The bigger and more powerful Amazon becomes, the more it tightens the thumbscrews on its suppliers. Many vendors are increasingly struggling with Amazon cutting their invoices because allegedly less merchandise has arrived at shipping centers than was billed, or because more and more rules and non-compliance with them come with penalties.
The costs for this can easily add up to high amounts per month and thus reach relevant orders of magnitude. If the causes are not identified and eliminated in time, these costs will keep accruing, thus increasing exponentially. This will put you in a cost trap that, at the end of the day, will mean you can no longer cover the costs of running the Amazon business.
In this article, we’ll explain the different types of chargebacks and show you what the most common reasons are for these charges by Amazon. We’ll also let you in on our years of experience dealing with these Amazon claims, and give you tips and tricks you can use to significantly minimize these deductions and save lots of money.
What are Amazon Charge Backs?
As an Amazon supplier, you must follow certain procedures and guidelines. In some cases, violations of this are punished with fines, the so-called charge backs. There are several types of charge backs on Amazon, most are associated with the ordering or logistics process. Basically, four different areas can be distinguished:
- Problems with purchase orders (PO)
- Problems with the notification (e.g. ASN)
- Problems with delivery/collection
- Problems with shipping preparation or packaging
What types of charge backs are there for vendors on Amazon and how can you avoid them?
Type of penalty | Explanation | Tips for avoidance |
1st area: delivery punctuality | ||
| Orders – Delivery (PO) | This fee is charged if you ship more items to Amazon than ordered in the PO. | Never deliver a larger number of the item than ordered (even if it should make logistical sense, or Amazon did not comply with the VPE when ordering). |
| Orders – Down Confirmed | This fee will be charged if you reduce the quantity outside the deadline ( e.g. delivery window). | If you need to reduce quantities subsequently, then by all means within the delivery window. Any change must be entered in VendorCentral. |
| Units not shipped | This fee is charged if you have confirmed items but they are not shipped. | If you cannot deliver items, cancel the item in question or the PO in VendorCentral. |
| Orders – delivery punctuality | You will be charged compensation for failure to deliver on time if your confirmed products, including backorders, are not received within the order window. | Ship packages on the first or second day after order receipt, if possible. For pallets, notification must be made within the delivery window. Please make sure that the carrier receives all the information and also reports any delays back to you. |
| Delivery – date and load | If your contracted carrier fails to show up on the agreed delivery date, or if acceptance of the load is refused (e.g., inadequately secured or wrong type of truck), charge backs will be due. (currently 290 EUR in case of no-show). | Delivery guidelines per warehouse can be found in Amazon’s Resource Center. Notification must be booked at least 24 hours in advance. Booked appointments must be kept and changes must be stored in VendorCentral. |
Area 2: Non-compliant or inaccurate ASNs | ||
| Notification – non-compliant ASN | Through the Advanced Shipment Notice (ASN), you provide Amazon with content and tracking info before the goods arrive at the Amazon logistics center. Incorrect ASNs and ASNs submitted too late will result in penalties. | The information in the ASN must match when notified. The ASN must be entered into Amazon’s system prior to delivery. In addition, the carrier must record the BOL/PRO number in the advance shipping advice. (BOL from ASN and BOL specified by forwarder in the notification must match). Changes must be deposited in VendorCentral. |
3rd area: Non-compliant information about the carton contents. | ||
| Delivery – carton labels | You have not provided information about the carton contents or the label could not be read. | Put Amazon compliant content labels on your boxes. |
4. area: preparation of products for shipment | ||
| Shipping preparation – repacking | The outer packaging of your items does not comply with Amazon guidelines (product could get dusty, or parts could get lost). | You will find an overview of the affected articles in your ARA under Product Catalog “Instructions for preparation required”. |
| Shipping preparation – barcode | Your item does not have a readable barcode that matches an Amazon ASIN. | Print the EAN code legibly on the respective carton. |
5. range: Shipping in original packaging (SIOC) | ||
| Shipping preparation – SIOC | Items exceeding a defined size must be delivered in shippable and certified packaging. | An overview of affected items can be found in VendorCentral under Operational Performance. |
More tips and tricks from our experience with a wide range of manufacturers:
Backorder: The delivery window will not be automatically extended just because you have confirmed the item in the backorder option. This option may be used as long as you do not fall below the 90% in the four week cycle.
No Show: If you have received No Show charges and are unable to track them, you can request notification information by case to file a claim against the carrier if necessary. Request the following data by case: Creation Date, Carrier request delivery time and date, Actual Arrival Date, Schedule Date, Checkin Date, Unloaded Date, Closed Date.
Desired date on delivery: If the carrier specifies a desired date on notification instead of Amazon’s date, charge backs will also apply. Dates which Amazon changes itself will not be charged.
Number of pallets: If one pallet is registered, only one pallet should be shipped… Example: External logistician packs one pallet on 2 pallets due to height restriction and ships 2 pallets.
No single code on outer packaging: If it is necessary to paste over an EAN code on the packaging, care must be taken to ensure that this is ALWAYS done.
Shipment preparation: if you think the charge backs are unfounded, you can object by case with appropriate pictures. The items are reviewed on the part of Amazon (Recommended order: 1. file an objection to the compensation payment directly and only if that was unsuccessful. – 2. contradict with images per case).
Preferred Carrier – Even if you ship with a preferred carrier, periodically ask for proof of shipment of their merchandise (also ask about restocking if necessary) so you can respond accordingly. It is difficult to make claims against the shipping company later. In doing so, make sure that the shipping company receives all the necessary information for the shipment and also gives feedback in case of any delays, so that you can adjust the PO accordingly, for example. (Preferred Carrier does not automatically mean that everything runs correctly here……)
You’re just thinking“help” right now?
Our team of experts looks back on many years of experience in dealing with Amazon. We help vendors from a wide range of industries and provide both consulting and operational support. Just contact us.
