eBay’s New Seller Standard – The Defect Rate

This year eBay have introduced a number of changes for sellers (as always!), with the main ones being eBay’s new Managed Returns Process and new seller performance measures and specifically – the defect rate.

I have already written a guide on managed returns, which you can read here: eBay’s Managed Returns Process – Explained, so now it’s time to go over eBay’s other big change – the recently introduced new seller performance measurement.

Let’s get started!

So firstly, what is this new performance measurement and when was it introduced?

Well the defect rate (as it’s known) came into effect in August this year, replacing the previous minimum positive feedback requirements, and basically, based on extensive research conducted over millions of transactions, it measures the aspects of a transaction that eBay believe are most important to buyers.

And if something goes wrong with a transaction, it counts as a defect on your account. eBay then uses this defect rate to monitor your performance and if you fall below their minimum requirements, you will lose your Top-rated seller status and even worse; your positions in search results will be penalised and you can even be suspended from eBay completely.

What counts as a defect?

A defect is a transaction that’s considered to create a “bad shopping experience for buyers” and any of the following will count as a defect against you:

• A detailed seller rating of 1, 2 or 3 for item as described
• A return due to the item being not as described
• An eBay Money Back Guarantee or PayPal Buyer Protection case for item not as described
• A detailed seller rating of 1 for dispatch time
• An eBay Money Back Guarantee or PayPal Buyer Protection case for item not received
• Negative Feedback
• Neutral Feedback (yes, that’s right – neutral feedback is now considered as bad as negative feedback in eBay’s eyes!)
• A transaction being cancelled by you due to the item being out of stock

One important thing to note here – you can only get a single defect per transaction.

So what that means is, let’s say a buyer leaves you a detailed seller rating of 2 for item as described and then also leaves you neutral feedback – that will count as a single defect for that transaction.

If a buyer leaves you a detailed seller rating of 1 for item as described, a detailed seller rating of 1 for dispatch time, leaves negative feedback and then also opens a PayPal Buyer Protection case – that will still just count as one defect.

So now you know what a defect is, let’s take a look at the minimum standard expected of sellers on eBay:

So basically a max defect rate of 5% for standard sellers and 2% for Top-rated sellers.

BUT in only kicks in when you have reached minimum number of unique buyers affected – 8 for all sellers and 5 for TRS. So for example, if you’re a TRS and have made just 100 sales over last 12 months and have 3% defect rate, from just 3 transactions, even though the percentage is above limit (2%), you won’t lose your TRS status because you haven’t reached minimum number of buyers affected – which is 5 for TRS accounts.

How to Reduce risks of getting a DEFECT to minimum

Without saying, your main task (as always) is to provide absolute BEST service to your customers. This means:

• High quality products which deliver;
• Proper, detailed product descriptions which leaves minimum room for interpretation;
• Professionally made product pictures;
• Honest condition description in case of used goods (don’t make it sound better than it is);
• Fast dispatch times (max 24 hours Mon.-Fri.)
• Reliable, preferably free shipping;
• Secure, suitable packaging materials for products you sell;
• Fast response to customer queries (max 24 hours Mon.-Fri.)

If you look at the defects list above, you’ll notice that many defects are related to “item not as described”. This again proves how important are your product descriptions and images. You simply have no choice but to get this part right! Create your listings in a way that it leaves no room for error!

Another important defect that you can get even by accident is last one on the list: 

• A transaction being cancelled by you due to the item being out of stock

If you run in such a situation when someone bought an item you don’t have anymore, do whatever it takes to leave the customer happy and DO NOT cancel transaction stating reason – out of stock. That will be classed as a defect. What you can do is ideally find the item somewhere else – buy it from Amazon or same eBay and fulfil your order.

If that’s not possible, get in touch with buyer: apologies and explain the situation. You could say that you had just one item left for example but it’s slightly defective so you can’t sell it and ask buyer to initiate transaction cancellation. This way you won’t earn a defect plus get your final value fees back.

If everything else fails, cancel transactions on your own but DO NOT pick “out of stock” as reason for cancellation.

How to Calculate Your Defect Rate

Your defect rate is calculated as a percentage of your total transactions, regardless of whether or not you received positive feedback for them.

As an example, let’s say I have an eBay store and in the last 12 months I’ve made 1,800 sales. And from these 1,800 sales I’ve had 32 defects and 1,000 positive feedbacks left for me.

That means that my defect rate is 32/1800 = 1.78%

So the number of defects divided by the TOTAL no. of sales (not just ones that you were left positive feedback for) times 100 (to get the percentage).

Basically eBay are saying that if you don’t hear from your buyer post-sale, they’ll “assume the transaction went well”.

How to Find Your Defect Rate

To find out what your defect rate is, you simply have to login to your account and go to your Seller Dashboard (under the My Account tab).

From there you can see an overview of your selling standard, including what percentage of your transactions had defects.

Another important thing to remember, that eBay don’t really make very clear, is that your seller performance will be monitored separately by region. So to see your performance ratings for different countries, simply select them from the box in the top right hand side:

From your account you can also run a Transaction Defect Report which is a tool that will help you review your performance and identify areas that require attention.

This report will include a full list of all transactions with a defect, including exactly what defect it was, so make sure you use this to identify any problems and fix them before you go over the maximum defect rate!

If this isn’t something that you’ve been monitoring closely then please; go and check your most recent report right now (they’re updated weekly).

It’s simply not enough anymore to provide an overall good experience and solely monitor your positive feedback percentage – with these changes eBay have made you really do need to keep an eye on everything 100%.

Even if a buyer seems happy and you resolve a problem completely, that transaction can still be counted as a defect.

It sounds ridiculous I know, but that’s just how it is and if you want to sell on eBay, you have to play by their rules…

In many cases a defect can be counted when a buyer never even meant to penalise you! There are countless such stories online and it is true – a defect can be counted against simply because your buyer selected the wrong option when contacting you to ask a question!

Also, it would seem this new system is even more open to buyer abuse than ever before BUT there are some safeguards in place to protect you, and in some circumstances you can get a defect removed so that it’s not counted in your seller performance standards.

That’s what we’ll be going over in Part 2, which I will publish this Friday.

Stay tuned.

All the best,
Andrew