Vendor Central chargebacks are tiny Amazon fees, but they all add up!
Vendor Central suppliers sell directly to Amazon, they have to pay a number of extra fees if their labels aren’t compliant, if their ASN’s are incorrect or if any of a number of compliance requirements are breached. These breaches can range from documentation errors, to preparation and packaging, labelling and many more. The cost of these breaches hits a business directly in the pocket; Can Vendors reduce their chargebacks and shortages?
How can Vendors avoid paying these Amazon Vendor chargebacks and reduce these Shortages?
What are Amazon Vendor Chargebacks?
Chargebacks are fees that Amazon charges Vendors when their deliveries do not line up with Amazon’s requirements.
These can include:
- PO (Purchase Order) Errors
- ASN (Advanced Shipping Notification) Errors
- Preparation and Packaging Inconsistencies
- Receive Process Errors
- Direct Fulfilment Chargebacks
For example, Amazon ordered 60 units from you to be shipped by a certain date.
- If the number of units is different, you’d face a PO chargeback.
- Maybe you shipped later than the time window specified in the PO which would incur an ASN chargeback.
- You may have boxed the items instead of bubble wrapping and boxing the items which would incur a Preparation and Packaging chargeback.
- You have unscannable, non-GS1-approved barcodes; that’s a receive process chargeback
- Or if you use Vendor Central to send directly to customers, but used an incorrect shipping method, that would be a direct fulfilment chargeback.
These chargebacks can be costly and incredibly numerous, so it’s important for Vendors to avoid them whenever possible.
How to Reduce Vendor Chargebacks
In two words; stay compliant.
However, that’s easier said than done, there are a whole host of potential errors that a Vendor can make. You have to run a business on top of your dealings with Amazon, so it’s unlikely that you have the time to everywhere, all of the time!
With that said there are some steps that you can take:
Resend your ASN for confirmation
An ASN must arrive before your product arrive at the Amazon Fulfilment Centre. If anything has changed about your order since the last ASN that you sent, then you will be charged for each discrepancy. Luckily, Amazon doesn’t mind if you resend ASNs, they will only count the latest one that you send – just make sure that it’s correct!
Review Amazon’s Packaging Rules
If you review the rules for packaging Amazon items, you shouldn’t have a problem classifying your own products within those categories. Ensure that your production line or supply chain is effectively matching those restrictions.
To increase your chances, you can also…
Highlight Potentially Difficult Products
Got a product that may need different packaging? Make sure that you consider how to reduce vendor chargebacks and highlight those products before you begin fulfilling those orders. You don’t necessarily have to be on the production line overseeing it, but you can make sure that your employees take extra care with the products.
Get Your Labels Upgraded
Amazon’s incredibly powerful supply chain runs so well due to one thing – automation.
Part of that requires you to have GS1 standard barcodes that are easily scannable and legitimate. So make sure you brush up on your barcodes and labels knowledge!
Record Everything; Challenge Everything
The issue with large scale automation is that it picks up exceptions, not errors. Most of the time, these exceptions are errors. However, sometimes Vendors can be wrongfully charged! If you can record and dispute every single charge that comes your way, the burden of proof lies on Amazon to show that your chargebacks were valid. You may discover that you can reduce all of your Vendor chargebacks this way!
What are Shortage Deductions on Vendor Central ?
In summary, shortage deductions on Vendor Central mean Amazon is saying that you as a Vendor did not ship the number of products that you had agreed to supply them in your order confirmation. Amazon call this a Purchase Quantity Variance (PQV)
PQV deductions are by far the biggest deductions Amazon will impose on a vendor and cause serious delays in Amazon processing invoices for payment.
Can a Vendor recover these shortage deductions?
The short answer is YES, but it is time consuming without the correct process and tools.
How to Stop Shortages
The first thing you could do is perform a number of simple checks on your own internal processes, for example:
- Make sure the ASN (Advanced Shipment Notification is done before the shipment reaches the Amazon FC (Fulfilment Centre) and that the number of units shipping match the PO confirmed numbers.
- Often the EAN/UPC is different to what is listed in the Vendor catalog so it’s a good idea to update your catalog regularly.
- Check that your labels are GS1 Compliant and placed on cartons/pallets as required by Amazon Shipping Guidelines
- Ensure there is only one scannable EAN/UPC/GTIN/ASIN for each unique unit or master pack
- Global Trade Item Numbers (GTIN) are among several numbers that are used to identify each and every product sold on Amazon. It is a universal identifier that is found on the product’s cover or packaging, either above or below the bar code; The GTIN can be scanned if the carton label cannot be scanned at the Amazon FC for any reason once it is included in the Amazon GTIN Gold Listing
The Easy Way to Recover Vendor Chargebacks and Shortages
Automation tools now make it far easier to remain Amazon compliant.
With VC Managed Service, you can do just that. In fact, it’s so effective that our clients have seen a 70% regain of their revenue, and a 68% improvement in operational performance.
This tool can identify supply chain defects, stock-receipt issues, automatically update and send your ASNs and keep your operational requirement margin to <5%.
It can do all that while you make yourself a coffee.
VC Managed Service will also maintain a constant record of documentation and dispute every chargeback and shortage made against your business. This is a tool that works 24/7 to reduce your chargebacks and shortages while you focus on your business. Get in touch with one of our specialists today and learn more about our rolling contracts for Amazon Vendors! Remember to check out our ecommerce guides and resources to stay ahead of the game and keep your profits on the rise!