Amazon offers immense potential for sales growth, but maximizing profits requires a solid understanding of its guidelines. One common challenge sellers encounter is vendor chargeback fees—an expense that can quietly eat away at your bottom line.
These fees can arise from various situations, and if not managed properly, can have a significant impact on your profitability. To prevent losses, it's crucial to understand what Amazon chargeback fees are, why they happen, and how to manage them effectively to keep your business profitable and resilient.
What Are Amazon Vendor Chargebacks?
Amazon can charge fees, known as "chargebacks," on your sales if you fail to comply with their rules. These unforeseen expenses can affect your progress toward your revenue goals.
Amazon is highly systematized for efficiency and profit, so when sellers don’t follow its rules, it disrupts operations. This can lead to unexpected costs for Amazon, which the chargebacks are intended to cover.
How Amazon Handles Chargebacks
Failure to comply with Amazon’s policies may result in further actions by Amazon, such as refusing inventory, returning or disposing of stock, blocking future shipments, and engaging in problem resolution related to your preparation process.
Here’s a breakdown of why Amazon imposes these chargebacks:
- Efficiency Disruption: Non-compliance disrupts Amazon’s highly systematized operations.
- Unexpected Costs: Failures to follow guidelines can lead to additional costs for Amazon.
- Operational Impact: Non-compliance can slow down Amazon's processes, affecting overall efficiency.
Amazon Vendor Awareness
Chargebacks are designed to cover these unexpected costs and maintain Amazon's operational integrity. Understanding and adhering to Amazon's rules is crucial to avoid these penalties and ensure smooth operations.
How to Review Amazon Vendor Chargebacks
You can access details on Amazon Vendor chargeback fees via the "Payments" tab of your Vendor Central account in two ways:
- Remittance: View itemized deductions under the description and look for the check mark indicating the Amazon chargeback.
- Reports > Operational Performance: View all charges for your account over the past year, especially operational errors. Select an Amazon chargeback type from the list to see detailed information.
Accessing these details will also be useful when disputing the chargeback.
Chargeback Solutions List - Free Download
Use this one-page snapshot as a quick reference to understand and avoid costly chargeback fees from Amazon. Download now.
Types of Amazon Chargeback Fees
Understanding the various types of Amazon vendor chargebacks is crucial to avoiding financial penalties. These chargebacks can occur due to errors or non-compliance in many stages of the supply chain process, from shipment preparation to delivery. By familiarizing themselves, vendors can proactively prevent chargebacks, safeguarding their profitability and relationship with Amazon.
1. ASN Accuracy Chargeback
The ASN Accuracy Chargeback is a penalty on vendors for inaccurate Advanced Shipping Notifications (ASNs). ASNs provide shipment details before arrival at Amazon's fulfillment center. Inaccurate ASNs lead to discrepancies, resulting in chargebacks that promote supply chain efficiency.
How to Avoid: Provide timely and accurate submission of ASN information before shipment arrival.
2. Carton Content Accuracy Chargeback
The Carton Content Accuracy Chargeback occurs when the quantity of products in a shipment's carton doesn't match the information provided in the Advanced Shipping Notification (ASN). This chargeback is designed to streamline inventory management and fulfillment processes.
How to Avoid: Maintain accurate carton content information in your ASNs.
3. Carton Information Compliance Chargeback
The Carton Information Compliance Chargeback is issued when cartons received by Amazon's fulfillment center lack proper labeling or have incorrect labeling. This ensures that products can be accurately identified and processed within Amazon's system.
How to Avoid: Ensure proper labeling and compliance with carton information standards.
4. Import Documents Late Delivery Chargeback
The Import Documents Late Delivery Chargeback occurs when required trade documents are not delivered to Amazon within the specified timeframe for Direct Import shipments.
How to Avoid: Submit all required import documents before the specified deadline.
5. Import PO On-Time Non-Compliance Chargeback
The Import PO On-Time Non-Compliance Chargeback is applied when the estimated cargo delivery date provided by the vendor falls outside the shipping window specified by Amazon for the placed Purchase Order.
How to Avoid: Provide an Estimated Cargo Delivery Date within the specified shipping window.
6. Import Shipment Late Booking Chargeback
The Import Shipment Late Booking Chargeback occurs when a vendor fails to submit a booking for their shipment at least 14 days before the Ship Window Open Date for ocean freight or three days before shipping by air, as required by Amazon.
How to Avoid: Submit bookings at least 14 days (for ocean freight) or three days (for air freight) before the specified deadline.
7. No Show Chargeback
The No Show Chargeback happens when a carrier fails to appear for a scheduled delivery without canceling the appointment in advance.
How to Avoid: Ensure carriers correctly book and cancel appointments through Amazon's Carrier Appointment Request Portal.
8. PO On-Time Accuracy Chargeback
The PO On-Time Accuracy Chargeback occurs when a vendor delivers products outside the assigned shipping window of a confirmed Amazon purchase order.
How to Avoid: Deliver confirmed products within the assigned shipping window.
9. Oversized Carton Chargeback
The Oversized Carton Chargeback happens when a vendor sends a box to an Amazon warehouse that exceeds specified dimensions unless the item itself is naturally larger.
How to Avoid: Ensure boxes do not exceed specified size limits.
10. Overage PO Units Chargeback
The Overage PO Units Chargeback occurs when a vendor delivers more products than confirmed in the Amazon Purchase Order.
How to Avoid: Regularly review and update product catalog data.
11. Overweight Carton Chargeback
The Overweight Carton Chargeback happens when a vendor sends a box to an Amazon warehouse containing a unit that weighs more than the specified limit, typically 23 kg.
How to Avoid: Ensure boxes containing multiple units do not exceed weight limits.
12. Paper Invoice Chargeback
The Paper Invoice Chargeback occurs when a vendor sends a paper invoice or submits a PDF invoice via methods not approved by Amazon, resulting in a penalty.
How to Avoid: Submit invoices electronically through approved channels.
13. Prep Issues Chargeback
The Prep Issues Chargeback is issued when products require additional preparation for safe delivery to customers. It includes prep such as bagging, barcode labeling, and bubble wrapping, among others.
How to Avoid: Ensure products are delivered in appropriate packaging.
14. Rejected Delivery Chargeback
The Rejected Delivery Chargeback occurs when Amazon refuses delivery due to safety or compliance concerns at its fulfillment centers, such as unsafely stacked pallets or improperly secured items.
How to Avoid: Deliver pallets according to Amazon's safety regulations.
15. Ships In Own Container (SIOC) Chargeback
The Ships In Own Container (SIOC) Chargeback applies when products larger than specific dimensions or weight are not certified as SIOC. This chargeback is issued if items fail to meet Amazon's packaging standards, except for certain exempt products like advent calendars or media items.
How to Avoid: Work with Amazon to certify products as SIOC or follow certification steps independently.
Chargeback Management Services
Chargeback management services help businesses deal with costly Amazon chargebacks. By effectively handling these disputes, these services not only boost profitability but also shield you from unexpected expenses that could erode your bottom line.
By leveraging their experience and knowledge in chargeback Amazon cases, management services can reduce financial losses and improve performance. They utilize advanced technologies and analytics to identify trends and root causes of chargebacks, offering effective chargeback solutions.
For more information about Awesome Dynamic’s chargeback solutions or for help selling on Amazon, contact the Awesome Dynamic Amazon Consulting team today.