How vendors can avoid Amazon chargebacks fees

As an Amazon vendor, there are extra guidelines and restrictions which Amazon enforces. For example, if you break a specific rule, you may end up being penalised for non-compliance in the form of a fee. This is what is called a vendor chargeback. Amazon chargebacks can affect your profit margins and is an issue that many vendors suffer from. 

In our experience with disputing Amazon chargeback claims for our clients, the average vendor loses £3,000 per month due to these charges! If that wasn’t enough, if you can’t solve the cause of the chargeback, these fees will consistently be accrued, affecting your business negatively. Find out what the different types of chargebacks are and our tips that could end up saving you a great deal

What are Amazon chargebacks?

An Amazon chargeback can be explained as an enforced fee that Amazon may charge a vendor if they find a mistake with the bought stock. It can be thought as similar to a fine in that it is the vendor’s responsibility to ensure they comply to Amazon’s vendor terms & conditions. Although there are different types of Amazon chargebacks, the most common ones are all associated with the shipping and logistical process. Here are the 4 most common Amazon chargebacks that vendors tend to get hit by and the Molzi’s tips to avoid them.

Types of Amazon chargebacks:
Purchase order related

This charge is when errors are made related to the purchase order. For example, it isn’t confirmed in a timely manner, you miss your Amazon shipment window or you send the wrong number of units to Amazon.

Received shipment related

These charges are related to any compliance violations encountered at the Amazon Fulfillment Centre after the shipment is taken in. Common mistakes include; missing barcodes, missing information and content accuracy issues.

Preparation related

You will also get charged if products aren’t properly enclosed the way they should be when you ship to Amazon. This includes charges for not properly bagging items in cartons correctly or not properly taping the carton closed and also if they are not FFP optimised.

Advanced Shipment Notice (ASN) related

The last kind of chargeback is applied when the Advanced Shipment Notice is not sent correctly from your account or the EDI trading partner. If the ASN is not sent by the vendor within two weeks of Receipt of the Shipment or there is an error in transmitting the EDI, vendors will be charged.

Tips to avoid Amazon chargeback fees:
PO chargebacks

Be sure to complete the purchase order in vendor central in under 12 hours after it arrives and indicate which units can ship in the shipment window given.

Received shipment chargebacks

Print shipment labels beforehand and ensure that all units are labelled correctly. Also, try to keep everything inside easy to scan to avoid human error on Amazon’s part. Make a final check before shipping.

Preparation chargebacks

Read up on Amazon’s Packaging Certifications Guidelines and ensure you are FFP optimised.

ASN chargebacks

The name makes it clear – The Advanced Shipment Notice must be sent before the shipment is scanned into an Amazon FC. After shipping it off, make certain that you send an ASN manually.

Use a payment processor that offers seller advanced protection features

 Your payment process should offer fraud detection and monitoring services that go beyond just basic fraud detection features. A good payment processor should automatically have seller protection and fraud detection features in place, such as address verification services (AVS). Look for advanced features such as covering chargeback losses (up to a certain amount), managing disputes through your payment platform and defining when an order should be held for review. 

Pick and choose your battles
While you may feel frustrated and want to dispute any and every chargeback or dispute that you see, but actually it might harm your business in the long run. Chargeback disputes take time and effort. You will have to ensure all your paperwork is in order before making the claim. On top of this, payment processor track how many chargebacks are filed against your business and can penalise your account if you seem too high-risk. If the chargeback amount is minimal, it may be the best option to refund the customer. 
 
Make operational changes

Check your Vendor Operational Performance dashboard to identify all the chargebacks you have accumulated. By seeing which ones you have been affected by, you may be able to take internal measures to solve them. Do you need extra support with shipping or logistical challenges? In might be best to seek outside support from a reputable Amazon agency to provide additional support. 

Have Molzi take a look at your Amazon chargeback issues

Chargebacks are the bane of every vendor because there seems to be a fee for everything! So much so that most brands just accept chargebacks as a cost of doing business with Amazon, ready to write off possibly hundreds of thousands, if not millions of dollars. Don’t become a victim to Amazon chargebacks! Our team of experienced and knowledgeable Amazon account managers can identify operational errors and weaknesses, preventing you from losing money. Additionally, with Molzi on your side, we can dispute claims on your behalf, ensuring you’re brand and its assets are represented and protected. 

Does your brand need any support lowering your Amazon chargebacks or disputing claims with Amazon? Get in touch with our Amazon team for a free consultation today!