Amazon Vendor Chargebacks | Simply explained

Vendor Chargebacks

Vendor chargebacks are penalty fees imposed by Amazon when vendors fail to meet compliance standards or deviate from agreed-upon terms. These chargebacks serve as a mechanism to ensure products arrive in optimal condition and are process-ready within fulfillment centers, while also maintaining adherence to purchase order and invoicing agreements.

Packaging and Labeling Compliance Chargebacks

These chargebacks are imposed for failing to meet standards in product preparation, packaging, and labeling:

  • Bagging Non-Compliance: Charged when products needing protection are inadequately bagged to guard against damage, dust, or leakage.

  • Bubble Wrap Non-Compliance: Applied when fragile or sharp items are insufficiently wrapped, risking damage during transit.

  • Barcode Labeling Non-Compliance: Occurs when products lack proper, scannable barcodes linked to their ASINs.

  • Boxing Non-Compliance: Imposed if products are inadequately boxed, risking damage during shipment.

  • Taping Non-Compliance: Charged for improperly secured products, risking displacement and damage via conveyor systems.

  • Set Creation Non-Compliance: Occurs when multi-unit product sets are not correctly created and packaged.

Operational Performance Chargebacks

These chargebacks relate to vendor adherence to purchase order confirmations and invoicing procedures:

  • Unconfirmed PO Units: This chargeback occurs when a vendor sends products not confirmed in a purchase order, costing EUR 0.70 per unit.

  • Overage PO Units: Applied when more products are received than confirmed in the purchase order. For instance, if 10 units are confirmed but 12 received, the extra units incur a chargeback.

  • Paper Invoices: Chargebacks are issued when vendors use non-approved methods to submit invoices to Amazon, rather than using electronic formats like EDI.

Vendor chargebacks result in additional handling costs and operational inefficiencies. Ensuring strict adherence to packaging requirements, PO confirmations, and proper invoicing methods can help vendors avoid these penalties and maintain optimal operational performance.

Back to top