If you manage to keep a clear Amazon Vendor chargeback list – then you should have no issues. That is, in theory at least. We all know the theory doesn’t always translate well to the real world. However, knowing exactly what an Amazon Vendor should avoid is a strong start.
But where to begin?
There are an enormous amount of chargebacks both great and small, and each one of them cuts a significant chunk of your overall profits. A three percent chargeback here, a five percent there, and pretty soon your Amazon chargebacks are running into the thousands. Not to mention that if your performance score drops low enough because of these, you will face even harsher reprimands.
But it is easier said than done after all – to manually review, process and refute these chargebacks requires time and effort and can become a drain on manpower. To analyse your operations and identify potential chargeback causes can also become another issue entirely.
But the companies that contest these chargebacks successfully can save hundreds, even thousands in profit every single quarter. So let’s begin, a complete chargeback list for Amazon Vendors. We’ll start by explaining why chargebacks exist and give you a breakdown of the complete chargeback list.
After that, we’ll show you how to avoid chargebacks as well!
Why Do Amazon Vendor Chargebacks Exist?
Before we get to our Amazon Vendor chargeback list, you must realise that these chargebacks are not unique.
Vendor chargebacks are not exclusive to Amazon at all. Mass retail channels of big block chains introduced them during the 1970’s. These enormous companies realised that their supply chains required a tremendous amount of logistics and organisation to handle and an even larger volume of inventory to ensure maximum profits.
That’s when technology arrived.
Automated warehouses and technology gave the opportunity to effortlessly track and manage product flow with minimal human intervention. These included scannable labels and shipping notifications detailing what, where, when and how many of each product. This ensured timetabled organisation and a more expedited supply chain.
This system streamlined the entire process and made burgeoning systems more efficient – but only if it worked perfectly.
How would they fix labelling issues and missed delivery slots? Issues such as required manual labour and oversight. Both of which cost time and money. These enormous companies were now faced with a conundrum. They needed multiple vendors selling a variety of products across different industries to comply with their rules. This also included a way to enforce these rules, otherwise the entire supply chain would face increased delays and costs.
Hence, Vendor chargebacks were created.
These fines would ensure that vendors had to adhere to their strict business guidelines, or face financial punishment. Small ones, to be sure, but if vendors were not careful – they would continue to grow and grow.
The Amazon Vendor Chargeback List
We know this is what you’ve been waiting for. A comprehensive list of the chargebacks that each Amazon Vendor can and does face on a daily basis. Like with our Vendor Central Guide, we’ll break these down into a few bitesize sections to differentiate between them.
- Purchase Order Chargebacks
- ASN Chargebacks
- Preparation / Packaging Chargebacks
- Receive Process Chargeback
- Direct Fulfilment Chargebacks
Purchase Order Chargebacks
These are the chargebacks relating to your Purchase Order or PO. This is the document containing the order information for your products, including quantity and dates. These Purchase Order Chargebacks can be broken down into 3 sections:
- Not On Time
- Down Confirmed
- Not Filled
Not On Time
The first is the most simple. Perhaps your Freight Ready Date (FRD) was set outside the ship window as set on your PO. Or your Carrier Requested Delivery Date (CRDD) was outside the window set out on your PO. If either of these events occur, then you can face Amazon Vendor Chargebacks of 3% of the cost of every product that was non-compliant!
The second is Down Confirmed. This event is when you reduce the confirmed number of units on the PO five calendar days after the start of the ship window. Any changes made after this time period incur a chargeback of 3%of the total cost for the missing units.
Finally you have the worst of the Purchase Order Chargebacks – Not Filled. You failed to send the products confirmed on the PO before the PO auto-cancel date. As you have failed to provide your services, you are charged a full 10% of the cost of every product that is auto-cancelled!
ASN Chargebacks are due to miscommunication between yourself and Amazon. An ASN is an Advanced Shipment Notification. This is the reporting method between Vendors and Amazon in relation to shipment content and carrier tracking.
ASN chargebacks occur when items arrive at the fulfillment centre before receiving an ASN, or by submitting an ASN with missing or incorrect information. This can be anything including:
- Incorrect quantities
- No Expiry Dates
- Progressive Tracking Number (PRO) and Bill of Landing (BOL) do not match
Any errors could be costly, with chargebacks varying from between 1% – 6% of item cost. This amount can vary depending upon your levels of previous compliance as well. So if this is a first-time offence, it is barely more than a slap on the wrist. If you have a history of these mistakes then…
Preparation / Packaging Chargebacks
As a Vendor, each and every one of your products must be finely prepared according to explicit instructions from Amazon. They handle thousands upon thousands of items at each centre every single day, and the manpower involved to repackage and prepare your shipments is costly. Not to mention it delays customers who want to buy your products.
