On-Time Delivery Policy for Seller-Fulfilled Amazon Orders

Amazon announced a few months ago that, starting September 25, it will have new on-time delivery rate (OTDR) standards for third-party sellers on its platform who fulfill orders themselves--sometimes called the merchant fulfilled network (MFN), fulfilled by merchant (FBM), or simply seller-fulfilled orders.

According to Amazon, if you're an MFN seller, you'll need to maintain a 90% or higher OTDR to continue listing items as seller-fulfilled (rather than fulfilled by Amazon, or FBA). This policy is meant to assure buyers that their Amazon orders will arrive by the promised delivery date, whether shipped by Amazon or by a third-party merchant, keeping the whole experience of shopping on Amazon a positive one.

However, there's a more controversial piece to the new announcement. Amazon also stated:

"Also, we'll make the following changes to shipping settings to help sellers with Professional selling plans set accurate delivery dates:

Transit time settings: On August 25, 2024, our transit time requirements will be updated to match the delivery capabilities of shipping services. If you're shipping within the contiguous United States (excluding Hawaii, Alaska, and US territories), you can set a maximum transit time of five days for standard shipping and eight days for free economy shipping. ...

Handling time settings: On September 25, 2024, to help improve the accuracy of handling time, we'll enable automated handling time for sellers that have a manually configured handling time that is two or more days slower than their actual handling time (also known as a handling time gap). "

That change to handling time settings in particular caused some alarm on the Seller Forums. Read on to learn why sellers find the handling time change alarming, why they're struggling with maintaining an OTDR despite their best efforts, and what you can do to keep selling successfully.

Handling Time Change for On-Time Delivery Rate

Amazon's announcement about handling times means that, if a seller usually ships packages within one day, but has manually set their handling time to three days to provide a bit of buffer and cover scenarios like weekends and holidays when their staff aren't working, Amazon may automatically change their handling time to one day and eliminate that buffer.

Understandably, sellers expressed concern on the Seller Forums. Several explained why they purposely add a handling time buffer to be certain to meet or even exceed the buyer's expectations every time. Now, this ability to "underpromise and over-deliver" might be compromised.

One seller shared that they will be purposely delaying shipping from now on: "I'll make sure to wait until the last minute to ship most of my orders, so that I don't get this setting changed against my will...Way to encourage good customer service."

Carrier Issues

But a seller who avoids the danger of automated handling times risks falling into the trap of a too-low OTDR. After all, the metric is not on-time ship rate, but on-time delivery rate, so even an order the seller shipped on time might be delayed by carrier issues and delivered later than promised.

Many sellers shared on the forums that, despite their best efforts and shipping 100% of their orders within the promised handling time, they have an OTDR of lower than 90% due to delays on the carrier's side that are beyond their control.

While Amazon says it will "take action" against sellers who have OTDR rates that are too low, it isn't clear what that action will be.

What Can a Seller Do?

First of all, it might be possible for many sellers to abide by the new policies and get into a new rhythm that works just fine. Instead of relying on padded handling times, sellers may have to prioritize shipping 100% of their orders as quickly as possible and choose their carriers as wisely as possible to avoid having too many orders get delayed. After all, Amazon doesn't expect zero delayed orders; it asks that no more than 10% of them be delayed.

If this doesn't sound manageable for your business, working with a third-party logistics company (3PL) is another option:

Sellers can turn to a 3PL to pick, pack, and ship their MFN orders. 3PLs often support dozens of brands and their Amazon channels, therefore they hyper-focus on their operational compliance. 3PLs can operate in accordance with Amazon's Handling Time Change while also providing shipping options that meet the Shipping Settings change. Specifically, a 3PL with multiple locations can help support your MFN business and ensure compliance with Amazon's ever-changing policies."

-Kayvon Nazarian, Co-Founder and CEO of ZonPrep

Lastly, of course, you can use Fulfillment by Amazon for some or all of your orders. FBA orders are not subject to the OTDR policy. Send your top-selling products to FBA and continue listing others as MFN, or list all products as both so that the FBA units can sell first and the MFN can be backup. This way, if Amazon (for example) stops allowing you to list items as MFN due to a too-low OTDR, you still have a business. Or, if it's financially feasible with FBA fees, simply switch everything over to the FBA model.

FBA can be a bit of a learning curve, especially when it comes to planning your inventory and replenishing it at the right times so that you stay in stock while avoiding excess fees. SellerPulse by eComEngine offers a robust Inventory Planning Dashboard that helps you see where all your FBA inventory is currently, what SKUs are running low and risking the low-inventory-level fee, and what units are selling too slowly and incurring aged inventory surcharges.

RestockPro by eComEngine can also help by giving you a daily to-do list of inventory to reorder from your suppliers or ship to FBA. Manage your POs and track your FBA shipments from your facility to the Fulfillment Center, all in one place.