When you’ve stopped receiving orders on Lazada, it doesn’t always mean that there’s something wrong with your CRO optimization (although that’s also sometimes a possibility). A lot of times your inability to receive orders is due to something called OVL limit. We will talk more about that in the coming paragraphs.
What Is OVL?
OVL stands for Order Volume Limit. This pertains to the maximum number of orders that your Lazada store is permitted to receive in a day.
What does that mean? It basically means that once your store has achieved its order volume limit, your products will no longer be available in the Lazada platform (at least for that specific day). Hence, buyers won’t be able to order your products anymore until your OVL resets the following day.
What Is Your OVL?
There is a default OVL of 10,000 for all Lazada sellers unless you are new to the platform (meaning you have only been using Lazada for less than 90 days) in which case your OVL would be locked at 150.
Why Do Lazada Sellers Need OVL?
At first glance, it might appear as if Lazada is trying to restrict sellers in terms of order fulfillment but upon taking a closer look, you will realize that the over volume limit actually services a function through the following ways:
- Ensuring that you don’t accommodate customers outside of your stock capacity
- Limit order intake for sellers with little manpower
- Helps sellers (with longer supply chain processes) not take more orders than their team can handle
Does My Performance Have Anything To Do With My OVL And How?
By default, no, because it’s a Lazada policy to give all sellers their respective order volume limit. However, over volume limit penalties can also apply if your seller performance in terms of cancellation rate (initiated by the seller) declines.
This policy follows a two-week time frame. If you initiate the cancellation of your orders (more than 5%) in the past two weeks (regardless of the status of the order), your OVL will be reduced to half of your daily average OVL from two weeks ago.
Another scenario that can lead to over volume limit deduction would be when you can cancel more than 3% of your ordered items that are already in Ready to Ship (RTS) status in the past two weeks. Your OVL will also be reduced to your average daily OVL in the former two weeks.
The final condition for OVL penalty/deduction is when you cancel more than 5% of your ordered items (regardless of status) in the past seven days, and your canceled products equate to more than five items, your OVL will be reduced to only 25% of your average daily OVL in the past seven days.
How Can OVLs Be Maintained?
The idea is that you need to avoid a seller-initiated cancellation rate rising to 3%-5%. But based on hands-on experience, this is easier said than done. So, here are some pointers that you can incorporate in your seller SOP to prevent the need to act upon seller-initiated cancellations:
- Only place stock counts that are available on-hand
- Anticipating incoming stocks and placing them on your Lazada inventory can make you lose track of the actual quantity count of your products. Hence, upon realizing that you don’t have sufficient stocks, you will have no choice but to cancel some existing orders.
- Only set an order to RTS if the item is actually packed and ready to be dropped off or pick up
- Due to unperceived events, an error in your workflow could invite the need to cancel an order. If the item is already tagged as RTS, you’d be putting your OVL at risk.
- Make sure that your stock and price levels are accurate
- By doing so, you will be able to process orders a lot faster. Otherwise, any reason to cancel an order could pop up every time.
What If Customers Keep On Cancelling Orders?
You don’t have to worry about OVL deductions when customers or delivery partners decide to cancel an order. Only seller-initiated cancellations are counted in OVL deductions.
How Do I Remove An Existing OVL Penalty?
Know that order volume deductions and/or limitations isn’t a long term penalty. As a matter of fact, the system refreshes the OVL limitations every week.
Lazada sellers are automatically given an order volume limit deduction if they fall under the cancellation rate precautions as stated earlier in this post.
Therefore, to remove an order volume limit, you simply need to improve your cancellation rate and you will most likely get back your default OVL in the following week. There is, of course, an exception, which we will be discussing in the section below.
I Already Improved My Cancelation Rate. The Penalty Is Still There. What Do I Do?
The order volume limit applies to 50% of your daily orders in the past two weeks. If you recently improved your cancellation rate and you still have an order volume limit penalty, it means you will get your default OVL in the next two weeks.
Lazada replenishes the order volume limit by increments. This means in the first week following the improvement of the cancellation rate, 50% of your order volume limit penalty will be lifted. The Lazada team will replenish the remaining 50% OVL in the following week given that you don’t breach the cancellation threshold. If you maintain your improved cancellation for the span of those two weeks, your OVL limitation will be lifted completely and you can get back to your default order volume limit.
OVL Vs. POL
There is some confusion with regards to POL and OVL due to both of them being related to order limitations.
OVL is the maximum number of orders a seller can receive in a given day. Meanwhile, POL stands for Pending Order Limit. This pertains to the number of pending orders a seller is permitted to have.
In what ways are OVL and POL similar?
- They are both limitation metrics
- Once a seller has reached the metric threshold, he will no longer be able to receive further product orders in the seller center.
In what ways are order volume limit and POL different?
- POL does not reset every weeks unlike OVL
- You need to process pending orders to lift the POL
LazMall brands and big-time sellers are the seller groups that receive the most impact from OVL penalties. The order volume limit puts a hedge between their current revenue and its maximum potential sales outcome. Learning what causes an OVL limitation and how to overcome it sets you in the right direction with regards to achieving your objectives and expanding revenue.