Learn how to eliminate unwanted Amazon chargebacks whilst improving your business simultaneously

The way you handle your Amazon chargebacks can significantly impact your business’s earnings. Chargebacks for non-compliance with Amazon’s strict guidelines can quickly eat into your yearly profits. However, you can easily eliminate these costs by improving your Amazon logistics.

Chargebacks are designed to incentivise sellers to develop better processes. They can give crucial insight into problems with your operational performance that you may be unaware of. This is why it is essential to regularly check and investigate each chargeback you receive.

You can effectively save thousands by responding appropriately to your chargebacks. Amazon’s strict rules are designed to keep costs down, and provide the best customer experience. Therefore, it is well worth aligning your processes with their guidelines to reduce chargebacks and increase customer satisfaction.

Eliminating mistakes and Amazon recovering chargebacks

It is also important to check whether Amazon has issued you chargeback or shortage fees by mistake. This happens all too often, so it’s vital your business knows how to dispute them to minimise lost earnings. Check out our guide to disputing claims if you are unsure how to do this or contact our experienced Amazon Chargeback Specialists to take care of the hard work for you.

Many businesses write off chargebacks as an unavoidable cost of selling on Amazon. By doing so, they miss out on key learning opportunities and needlessly sacrifice profit. Here at Optimizon Amazon Agency, we empower clients to make the most of Amazon by analysing and addressing the root causes of their chargebacks.

Let’s take a closer look at how you can use chargebacks to improve your Amazon logistics and maximise your earning potential.

What do chargebacks say about Amazon logistics?

Chargebacks highlight areas for improvement in your operational performance. They exist to benefit both the vendor and Amazon, and ultimately the customer, by promoting efficiency and accuracy.

There are over 6 million seller accounts on Amazon and more businesses sign up every day. Amazon handles this huge logistical operation by closely regulating all its vendors. This ensures the process of collecting, storing and shipping goods from multiple suppliers runs as smoothly as possible.  

Amazon issues chargebacks when vendors do not comply with their rules as it disrupts the flow of operations. You may have to deal with numerous types of chargebacks: buyer chargebacks, ASN accuracy chargebacks, preparation related chargebacks to name a few. More specifically, these can include faults such as late delivery, data misalignment or faulty packaging.

Amazon also charges shortage fees when it believes the quantity of products received in the warehouse is less than the quantity accepted by the vendor. This can be the result of an error as small as having the incorrect label on your shipment, which subsequently leads to inaccurate data on Amazon’s warehouse system.  

Chargebacks reflect the unexpected costs incurred by these errors, which Amazon has to deal with. Amazon passes these costs back onto sellers to encourage compliance with guidelines and thereby streamline operations.

You can easily determine the cause for each chargeback by checking your Operational Performance Report on Vendor Central. Each chargeback focuses on a specific variation of non-compliance, so responding to all of them will comprehensively strengthen your Amazon logistics.

How can I improve logistics and avoid chargebacks?

Track your chargebacks and address any operational issues as soon as possible. At Optimizon, our Chargeback Specialists assess our clients’ chargebacks and analyse their operational performance on a weekly basis. Multiple fees can soon add up, so taking a proactive approach can save your business hefty amounts in the long-run.

There are simple changes you can make immediately. Reduce any shipment chargebacks and shortage fees by ensuring barcodes on units are visible, accurate and easy to scan. Make sure all your orders follow Amazon’s labelling requirements. This minimises the possibility for errors on Amazon’s part by preventing inaccurate shipment processing.

You can easily avoid unconfirmed purchase order chargebacks – fees applied for receipt of products that were not included in the original purchase order – by double-checking the contents of each carton leaving your warehouse. This also reduces your chances of receiving overage chargebacks or shortage fees.

It is also critical to keep all product data up to date. Amazon automates many of its processes, so it is up to you to account for any differences that may occur. Make sure all the information provided in your purchase orders match your shipments and it is much less likely you will receive chargebacks for inaccuracies. Shipping on time will also reduce fees for non-compliance.

One way to streamline the entire order process and thereby reduce opportunities for the above errors is by using the Pan-EU Inbound Consolidation Service (PICS). This is an option to consider if you have high quantity orders and or are sending multiple trucks across the country each week. This programme is also great if you sell your products in EU.

This service aims to simplify the order fulfilment process for vendors and can lead to operational costs savings. However, it must be noted that the vendor must be eligible to enter into this agreement.

What is the Pan-EU Inbound Consolidation Service (PICS)?

PICS is a service which allows you to ship orders to a limited number of fulfilment centres. Amazon subsequently spreads your inventory through the fulfilment network to place products closer to customers. Therefore, you prepare fewer purchase orders with greater quantities and considerably simplify operational processes.

It’s best to think of PICS as a renegotiation with Amazon, rather than a product or service. Amazon will invite eligible vendors to enter into this agreement. It’s worth mentioning here, that Optimizon can assist businesses with the renegotiation of their Amazon terms.

For business selling in the EU, there is also a Super PICS service. So instead of delivering to 60 fulfilment centres across the EU, you deliver to just a handful. Amazon then spreads the inventory across the agreed countries. Super PICS is an exclusive service, but could be open to large retailers that meet certain criteria.

Business Savings

In simple terms, using PICS means the number of purchase orders your business receives from Amazon each week will be slashed.

Fewer purchase orders mean lower preparation, transportation and labour costs. It also reduces opportunities for human errors, late deliveries, and other inaccuracies that can lead to costly chargebacks.

Customers also have better access to your products and receive orders on time. This minimises late-delivery chargebacks and negative reviews for your business, which can significantly harm sales.

Many vendors improve their Amazon logistics by taking advantage of PICS. Our vendors observed the number of purchase orders received per week halved by using this service. It reduced the number of trucks they had to manage in their warehouses, improved truck and pallet fill rates, and allowed them to consolidate higher number of units per purchase order.

The reduced number of purchase orders also allowed our vendors to save time on admin work. They managed to reach minimum order quantities more easily and drove conversions with increased product availability. Critically, they also minimised chargebacks for non-compliance by using this service and boosted their operational performances.

Contact our team if you would like more information about how can PICS can benefit your business and for help applying.

When Amazon gets it wrong

There are many cases in which Amazon issues chargeback fees unfairly. One example of this is when Amazon gets shipping windows wrong. It can be a huge challenge for clients as they often don’t notice. Subsequently, they get charged for the error and don’t dispute it.

In fact, it’s fairly common that Amazon does not give the correct shipping window, which is 5 working days. In many cases we see, weekends have been counted as a normal business day by the system. This type of chargeback is seen very often, but are regularly dismissed by Amazon sellers, often costing them thousands.

Amazon Vendor Chargeback Service

Optimizon runs a vendor chargeback service that involves our specialist team monitoring and disputing any unfair fees. We regularly save businesses thousands in lost fees every year.

In addition, the team can offer training to ensure that your business is hitting perfect inbound standards with Amazon.

Conclusion

The good news is chargebacks are not an inevitable part of doing business on Amazon. They can be excellent indicators of where you can make positive changes to your Amazon logistics. Even in areas where you fail to stamp them out completely, you can challenge unwarranted charges and reclaim lost revenue.

We have dedicated and experienced personnel who are ready to help you take control of your chargebacks and increase your profits. Find out more about our Amazon Vendor Chargeback Service here or get in touch to learn more.