Everything you need to know about Amazon chargebacks

Amazon chargebacks are charges that nearly every vendor who does business with Amazon has to work through, and unaddressed issues with chargebacks can cost your business significant amounts each year.  

This blog serves as a comprehensive guide to understanding Amazon chargebacks while providing insight into Flywheel’s Fee Recover solutions that can help your business recover built-up, unnecessary fees.

What is an Amazon chargeback?

Chargebacks, also known as deductions, occur when money is deducted from your Amazon account or Amazon refuses to pay the amount owed to you for the product shipped due to a variety of reasons throughout the supply chain journey a product takes from a brand’s warehouse to Amazon’s warehouses.

What causes an Amazon chargeback?

Amazon takes operational efficiency across distribution and fulfilment very seriously - which means that Amazon will charge you for anything that slows down the receiving process. The causes of chargebacks can range from lost inventory, incorrect catalog information, not following Amazon vendor manual processes, non-efficient receipt of product into the fulfilment centers, incorrect labelling or products, not prepping products per Amazon’s requirements, the list goes on.

These errors lead to shortages, price claims, fines, and CoOp overbills, all of which are considered chargebacks.

What types of chargebacks exist?

• Fines: Product being shipped is not meeting Amazon’s operational performance guidelines and the vendor is fined for this slowdown.

• Invoice short payments: Amazon is not paying the invoice in full due to lost inventory.

• CoOps Accrual: Amazon is not invoicing the vendor at the correct cost - which often goes unrecognized by a vendor.  

What are the impacts of chargebacks on vendors and sellers?

A few miscellaneous charges here and there are the cost of doing business with Amazon, but when these chargebacks compile over time, this can begin to affect the overall profits of the business. For vendors with significant issues in this process, this can amount to tens of thousands, even millions, of lost revenue.

Thankfully, many chargebacks can be traced back and disputed or caused by an easy fix just waiting to be identified.  

How to resolve Amazon chargebacks

Here we have outlined a four-step process to resolving chargebacks and recovering fees:

• First, determine the validity of the charge. It’s possible that the charge is incorrect.  

• Second, dispute the charges while following the guidelines on the dispute process Amazon states within Vendor Central.  It is important to note that this process can differ based on the different chargeback types noted above.

• Third, begin filing cases to attempt any recovery that was not paid back after submitting the disputes.  

• Lastly, complete and submit a settlement for the open balance.  Once the settlement process is completed, you cannot go back and recover money from that time period, so you need to be sure you have acted in a timely manner and captured all of the open balance.  

Remember, Amazon is an ecommerce giant, and to keep up with demand, there are specific and strict processes in place to keep efficiency high and costs low. Managing chargebacks is a daunting process but read on to learn how Flywheel can help lighten the load.  

Flywheel’s Fee Recovery Service

Managing chargebacks on a large scale can be incredibly time-intensive and should involve a dedicated team of fee recovery experts. Flywheel’s Fee Recovery program came to life out of a recognition of a need from vendors to have a hands-on team trained in the fee recovery process that eases the resource dedication needed on the matter. Here’s how our team tackles fee recovery for large enterprise businesses:

Identify

As mentioned above, many chargebacks are either incorrect or are easily solved if the root cause can be identified. Identifying the root causes across a catalog of thousands of items is a significant task - but that’s what our experts are here for!  

Dispute

Accurately disputing chargebacks is one element, but creating and managing these dispute cases at scale can lead to inefficiencies if there are not dedicated resources to the project. Our team manages thousands of chargeback disputes at a time, with our proprietary technology simplifying this process so that we can continue to scale and help recover even more fees.

Prevent

Prevention of chargebacks first stems from understanding and complying with all of Amazon’s guidelines and policies when it comes to shipping products to FCs. These guidelines and policies need to be reviewed on a regular cadence to monitor for changes to standard processes.

Even if your business has a solid understanding of these guidelines, things can still go awry. After Flywheel assesses all of your chargebacks and identifies the issues, if there are fixes that need to be put in place, our team will provide actionable strategies that will help to prevent or reduce these chargebacks going forward.  

Our team has recovered $75M in fees over the last 3 years, acting as a true extension of your team. If your brand is looking to increase profits by recovering fees at scale, you can learn more here.

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