Navigating Amazon's On-Time Delivery Rate (OTDR) Policy for Seller-Fulfilled Orders

Amazon recently updated its On-Time Delivery Rate (OTDR) standards for sellers who fulfill orders themselves (also known as Merchant Fulfilled Network (MFN), Fulfilled by Merchant (FBM), or simply seller-fulfilled orders). Starting September 25, 2024, sellers need to maintain an OTDR of 90% or higher in order to continue listing products as seller-fulfilled rather than switching to Fulfilled by Amazon (FBA).

This new policy is designed to provide Amazon customers with a seamless shopping experience, ensuring that their orders arrive by the promised delivery date, regardless of whether they are shipped by Amazon or a third-party merchant. However, some changes introduced in this policy have caused concern among sellers. Let’s explore why these updates matter, the challenges they present, and what sellers can do to maintain success on Amazon.

What is the On-Time Delivery Rate (OTDR) and Why Is It Important?

The OTDR is a metric that tracks how many of your seller-fulfilled orders are delivered by the promised date. To remain eligible to sell seller-fulfilled orders, you must keep your OTDR above 90%. If your rate drops below this threshold, Amazon may restrict your ability to list products as MFN, which could impact your sales and visibility.

Amazon also introduced updates to transit time settings and handling time adjustments that affect sellers' ability to meet these new OTDR requirements. Let's take a closer look at these updates.

Changes to Handling Time Settings

A key change that has raised concerns is Amazon’s update to handling time settings. As part of this policy, if you’ve manually set your handling time to be longer than your actual shipping time, Amazon may automatically adjust it to reflect the actual time it takes you to handle and ship orders.

What’s the Concern?

Many sellers intentionally set their handling time to a higher number (e.g., three days) to build a buffer for weekends, holidays, or unforeseen delays. This buffer allows sellers to exceed customer expectations by underpromising and overdelivering. However, with the new policy, if your handling time is more than two days slower than your actual processing time, Amazon will automate this adjustment, potentially removing the buffer.

This change has caused alarm because it forces sellers to ship orders faster than they may be comfortable with, especially during periods of high volume or when staff is unavailable (e.g., weekends or holidays). Some sellers on the forums have even mentioned that they’ll now purposely delay shipments to avoid having their handling time automatically reduced.

Carrier Issues and Their Impact on OTDR

Even if sellers ship products on time, there is still a chance that delays can occur due to carrier issues. The OTDR measures on-time delivery—not just on-time shipping—so if a carrier delays an order in transit, it can count against a seller’s OTDR, even if the seller shipped on time.

Many sellers have voiced frustration, noting that despite fulfilling orders promptly, their OTDR remains below 90% due to factors outside their control, such as delays with the carrier. While Amazon states it will take action against sellers who consistently have low OTDR rates, there’s no clear indication of what these actions will entail.

What Can Sellers Do to Maintain a High OTDR?

While the new policy and changes to transit and handling time settings may feel overwhelming, there are several strategies sellers can employ to stay compliant and continue to thrive.

1. Prioritize Fast Shipping

One option is to ship all orders as quickly as possible, aiming for same-day or next-day processing. This can help you ensure that you meet Amazon’s OTDR requirements while avoiding delays due to unexpected carrier issues.

2. Choose the Right Shipping Carriers

Selecting reliable carriers is critical. You may need to adjust your shipping strategies and select carriers that offer the most reliable delivery windows. Make sure to track your shipments to avoid surprises with delayed deliveries that could negatively affect your OTDR.

3. Work with a Third-Party Logistics (3PL) Provider

If the new changes are challenging for your business, consider using a third-party logistics company (3PL) to handle your MFN orders. A 3PL specializes in managing inventory, packaging, and shipping, ensuring that your orders meet Amazon's standards. They can help with on-time deliveries and ensure that your shipping timelines align with Amazon’s updated policies.

4. Switch to Fulfillment by Amazon (FBA)

For high-volume or top-selling products, transitioning to Fulfillment by Amazon (FBA) can be an effective solution. FBA is not subject to the OTDR policy, so it can give sellers peace of mind regarding timely deliveries. You can still list products as MFN for other items while moving your best sellers to FBA. This hybrid approach ensures that your business remains compliant with Amazon’s requirements while still offering flexibility in your operations.

5. Monitor Your Metrics Regularly

Keep an eye on your OTDR and other performance metrics in Seller Central. Use this data to identify potential issues early, whether they are caused by handling time discrepancies, carrier delays, or other factors. If you’re approaching the 90% OTDR threshold, take proactive steps to address the issue before it affects your listings.

Final Thoughts: Adjusting to Amazon’s New Policies

The new OTDR policy and changes to handling time settings may seem like hurdles, but with careful planning and attention to detail, sellers can adapt and continue to thrive on Amazon. By shipping orders quickly, choosing reliable carriers, and utilizing 3PL services or FBA when appropriate, you can meet the demands of Amazon’s new policy while continuing to provide great customer service.

As Amazon continues to evolve, staying on top of these changes is crucial for your success. Keep refining your shipping strategies and remember that a well-prepared business can navigate these updates with minimal disruption

Ruben A

CEO at PAS