How Vendors Can Avoid Amazon Chargeback Fees
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How Vendors Can Avoid Amazon Chargeback Fees
Nov. 3, 2015•0 likes•5,579 views
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Retail
From packaging problems to technical errors within an Electronic Data Interchange (EDI), Amazon will charge vendors for almost anything they can & most of the time vendors don’t know these fees occur. In almost every case, these chargeback fees are preventable.
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How Vendors Can Avoid Amazon Chargeback Fees
- Amazon Vendor Chargebacks Identifying Types of Chargebacks & Best Practices to Prevent Deductions to Your Revenue AMAZON VENDOR COURSE
- Logistics Session Recording Will Be Sent Next Week Q&A Following the Presentation Submit Questions In the Chat Box to the Right T O D AY ’ S S P E A K E R S Jeff Coleman Director, Account Management CPC Strategy Katie Lavieri Vendor Services Manager CPC Strategy
- OVERVIEW • Founded in 2007 • Recognized as an Official Google Shopping Partner • 300+ Active Retail Clients • Top 50 fastest growing company in San Diego 3 years CLIENTS About CPC Strategy SOLUTIONS • Retail-focused Paid Search (PPC) • Google Shopping Management • Shopping Channel Management • Amazon Sales Acceleration
- Poll For The Audience… How many of you have dealt with Amazon Chargeback fees before? I have, frequently. I have, but not very often. I’ve never dealt with chargeback fees before. I don’t know what chargeback fees are.
- Katie Lavieri Vendor Services Manager Directed fulfillment process to contribute over $1 million in prevented and disputed chargebacks while at Currently manages Amazon Vendor Service offerings at CPC Strategy Former member of Nixon’s Global Retail Operations team Managed EDI for Nixon US Created and lead Nixon’s Vendor Compliance Department for US and EMEA
- Course Overview • How Amazon Chargeback Fees Negatively Impact Revenue • The 5 Main Types Of Amazon Chargeback Fees • How To Locate Your Chargeback Fees In Vendor Central • Actionable Steps To Prevent Amazon Chargebacks • Disputing Invalid Charges & What To Expect • Q&a
- How Amazon Chargeback Fees Negatively Impact Revenue Amazon chargebacks = operational non-compliance fees Deducted from remittance checks Small operational errors can cost Vendor thousands of dollars Sales Targets Examples
- The 5 Main Types of Amazon Chargeback Fees 1. PO Related Issues – Most common form of chargeback • Any ship window violation, PO confirmation error 2. ASN Related Charges – Advanced Ship Notice • Includes vendor central and EDI ASNs 3. Prep Related Charges – Amazon has very specific requirements
- The 5 Main Types of Amazon Chargeback Fees 4. Transportation Related Charges • Shipping and delivery fees 5. Receive related issues • Carton, barcode & label issues
- How To Locate Your Chargeback Fees In Vendor Central Payments Tab Vendor Operational Reporting Filter by date
- How To Locate Your Chargeback Fees In Vendor Central Chargeback types Extracting data
- Actionable Steps To Prevent Chargebacks PO –Compliance Ship window awareness Confirmation compliance ASN Related Charges Vendor Central manual ASNs EDI mapping
- Actionable Steps To Prevent Chargebacks Prep Related Charges Bagging Bubble wrapping Taping
- Actionable Steps To Prevent Chargebacks Transportation Related Charges Routing Appointments Receive related issues Carton content label Barcode on product Dunnage
- How to Dispute Invalid Chargebacks Proof of invalidity Excel, screen shot, text file Explain why it’s invalid in clear, concise terms
- How to Dispute Invalid Chargebacks Send Dispute via Vendor Central Reach out to the buyer or create a support ticket
- Questions for Katie? Submit your questions in the chat box on the right cpcstrategy.com/amazon-evaluation/ www.CPCStrategy.com | 619.501.6138 | contact@cpcstrategy.com Apply For A Free 60 min. Retail Search Audit
Editor's Notes
- Amazon is widely known among the vendor community as a heavy applier of charge backs. Charge backs are operational non – compliance fees for not following Amazon’s very specific order management and fulfillment process. Amazon has a charge back schedule posted in vendor central detailing how much of a charge is deducted for each type of compliance violation. Some of these fees are a percentage of the unit’s value, a flat fee, or sometimes a combination of both. Vendors have a 90 day grace period at the beginnings of their Amazon business in which they are warned about an upcoming charge back and sometimes in this period charges are waived. However, after that 90 day period, there is not a warning to let the vendor know charge backs are being applied. These charges will appear on vendor’s remittances. These charges can add up to thousands of dollars on each remittance check. Keeping an eye on charge backs and evaluating your operational process and performance is absolutely key to minimizing remittance deductions. This is so incredibly important because these charges can become so large that they can prevent a company from reaching target sales goals. For example, Company XYZ has projected to hit $500,000 in revenue in their last quarter, but they shipped some orders without requesting the proper routing and cartons did not reach the Amazon fulfillment center by the cancel ship dates. All of a sudden, Company XYZ is $10,000 below their projected revenue expectations. Let’s review how vendors can educate themselves on charge back management and prevention.
