative feedback, investigate the details. Adjust your process if the raised issues are legitimate.
     
  • Manage oversells – With ChannelAdvisor you already have a safeguard when it comes to potential overselling. Still, you should manage your inventory quantities tightly, restock in time, and use buffers for high-velocity items.
     
  • Keep an eye on your seller performance – Our eBay Seller Dashboard makes it easy for you to stay on top of your performance and never experience unpleasant surprises that could lead to downgrades in seller status...or worse.

 

Automated Case Creation with ChannelAdvisor


If you submit a refund for a returned item without a dispute or case this will count as a defect. ChannelAdvisor has created a safety net to protect you from unnecessary defects. We will automatically create eBay disputes for certain refunds submitted to ChannelAdvisor if the eBay transaction meets the following criteria:

  • The order has been marked as shipped by the seller.
     
  • The refund submitted is at least 100% of value.
     
  • No previous disputes have been submitted for the transaction.

Note: We won't create disputes automatically for partial refunds as they do not count as "seller-cancelled" and thus don't affect your defect rate.

 

Reference


More detailed information can be found in the following posts on our eBay Strategies blog:

Updates from eBay Seller Release 14.1 Part I

Updates from eBay Seller Release 14.1 Part II

eBay Seller Release 14.1 Questions & Answers

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