The document discusses strategies for Amazon vendors to reduce chargebacks and increase profitability. It begins with an overview of the key differences between vendor central and seller central models. It then provides tips on how to analyze chargeback data to identify root causes, including looking at chargeback types and pivoting the data. The document also discusses optimizing dispatch and receive processes, such as implementing electronic ordering and license plate scanning, to reduce errors. The main takeaways are to analyze chargeback costs thoroughly, review processes that could lead to shortages or late shipments, and consider alternatives like third-party fulfillment if individual products are unprofitable on vendor central.

1. Chris Khoo
chris@khoocommerce.com
+44 1403 802 000
Amazon Vendor Operations -
save your company £10000s
per year

2. #AmafestUK - Amazon Sellers Conference | Brighton
Today we’re going to look at:
● Briefly touch on Vendor Central vs Seller Central Models.
● How to dissect chargebacks and assess profitability.
● Look at root causes of shortages and where they arise.
● Explore a practical case study of a company successfully reducing shortage claims on Vendor
Central.
Overview

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I currently sell
products
on Amazon

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I currently use
Seller Central

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I currently use
Vendor Central

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I have a love/hate
relationship
with Amazon

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Vendors make up 30% of Amazon Businesses
Credit: JungleScout, State of the Amazon Seller 2023 report
In 2023, SMB Amazon sellers are…

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Seller vs Vendor Central
SELLER CENTRAL VENDOR CENTRAL
Product Ownership The seller owns the product Amazon owns the product
Pricing Control You control the retail pricing Amazon sets the retail price
Prime Status Yes with FBA or SFP Yes *Direct Fulfilment could be >1 day
Restocking DCs You choose products to send in FBA Amazon raises POs to re-supply
Sign-up process Self-start Invite Only
Returns Returned to you/FBA Handled by Amazon *Depends on contract
Customer Service More contact with end customers No / minimal contact with end customers
Warehousing You pay Amazon for FBA Storage and Fulfilment No cost
Are there a cost
for operational problems?
Yes Yes

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Vendor Central Model

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Vendor Central Model with fees

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Vendor Central Chargeback Types
CHARGEBACK NAME DESCRIPTION
Ship in own Container Items in a rigid box larger than 45.5 x 34.0 x 26.5cm or 12.3kg not FFP certified
Prep Issues
Products required bagging, bubble wrapping or sealing etc before safe to ship to
customers.
PO on Time Accuracy Orders shipped late, cancelled late, or didn’t arrive within shipping window.
Carton Content accuracy Discrepancy between states items in ASN and actual quantity.
Carton Information Compliance Carton Identifier unscannable or missing.
Unconfirmed PO Units PO was raised, but not actioned within 24 hours
ASN Accuracy ASN sent late, Unit mismatch, BOL mismatch, Expiry Date issues
Overweight/Oversized Carton Cartons over 23kg or single side larger than 63.5cm. (Single products are exempt)

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Let’s look at how to
analyse them
This is about to get technical.
If you would like a copy of these slides please email me.

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1. Go to VC view chargeback data

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2. Set time range and download as CSV
TIP
Choose a defined
period that is not
too recent,
eg Q1-2 2023.

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3. Select all the data and make a pivot table

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4. Choose Issue Type, Status, Sub Type, and Charge
Rows:
Issue Type
SubType
Columns:
Status
Value:
Sum of charge

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4b. The charged amount is your total cost over that period
● NotOnTime
● Prep
● SIOC
Main culprits:
● Over £33K in 6 months
in this example.

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5. You can also analyse at an ASIN level
You can either look at
charged total or grand
total depending on
your analysis.
You may want to break
down by subtype eg
prep vs operational
issues.