- So let’s get right into the types or categories of charge backs. There are 5 major ones. Some of these will not be listed in Amazon’s charge back schedule, but we’ll review all of them in depth. PO Related – This is the most common type of charge back because it covers a large area of compliance requirements So any violation related to ship windows, back orders, PO confirmations, and over or under shipping. This also includes charges for EDI 855 Purchase Order Acknowledgement defects. ASN Related charges – ASNs, short for Advanced ship Notice, are required for all packaged whether or not a vendor is using EDI. These charge backs encompass any violations for sending an ASN late, or not sending an ASN at all. Prep Related Charges – Amazon has very specific requirements for how items are to prepped for shipment. These charge backs are for not complying with any polybagging, bubble wrap, taping, carton box defects, set creation or mandatory suffocation warning packaging.
- Transportation related charges – These charges are given for international shipments missing routing or late booking, or late delivery. For example, if a company was not able to ship the products by the last day of the ship window, there will be a fee because the package arrived at Amazon’s fulfillment center later than they were expecting it. 5. Receive related charges – Any charges related to carton defects like Po # not listed on cartons, GS1 – label or UCC – 128 label missing or unscannable, no dunnage, or a missing packing slip. A common receive related issue is an unscannable barcode in the GS1 or UCC – 128 label, which is the label placed on the outside of a carton. The barcode not scannning could be due to back end operational errors, EDI issues or just that it got scrapped off in the shipping process. In any case, if Amazon’s ware house is not able to use the barcode to scan in the products, they have to enter them into their system manually, and a charge back will serve as a penalty.
- So Amazon’s vendor central vendor portal allows vendors to see these charges going back up to one calendar year. If you go into vendor central and click on the Payments Tab, then select Vendor Operational Reporting. On the left side of the page there is a filter that allows you to see charges by 30, 60, 90 and 365 days of historical data. I would suggest filtering up to 365 days back initially, just because seeing all the charges over the course of the year will give you a more accurate picture of operational health. You may have been given more charge backs in one month or quarter than another, so definitely look at the yearly view. This will give you an idea of the percentage of revenue that were lost to charge backs. Once you have your filter applied, take a look at the five categories of charge backs. There will be totals for each category as well as a bar chart to the top right of the page. If you would like to extract this data into excel, you’ll need to double click on each charge back type header. It will take you to a new page with just the details for that specific charge back category. The right middle of that page has an export to excel option. This is really handy is creating charge back tracking reports.
- Once you have your filter applied, take a look at the five categories of charge backs. There will be totals for each category as well as a bar chart to the top right of the page. If you would like to extract this data into excel, you’ll need to double click on each charge back type header. It will take you to a new page with just the details for that specific charge back category. The right middle of that page has an export to excel option. This is really handy is creating charge back tracking reports.