So our Amazon Vendor chargeback list for packaging includes:
|Bubble Wrap –
|Ensuring fragile objects are bubble wrapped for safety
|Loose items must be taped
|Easily damaged and loose products must be boxed
|Products in danger of dust or leakage must be bagged
|Opaque Covering –
|Products with vulgar language or nudity must be opaquely covered
|Suffocation Warning –
|Bagged packages require a suffocation warning
|Set Creation –
|Multipack items must be packaged together securely and labelled as a set
|Hanger Removal –
|All clothes require removal of hangers before shipment
Each and every infraction for a product will receive a varying charge of the cost per unit. Not to mention it severely damages your Amazon compliance score.
Receive Process Chargebacks
Quite possibly the most worrying points on our Amazon Vendor chargeback list are the ones in the Receive process. This is the moment when your products are within the Amazon warehouse, yet have issues when it comes to Amazon’s automated systems.
These are a range of possibilities including
- Missing PO Labels
- Missing / Incorrect / Unscannable barcodes
- Unapproved packaging materials
- No Carton Content Labels
- Overweight / Oversized Cartons
- Expired products
These Amazon Vendor Chargebacks can be as high as 25% of the cost of each carton. These sky-high chargebacks can build enormous costs for your business – and not ones that can be written off on your taxes each year! A huge amount compared to the costs of making sure your barcodes are all GS1-approved.
Direct Fulfillment Chargebacks
These chargebacks only appear when Vendors use a direct fulfillment method (shipping orders directly to a customer via your Vendor Central account without first sending your product to an Amazon warehouse.)
These can be either:
- Cancellation charges
- Incorrect shipping method charges.
You will receive a $10 chargeback for every cancellation of an existing order or for a denial of an incoming one (another reason to make sure that your inventory is up to speed!) Another $10 charge is made for every delivery that is provided via a different method or carrier than that which is stated in the original order.
The Issue With Amazon Vendor Chargebacks and Shortages
Generally speaking, they increase supply chain processes exponentially. Standardised regulations and guidelines for Vendors ensure speedier processing which is beneficial for both Amazon and the Vendors.
The problem is the scale of automation.
Computers are incredible inventions but they are not perfect. Has your Alexa or Siri ever misheard you? Even a desktop computer needs a little CTRL+ALT+DEL once in a while to fix a frozen program. These issues are fixable because they have no real drawbacks. However, on a large scale these automated systems trigger errors that are wrongly attributed to Vendors. Their automated systems only track exceptions in the process, even if it is the system itself that is the cause.
Amazon is the largest distribution opportunity for most Vendors. However many businesses are unwilling to challenge unfair vendor chargebacks and shortages. It is put down to “the price of doing business” when they could reclaim their revenue and hard-earned profits.
So How Can You Use This Amazon Vendor Chargeback List?
One one hand you can use this Amazon Vendor chargebacks list to stay compliant.
You can be vigilant along your entire supply chain, ensure that you have dotted the i’s and crossed the t’s on every single paper form, double check that your labels are valid and scannable. While you are at it, make sure to oversee all the packaging and preparation – after all, micromanagement is easy, right?
Absolutely not of course. If you discover chargebacks are severely inhibiting your business, you need to discover if these are rightly or wrongly being applied. Every month Amazon Vendors have a 30-day window to dispute chargebacks and shortages. You need to record evidence across every aspect of your business and manually dispute each one that crops up.
The other option is to use this Amazon Vendor chargebacks list in conjunction with a Managed Service tool.
What’s a Managed Service Tool?
A Managed Service tool is your new best friend.
It freely challenges chargebacks and shortages without costing you and your business time or effort. Automatically logged disputes are sent directly to Amazon. When it comes to disputing chargebacks, if you don’t ask, you don’t get. Thanks to automation, it’s one less job for you to worry about.
Obviously preparation and packaging are a result of mistakes within the warehouse process. However, a Managed Service solution is intelligent enough to provide action AND advice.
Managed Services not only reclaim revenue in the short term, but identify the root causes of Vendor chargebacks and shortages. They then suggest or even automatically implement corrective actions that will strengthen your operational process, reduce your PQV and maintain compliance with Amazon’s performance requirements. Even if it cannot manually ensure that packaging is prepared correctly, it can highlight potential issues and the products most likely to be incorrectly prepared.
Amazon Vendor Chargeback List – Our Conclusion
Luckily there is one tool that not only offers all this, but it also offers you a free audit on your Vendor Central account – so you can see how much you expect to save.
So after a free audit, this Vendor tool will start logging all your evidence and use this information to automatically dispute Vendor chargebacks and start saving you money. You can regain your revenue and start increasing those profits month-by-month while strengthening your supply chain. Best of all, it operates on a monthly rolling basis – so you’re not worried about being locked in!
Sign up for a free audit now and one of our representatives will contact you!