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5b. Export ASIN level sales from Amazon
You may need to do multiple periods due to
export limits and then re-combine in Excel
Open Selected POs -> Export CSV

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5c. Add in sales data to analyse profitability at ASIN level
1. Export and Pivot Sales Item Data
2. Columns: ASIN, Unit Cost, Received Qty
a. Unit Cost -> Set to Average
b. Received Qty -> Set to Sum
3. Total Revenue = Av. Cost
* Sum Received
4. Add in lookup for chargeback
data per ASIN
5. Add in column for Margin Analysis

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That was a lot!
But what should I actually do with all that info?

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Analysis Top Tips
1. Look for ASINs with consistently high prep costs and review if they should be
prep’d in your supply chain, not Amazon’s.
2. Look at your PO on Time Accuracy and review if your processes
are delaying shipments arriving with Amazon,
3. It might make sense to not sell some ASINs via VC if they are
actually costing you money to sell,
4. Split prep charges from operational charges and repeat the analysis.
This will help you understand what is ASIN-specific vs overall account impact.

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Let’s talk about Operational Fixes
1) Main operational issues are Shortages, PO on Time Accuracy, ASN
accuracy, and Carton Information Compliance/Accuracy.
a) Shortages can be caused by Packing and receive issues,
b) POoTA is caused by admin/operational issues and
delayed sending/processing,
c) ASN accuracy is either human error or product data
configuration issues,
d) Carton Compliance/Accuracy is due to labelling and packing
capture defects.

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All processes are susceptible to incurring chargebacks and shortages
Order Process Dispatch Process Receive
Process
Paper or Electronic
EDI or Manual
Manual or
Automatic
License Plate or
Manual Receive
POoTA
POoTA
ASN Acc
Shortage
Shortage
CIC

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Accurate Dispatch Processes is critical
Order Process Dispatch Process Receive
Process
Paper or Electronic
EDI or Manual
Manual or
Automatic
License Plate or
Manual Receive

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Amazon Dispatch Process
PROCESS MANUAL ELECTRONIC
Item Picking Confirmation Recorded onto paper pick sheet Scanned from shelf into box
Carrier Shipment Manually Made and tracked manually Integrated and Tracking number sent in ASN
Data entry into Amazon Re-entered into Amazon to create ASN Captured once at pack and ASN sent electronically
Label Printing Done at separate stage to packing Done as soon as packing completed
Number of labels 2 Amazon labels + 1 Carrier 1 Amazon label + 1 Carrier
Chance for Human Error High Low
Speed of process Slow Fast

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Receive Process at Amazon is also critical for shortage claims
Order Process Dispatch Process Receive
Process
Paper or Electronic
EDI or Manual
Manual or
Automatic
License Plate or
Manual Receive

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Let’s look at the Amazon Receive Process
Manual Receive License Plate Receive

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Amazon Receive Process
PROCESS MANUAL RECEIVE EFFICIENT RECEIVE VIA LICENSE PLATE
Box Opened? Yes No
Unit Scanned Individual Items Scanned Scanned at Carton Level
Speed Slow Fast
Chance for Human Error High Low
Chargeback from Amazon? Potentially for Carton Content Accuracy No
Source of Shortages? Yes, definitely No

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Dispatch and Receive Processes are critical for shortage claims
Order Process Dispatch Process Receive
Process
Paper or Electronic
EDI or Manual
Manual or
Automatic
License Plate or
Manual Receive
Changed to a new SSCC
process

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Systemised dispatch processes greatly improve accuracy and speed

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● Do an analysis of your chargebacks at an account, and ASIN, level.
● Where possible, compare with sales data at an ASIN level to drill into margin impact and understand
your real costs of operation.
○ Consider splitting the costs into general issues and product-specific issues to accurately
assess high volume products.
○ If considering 3P, contrast this with the FBA calculator in a super spreadsheet.
● If you have issues with shortages, consider using SSCCs and review your warehouse processes.
● If you have issues with chargebacks, do an account review to understand your flow of
orders/shipments/invoices to understand where issues arise.
Top Takeaways

33. Chris Khoo
chris@khoocommerce.com
+44 1403 802 000
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