- We will later touch on disputing Amazon charge backs, but the best way to deal with them is to prevent them all together, which is what we will cover here. So, let’s talk about preventing PO compliance charge backs. The most common Po related charge back is called On – time non compliance, which basically means the package did not arrive at Amazon’s fulfillment center by the Purchase Order’s ship window cancel date. Amazon is known to shorten ship windows unexpectedly, so the best course of action here is to reach out to your Amazon buyer and request a longer ship window. You also have the option to request what day you receive POs on by submitting a ticket in Vendor Central. Another common PO compliance charge is for incorrectly confirming POs. Now there are two ways to confirm POs, one is through Vendor Central, or through the EDI 855 Purchase Order Acknowledgement Document, both of these methods require that a PO is confirmed within 24 hours after Amazon sends it. Amazon counts weekends as business days, so keep that in mind if you’re receiving POs on Friday afternoons or Friday nights. If you’re not using EDI, make sure you’re checking vendor central frequently and denying or confirming POs within the 24 hour window. If you’re using EDI that is integrated with your ERP or Enterprise Resource Planning system and still seeing these charge backs, there is probably an issue with the 855 mapping. Also, if you’re using EDI to confirm PO’s it is best practice to map the 855 to confirm units in the PO instead of the PO as a whole. That way you can avoid getting other charges for under shipping. Okay, on to ASN (or Advanced Ship Notice) related charges. This category also splits into different action paths depending on if you use EDI or not. Let’s dive into the non- EDI path first. So if you are not using EDI with Amazon, then Amazon expects that the ASN is sent from vendor central manually. This must be sent the same day the package is shipped off to a fulfillment center. This will enable Amazon to use the ASN to scan in your package when they receive it. If they get the ASN late, or it’s missing, Amazon employees will have to enter the package into their warehouse manually, which is why they apply a charge. So make sure you’re sending those ASNs on time in vendor central. Alright now if you’re using EDI to send ASNs it’s a whole other ball game. To prevent late or missing ASN charge backs, check with your EDI provider and request 997s or functional acknowledgements for Amazon 856s. This will let you know if Amazon is receiving ASNs correctly. If they’re still giving you charge backs for this and have proof of their 997, you can dispute the charge backs by uploading the 997 in a text file in vendor central. We’ll touch more on that process later. Another common EDI ASN charge back is for not having the correct Standard Alpha Carrier Code or SCAC code. Make sure your EDI mapping has the correct SCAC code for your shipping method. The SCAC is different for collect and prepaid shipping, so if you’re unsure what to put in the SCAC code field, reach out to your EDI provider or create an EDI help ticket in vendor central to request the correct code. *** break into more slides
- Let’s get into prep related charges. This category is tricky to navigate making actionable steps against charge backs, because it usually involves changing how warehouse operations are run. In the graphic below we have a break down of all the charge backs related to Prep issues. The categories include product polybagging, external bubble wrap within a carton, taping, including a suffocation warning and set creation. Each category sold on Amazon has a unique set of prep requirements. I would suggest heavily reading the vendor compliance manual the buyer sent over when business started. You can also see how to prevent each charge back by clicking on the links in the picture below. If your warehouse packing operations are not able to comply with some of the requirements listed above, it may be beneficial to anyalze what financial impact the company would see if changes were made. For example, if company XYZ does not polybag any of their items and is thus seeing Amazon charge backs, the company could run an analysis to see how much it would cost to purchase polybags, how much it would cost in labor to add polybags to items and then compare if those costs are less or greater than Amazon charge backs for not polybagging.
