Limiting Amazon Chargebacks in Amazon Vendor Central
Chargebacks are sanctions levied on vendors failing to adhere to Amazon's operational process criteria, which might include mistakes such as incorrect labeling of cartons or shipping delays to Amazon's fulfillment centers. These penalties aim to motivate brands to conform to Amazon’s protocols, promoting them as a means to uphold quality, rather than a mere operating expense of doing business with Amazon. In the dashboard, certain views make a distinction between charged amounts and amounts that have been waived for various chargeback categories. Notably, Amazon might choose to waive penalties during the roll-out phase of new chargeback policies, or when a vendor successfully disputes an incorrect chargeback.
Assessing Your Chargeback Situation
To effectively evaluate your chargeback performance, log in to the Operational Performance dashboard within Vendor Central. Reach this section by selecting 'Reports' and then choosing 'Operational Performance'. This dashboard provides an exhaustive review of the chargebacks tied to your account over a specific timeframe, including granular breakdowns of the ASINs and POs associated with these penalties. For a deeper insight, Amazon furnishes a detailed report, organized by marketplace and purchase order IDs, available within Vendor Central. Access this data by clicking on the listed chargeback amount, allowing you to export and download the comprehensive report straight from the chargeback portal.
Navigating Amazon's Strict Process Requirements
Amazon is renowned for its rigorous process standards designed to ensure smooth operations and timely order fulfillment for customers, a critical aspect of its online marketplace. However, enforcing these strict standards can occasionally result in strained relations between Amazon and its vendors. A major source of this tension stems from the penalty chargebacks that Amazon issues when vendors fall short of specific policies.
To further your understanding of chargebacks, let’s explore the diverse categories of penalty charges that vendors may encounter within Amazon's Vendor Central platform:
1. Advanced Shipping Notification (ASN) Accuracy
Definition: The ASN is a digital message that contains vital details about the contents of your shipment and its carrier tracking information. Vendors are required to send this notification before their shipment reaches Amazon’s Fulfillment Center. An ASN Accuracy Chargeback is issued when the ASN received by Amazon via EDI is inaccurate or missing.
Avoidance Strategy: Regularly liaise with your EDI partner to ensure accurate and timely ASN submissions to Amazon.
2. Unannounced Carrier Absence
Definition: This chargeback arises when a carrier misses a confirmed delivery appointment without prior cancellation.
Avoidance Strategy: Work closely with your carrier partner to follow proper appointment booking and cancellation protocols via Amazon's Carrier Appointment Request Portal (CARP).
3. Shipment Carton Content Accuracy
Definition: This penalty arises when the physical contents of a received carton diverge from the information specified in the ASN.
Avoidance Strategy: Regularly verify that your ASN and the actual contents of your cartons align, particularly when product quantities or packaging sizes change.
4. Non-Compliance with Carton Size Guidelines
Definition: This penalty applies when a carton sent to Amazon's fulfillment center exceeds the size limit of 63.5 cm on any side, except when the sellable unit itself is larger.
Avoidance Strategy: Regularly review carton sizes, especially for shipments containing multiple sellable units, to ensure they meet Amazon’s specifications.
5. Carton Labeling Compliance
Definition: This chargeback pertains to cartons received at Amazon's fulfillment center that are either unlabelled or labelled incorrectly.
Avoidance Strategy: Ensure carton labels, including barcodes, are clear, legible, and scannable, and that they correspond with the information in the ASN.
6. Carton Weight Limit Violations
Definition: Penalties apply when a carton sent to Amazon’s warehouse surpasses the 23 kg weight limit, unless the sellable unit itself is over this weight.
Avoidance Strategy: Continually ensure that your cartons' weight is in line with Amazon’s specifications.
7. Purchase Order (PO) On-Time Delivery Accuracy
Definition: This chargeback is imposed when shipments are delivered outside the shipping window allocated to a confirmed Amazon PO.
Avoidance Strategy: Prioritize Amazon orders in your inventory allocation process to ensure timely delivery.
8. Timely Submission of Import Documents
Definition: This penalty is activated when required trade documents for Amazon’s Direct Import model aren't delivered within the specified timeframe.
Avoidance Strategy: Establish rigorous checks to ensure that all essential import documents are sent before the ocean or air freight departure date set by Amazon.
9. Product Prep Deficiencies
Definition: This chargeback is triggered if items require additional preparation to be safely dispatched to customers.
Avoidance Strategy: Ensure that products are dispatched in a state ready for the customer and comply with Amazon's prep requirements, which can be found in Vendor Central’s Help Center.
