Bobsled is an Inc. 5000 Amazon agency and we’ve had the privilege of working within 100+ Vendor Central accounts. A common problem that plagues most vendors is chargeback fees.
A lot of times vendors don't understand the nature of chargeback fees that are appearing within their account, what impact they are having, or how to manage them moving forward. Failing to manage chargebacks can really hurt the profitability of your Amazon channel. For many, it’s a grey area that causes a lot of stress and confusion!
Below we have outlined all the common vendor chargeback FAQs, best practices in terms of eliminating and mitigating fees, plus some pertinent nuggets from the Bobsled Amazon Vendor Chargebacks Guide.
What are Amazon Vendor chargeback fees?
Being an Amazon Vendor (selling products wholesale to Amazon) is by no means an easy task. Vendors are expected to meet a lot of requirements with how they prepare and ship inventory to Amazon.
When vendors fail to meet Amazon’s requirements they are dinged with fees known as chargebacks. For some chargebacks a brand has legitimately failed to meet the agreed vendor requirements – in other instances, an oversight has occurred on Amazon’s side and the chargeback has been issued in error. Vendors have the opportunity to dispute chargebacks and get reimbursed by Amazon.
There are many types of chargeback fees and getting familiar with all the different ways you can be charged by Amazon is an important first step! For brands of all sizes, chargebacks are the silent killer of profit for many Vendor Central accounts on Amazon.
Who can be impacted by Vendor chargeback fees?
In a recent episode of the Ecommerce Braintrust Podcast, Bobsled’s Caroline Adams explained that the vast majority of vendor accounts she has encountered are getting pinged unnecessarily with chargeback fees.
“Brands come to us and they say ‘Hey, we’re noticing all of this money getting deducted out of our account, can you help us out?’ and we do,” Caroline explains. “The first step we take is to go into the account and complete an account audit. This allows us to get a clear picture of all the chargeback fees and map out a strategy to eliminate them moving forward.”
🎧Listen to the full episode with Caroline – Vendor Chargebacks
Deep Dive - Episode 202
Why is it important to keep track of Vendor chargeback fees?
Channel profitability! Generating revenue with slim profit margins is a short-term play. Finding ways to dispute and reduce vendor chargeback fees is an obvious way to make the Amazon channel more viable over the long term.
According to Caroline, some vendor accounts she has audited have copped chargeback fees to the tune of $100k plus! By ignoring chargeback fee issues, brands are leaving hard-earned money on the table.
Which parts of my business are causing Vendor chargeback fees?
The root cause of many chargeback fees is an internal disconnect between two different divisions. Oftentimes, the ecommerce team may have a clear understanding of all the vendor account requirements, but this information has not effectively been shared with the team that prepares and ships inventory to Amazon’s FCs. Simply treating Amazon like any other wholesale buyer can have disastrous consequences in respect to chargeback fees.
Also, identifying, disputing, and figuring out how to avoid chargeback fees is a very unique skill set. This person needs to;
- Identify whether Amazon has issued a chargeback incorrectly (this, unfortunately, happens all the time) and promptly submit a dispute with all the correct documentation
- If a chargeback has been issued because the vendor legitimately failed to meet the agreed inventory and/or shipping requirements, the person in charge of monitoring chargeback fees needs to find a way to prevent the same chargeback from occurring in the future
An ecommerce team member may be perfectly adept at managing other parts of a Vendor Central account, but completely lacking when it comes to chargebacks. Simply accepting chargebacks as part of ‘the cost of doing business with Amazon’ is not acceptable! Brands need to find a specialist who can come in and implement an effective chargeback management solution.
💡Download Bobsled's comprehensive
Amazon Vendor Chargebacks Guide
When can I dispute Vendor chargeback fees?
This is an incredibly important thing to remember: Amazon only gives vendors 30 days to dispute the majority of chargebacks, and for invoice shortage chargebacks you have up to 12 months. If you don’t dispute fees within these windows the money will be lost forever, so it’s very important to catch new chargebacks as they roll in.
What are some best practices for managing
Vendor chargeback fees?
Here are things you need to keep top of mind to stay on top of chargebacks:
- Get a chargeback specialist to complete an account audit to get a clear picture of how these fees are impacting your vendor account
- Learn all the different types of chargeback fees – the Bobsled Amazon Vendor Chargebacks Guide has everything you need
- Ensure your ecommerce and fulfillment teams are in alignment when it comes to preparing inventory for Amazon
- Schedule weekly chargeback fee checks – this will help you dispute fees in a timely manner
- Changing how you send inventory to Amazon can drastically reduce ongoing chargebacks. Identify ways to streamline your fulfillment process so you can improve Amazon profitability.
- Have a dedicated Accounting or F&A internal resource dedicated to chasing chargebacks who can provide your Amazon team with all the right documentation to facilitate reimbursement.
These recommendations are just the tip of the iceberg! For a detailed overview, download the Bobsled Amazon Vendor Chargebacks Guide.
A Dollar Saved Is A Dollar Earned
Getting clarity on chargebacks will strengthen your entire Amazon channel. Don’t stay in the dark – download our guide or schedule
a free consultation today!
Tagged: Amazon Account Management