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Amazon Vendor Chargebacks

10 May 2022

How to manage and avoid Amazon Vendor Chargebacks

Despite all good intentions, as a retailer, you’ll most likely have experienced an Amazon Vendor Chargeback at some point. In fact, Chargebacks exceeded $6bn in 2018 alone.  

As the world’s largest online retail platform, it’s perhaps no surprise that Amazon has a myriad of rules and regulations in place for its Vendors in order to maintain healthy economies of scale.  But what are Vendor Chargebacks and how can you avoid them? 

What are Amazon Vendor Chargeback fees?

A Vendor Chargeback fee is when Amazon appends a fee to your account for non-compliance with its requirements in respect to packaging, fulfilment, shipping etc. If left unresolved, they could lead to Amazon refusing your inventory, returning or disposing of your inventory, or even blocking future shipments to the Amazon fulfilment centre.

Types of Vendor Chargebacks and how to avoid them

Here are some of the common types of chargebacks and what you can do to prevent them occurring. 

Advanced Shipment Notification (ASN) Chargeback

In order for Amazon to effectively schedule and prioritise transportation of your goods to their warehouses, you need to complete an ASN in good time, and without any errors, before they arrive at the fulfilment centre. Any late and/or erroneous notifications will result in a chargeback of between 2% and 6% of the cost of the goods, depending on the level of error.

How to avoid: Make sure you send ASNs for each shipment at least six hours prior to the consignment arriving at a fulfilment centre. You can verify submissions from within the Vendor Central portal. Simply go to “Orders”, then “Shipments”, and click on one of the “View shipments created in the last ‘x’ days” options. 

Direct Fulfilment Chargeback

These fees apply to retailers who fulfil orders directly, rather than via Amazon, and can include: 

How to avoid: To avoid cancellation fees, make sure you have sufficient inventory to fulfil all orders that Amazon submits, and update your available inventory at least once every 24 hours (for each applicable warehouse). Meanwhile, to avoid mismatch fees, make sure that your warehouse is actually set up for Amazon’s shipments through the courier or method that you agreed to use during the initial set-up phase. Amazon doesn’t allow vendors to switch to another method. 

Preparation and Packaging Chargebacks 

If you fail to prepare or package your products in a suitable manner, there are a number of nominal fees that might be applied. Ranging from just under a dollar to just over a dollar per instance, these chargebacks can soon add up! Here are just some examples:

How to avoid: Ensure optimum packaging for all of your products. This means not only having enough packaging to protect it, but having the right type of labelling for it to be processed in an appropriate manner. For instance, if it’s a delicate item, make sure that it is not only wrapped in bubble wrap, but that ‘fragile’ is clearly marked on any boxes containing that product. 

How to find and dispute your Amazon Vendor Chargeback fees

To find details of any fees, simply log into your Vendor Central account, go to “Remittance” to view fees (which are itemised under each fee type). Items that have incurred a fee will have a check mark that includes the chargeback. Alternatively, click on “Reports”, then “Operational Performance”, to view all charges over the past year. Be sure to make a note of the ‘status’ and ‘type’ when disputing the chargeback.

To dispute a Vendor Chargeback, follow the “dispute a chargeback” steps from within the portal and make sure you have the relevant documentation for each type of dispute to hand..

The key takeaway here is that you need to be proactive and keep on top of potential chargebacks. After all, it’s not in Amazon’s interests to contact you directly to resolve these issues. If you’re unsure where to start, it’s probably time to consider working with a trusted Amazon eCommerce partner. Just as an accountant can show you where to make significant tax savings throughout the year, at Acorn-i, we regularly save our customers £’000’s in chargeback fees per annum. Get in touch today to see how we can help you manage (and avoid) Amazon chargebacks.

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