10. Compliance with Import Purchase Order (PO) Timing
Definition: Vendors receive this chargeback when the Estimated Cargo Delivery Date they provide falls outside Amazon’s designated Shipping Window.
Avoidance Strategy: Diligently input an Estimated Cargo Delivery Date that falls within Amazon's prescribed shipping window for the given Purchase Order.
11. Excessive Units in Purchase Order (PO)
Definition: Vendors are charged when Amazon receives a quantity of products exceeding what was confirmed in the PO.
Avoidance Strategy: Keep your product catalogue data current and aligned with Amazon's records to avoid discrepancies.
12. Timely Booking of Import Shipments
Definition: Vendors are penalized when shipment bookings are not made within the timeframe leading up to the Ship Window Open Date.
Avoidance Strategy: Ensure your Direct Import shipment bookings are made at least 14 days (for ocean freight) or three days (for air freight) ahead of the Ship Window Open Date.
13. Ships In Own Container (SIOC) Certification
Definition: This penalty is applied to specific large or heavy products that lack SIOC certification.
Avoidance Strategy: Engage with your Vendor Manager and AVS to obtain SIOC certification for your products, or seek certification independently via an ISTA-certified third-party laboratory.
14. Non-Acceptance of Delivery
Definition: This chargeback is enacted when Amazon rejects a delivery due to safety or compliance violations.
Avoidance Strategy: Familiarize yourself with Amazon's safety and health regulations, as outlined in Vendor Central’s Resource Center, to ensure that your deliveries are compliant.
15. Submission of Paper Invoices
Definition: This chargeback is issued for vendors submitting paper or PDF invoices via the Contact Us form in Vendor Central.
Avoidance Strategy: Transmit invoices exclusively through Electronic Data Exchange (EDI) or the “Create Invoice” function in Vendor Central.
For more comprehensive definitions and an understanding of Amazon-specific terminology, consult our Amazon glossary.
Guidelines for Challenging Amazon Chargebacks Errors
Occasionally, Amazon might mistakenly impose chargebacks on your vendor account. If you believe a chargeback is unwarranted, you are entitled to challenge it by filing a payment dispute.
To embark on this course of action, adhere to these instructions:
Sign in to your Vendor Central account.
Proceed to the “Reports” section and opt for “Operational Performance.”
In the following interface, select “View Defect List,” positioned in the upper right corner.
This will reveal a summary where you can pinpoint and elect the transactions you intend to challenge.
To officially lodge your appeal, click on the “Dispute” button found in the upper left corner, here you can attach pertinent corroborative documents.
Be cognizant of Amazon's stipulation that disputes regarding incorrect chargebacks must be lodged within 30 days from their appearance in Vendor Central.
To enhance effectiveness and conserve resources and indirect costs tied to your Amazon partnership, contemplate introducing measures to automate the dispute procedure or assign it to a proficient third-party agency. Moreover, it is prudent to broach the subject of chargeback waivers during your yearly negotiations with Amazon. Vendor Managers are frequently inclined to approve these waivers, notably for newcomers to the marketplace, or for vendors devoted to amending process flaws within a designated period, commonly 12 months.
Vigilant monitoring of your chargebacks is vital for protecting your profit margins in your collaboration with Amazon. It is imperative to grasp that these penalties can swiftly amass, leading to unforeseen expenditures affecting your Profit and Loss (P&L) statement.
While certain brands may regard chargebacks as a routine operational expense tied to Amazon, it is beneficial to perceive them as chances to identify and rectify procedural discordances with the eCommerce giant.In circumstances where Amazon incorrectly applies chargebacks, the most efficacious counteraction is to either systematize the dispute procedure or engage the services of expert providers adept at recouping these fees on your behalf.
Navigating the complexities of Amazon's chargeback landscape requires meticulous attention to detail, a deep understanding of the processes involved, and a proactive approach to compliance. As a vendor, staying vigilant and thoroughly acquainted with Amazon’s operational protocols can significantly minimize the likelihood of receiving these penalties. When chargebacks do occur, it is essential to respond promptly and assertively by leveraging Amazon’s dispute process. As part of a broader strategy, consider regular consultation with specialists or the employment of third-party services that can help to streamline this aspect of your business, turning potential penalties into opportunities for refining operational effectiveness. Above all, it’s crucial to view these processes as integral to fostering a productive, profitable relationship with Amazon, rather than as mere obstacles. In this rapidly evolving marketplace, vendors who adapt, learn, and align themselves closely with Amazon's standards are the ones most likely to thrive. Good luck limiting your Amazon Chargebacks in Vendor Central!
Thank you,
Commerce Canal Team
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