What is the Cancellation Rate?
The Cancellation Rate is the number of seller-fulfilled orders cancelled by the seller prior to ship-confirmation divided by the number of seller-fulfilled orders within the relevant time period.
Cancellation Rate = (CancelledOrders) / (TotalOrders)
When computing this metric, we consider all order cancellations initiated by the seller, with the exception of those that are requested by the buyer using the order-cancellation options in their Amazon account. Pending orders that are cancelled by the buyer directly on Amazon are also not included. When an order comes in, it's very important that the item is in stock and available to ship. Pre-fulfillment order cancellations that are not in response to buyer requests can point to areas of improvement in your inventory management. We suggest that you work toward achieving and maintaining a pre-fulfillment cancel rate of less than 2.5%. We also require that you cancel no more than 2.5% of your orders.
A green check-mark in this column means that your performance is meeting Amazon's target for this metric.
A yellow exclamation point this column means that your performance does not currently meet Amazon's target for this metric. You should take steps immediately to improve your performance in this area. Performance at this level will not generally result in the suspension of your selling account, provided you are actively working to improve your customers' satisfaction.
A red "X" in this column means your performance does not meet Amazon's target for this metric and continued performance at this level may result in suspension or removal of your seller-fulfilled selling privileges.
Why are seller-cancelled orders bad?
It's important to ensure that items you've listed on Amazon are in stock and available to ship. When you cancel an order placed by a buyer prior to fulfillment, it's usually because the item is out of stock. Of course, some percentage of stock-outs may be unavoidable in normal business practice, but we expect you to try to minimize such issues. High cancelled order rates are a problem that can impact your selling account. In the short term, it also negatively affects your bottom line because an unfulfilled order is lost revenue to your company.
What is the difference between a refunded and a cancelled order?
A decision not to fulfill an order prior to ship-confirmation is treated as a cancelled order. Once an order is ship-confirmed, a decision to accept a return or not ship an item is treated as a refund. Refunds are not always negative events but a high Refund Rate can often be a sign of an underlying issue worthy of review.