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.
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.
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.”
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.
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;
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.
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.
Here are things you need to keep top of mind to stay on top of chargebacks:
These recommendations are just the tip of the iceberg! For a detailed overview, download the Bobsled Amazon Vendor Chargebacks Guide.