- On to transportation related charges. This category is fairly simple to correct any issues with. It’s just a matter of properly requesting routing within vendor central. It’s easy to forget to so, since it’s a process that unfortunatley cannot be automated. Also if you’re shipping internationally, make sure to schedule appointments at the final destination’s FC so it is scanned in properly. The next category, receive related issues can also be a little tricky to navigate through. If you’re seeing any charge backs in this category, it’s because something with the way the items are packaged up stops Amazon from processing them quickly. A common charge back in this category is for incorrect or missing carton content labels. To correct this, make sure the carton content labels, no matter how they are printed out, have the PO #, a scannable barcode, the ASIN, UPC and the most important one… the number of units in the carton. You can print this label out directly from Vendor Central, or if you’re printing it out from your ERP system, look into how the carton label’s mapping can change to comply with Amazon’s standards. Again, all this information is readily available in vendor central. Amazon also requires that each item in the carton is indivudually labeled with a barcode that is linked to it’s UPC. So make sure you’re labeling each product and have a UPC for all your items. Another common receive related issue is non – complaint dunnage. To avoid this, only use foam, air pillows, bubble wrap or full sheets of paper to pack items. Do not use styrofoam peanuts, packing peanuts, crinkle wrap or shredded paper. Using any of those packing materials will result in some high fees. Vendor central has tons of training videos on how to correctly package and ship for your specific category.
- Amazon may give you charge backs that you believe are invalid. There is a process to dispute them, but you’ll need to set aside 10 – 15 minutes to create the dispute as well as have proof that the charge back in not valid. This proof could be a text file of an EDI translation, a screen shot of an Inventory cycle count or a spreadsheet. These are just a few examples of what platforms you can use to show that you have proof necessary to show you followed operational compliance. Once you have the file of proof ready, log into vendor central and hoover over the Payments Menu and select Vendor Operational Performance. There will be 5 charge back categories. Click on the category associated with the charge back you are disputing. You will see a list of charge backs on the next page. To the very left of the charge backs you are disputing will be a check box. Check that box. Side note – you can check more than one box to dispute multiple charge backs at the same time. BUT all the charge backs have to be for the same Issue Type. You can see the issue type in the 6th column from the left. Once everything is selected, scroll to the bottom of the page and select the yellow button on the bottom left hand corner that says “dispute selected charge backs”. Quick note here – Amazon will only allow you to dispute charges that are less than 60 days old. If you see a check box for a particular charge back is missing, that is because Amazon already reversed it or it is too late to submit a dispute. After you hit dispute, you’ll see a lot a data explaining why the charge back was applied and what data you will need to dispute it. Hit “dispute” assuming you already have a file ready to upload that has the proof needed. Select the dispute reason, most likely it will almost always be “Amazon Error”. In the “Vendor Comment Box” briefly explain why you did correctly follow Amazon’s operational procedures. Quick tip – be sure to make the request friendly, as these are reviewed by a human, so it’s not just a machine reading the comments. Okay upload your attachment and when you’re ready, select the yellow “dispute” button to finalize the charge back removal request. It’s pretty common to not hear a response about the outcome of the dispute for up to 30 days. You can try to speed this along by letting your buyer know about the disputes and also submitting a ticket in vendor central. You can easily do this by opening a support case with the support topic “Vendor Operational Performance (Charge Backs)” and for the Specific Issue drop down menu, select the option that says “I need help understanding the chargeback I received”. When you describe the issue, explain you’re waiting for a charge back removal approval and would like an update.
- After you hit dispute, you’ll see a lot a data explaining why the charge back was applied and what data you will need to dispute it. Hit “dispute” assuming you already have a file ready to upload that has the proof needed. Select the dispute reason, most likely it will almost always be “Amazon Error”. In the “Vendor Comment Box” briefly explain why you did correctly follow Amazon’s operational procedures. Quick tip – be sure to make the request friendly, as these are reviewed by a human, so it’s not just a machine reading the comments. You can track the status of all charge back disputes at the bottom of the vendor operational performance tab. The highlighted area in the slide is where you can see what is pending, approved, disputed etc. If you want to take it a step further to help push along the dispute process, you can create a ‘support case’ in vendor central asking for an update on the charge backs you disputed. If you’re a new vendor and have a good working relationship with you buyer, it may help to reach out to them and ask for assistance if the charge back has not been reviewed after 30 days of disputing it. Amazon can take up to 60 business days to fully review the charge back dispute claim and come to a decision whether or not to reverse it, just something to keep in mind in terms of timing. If the charge back has been successfully reversed, great job! The refund will appear on your next remittance check.