The Digital Deep Dive With Aaron Conant
Analyzing Amazon's Chargebacks and Fines Process
Fri May 26 2023Description
The episode covers the challenges of Amazon fines and chargebacks in e-commerce, including the importance of addressing chargebacks and shortages on Amazon. It discusses provisional rates and overcharges, the process of checking vendor codes and claiming back overcharges, disputing claims and payment terms, cash flow issues and accounting considerations, Amazon's global expansion and industry trends, as well as AI, content creation, and targeted advertising.
Insights
Provisional rates can result in significant overcharges
Provisional rates introduced by Amazon can be three to four times higher than the actual rate, leading to overcharges. It is important for sellers to monitor these charges closely and reclaim the money if new terms and conditions are signed.
Claims can be made up to three years after charges
Sellers have up to three years to claim back most charges, except for chargebacks which have a 60-day limit. It is crucial to check vendor codes, use the right evidence, and follow up on rejected claims.
Amazon's improved team for addressing claims
Amazon has improved their team that addresses claims, resulting in a higher success rate of getting the money back within seven to 14 days when using Amazon data to dispute charges on units or shortages.
Payment terms determine when you get paid by Amazon
Payment terms are based on when Amazon receives the goods or the invoice, whichever is later. Invoices can be sent up to five years back if all the data is available.
Consider accounting irregularities when expanding internationally on Amazon
Accounting irregularities should be considered when expanding internationally on Amazon. Recovering trading term overcharges may take longer in certain countries compared to others.
Amazon's global expansion and industry trends
Amazon is globalizing for vendor central vendors, offering global DI and a program to purchase from US-based brands and import abroad. DSP spend on Amazon has increased, with more brands shifting from PPC to DSP.
AI and targeted advertising
AI could be used to create a multi-touch attribution tool for advertising. Short form video and influencers are in demand for content creation. OTT and CTV platforms can provide targeted ad serving with little fraud.
Chapters
- Challenges of Amazon fines and chargebacks in e-commerce
- Provisional rates and overcharges
- Checking vendor codes and claiming back overcharges
- Disputing claims and payment terms
- Cash flow issues and accounting considerations
- Amazon's global expansion and industry trends
- AI, content creation, and targeted advertising
Challenges of Amazon fines and chargebacks in e-commerce
00:04 - 07:13
- The podcast discusses the challenges of Amazon fines and chargebacks in e-commerce.
- The guest, from Hawkers Club, shares their experience in finance and e-commerce.
- They emphasize the importance of addressing chargebacks and shortages on Amazon.
- Amazon offers incentives for resolving chargebacks, but they need to be claimed by the seller.
- Cost price claims by Amazon should be carefully monitored as they may apply to all vendor codes.
- Even if a seller doesn't have returns, Amazon can push returns through and charge shipping fees. Sellers can claim these charges back without returning the goods.
- Provisional co-op charges can be significantly higher than agreed rates. Sellers should monitor these charges closely.
Provisional rates and overcharges
06:50 - 14:01
- Provisional rates can be three to four times higher than the actual rate, resulting in overcharges.
- Amazon introduced provisional agreements as a fallback when vendor agreements expire or are not signed.
- If you don't have a non-provisional agreement in place, you will be charged the provisional rate.
- You can reclaim the money if you later sign new terms and conditions.
- Many people are unaware of this provision and its implications.
- Reclaims can be made up to three years after the overcharge occurred.
- Amazon often overcharges on trading terms or co-op fees by charging for more units than were actually ordered.
- Shortages in inventory can also result in trading term charges, even if Amazon never received the goods.
- Direct fulfillment orders should not incur freight charges, but sometimes Amazon mistakenly applies them.
- These issues occur randomly and are not present on every order, making them difficult to spot without careful analysis.
- Even accounts that use direct fulfillment have been found to have these issues.
- The charges for these errors never become insignificant because they are based on a percentage of revenue.
Checking vendor codes and claiming back overcharges
13:34 - 21:26
- Every account has had some type of issue on the direct fulfillment side
- Checking vendor codes is important to ensure accurate reporting and charges
- GMM agreements require monthly profitability checks and claiming back overcharges
- Reviewing Amazon accounting on a line basis can uncover significant savings
- Common mistakes include not checking, not using the right evidence, and not following up on rejected claims
- Claims can be made up to three years after charges, except for chargebacks which have a 60-day limit
Disputing claims and payment terms
20:57 - 28:49
- You have up to three years to claim back most charges, except for chargebacks which have a 60-day limit.
- Disputing claims can take about 12 weeks for trading terms on freight or GMM agreements.
- Using Amazon data to dispute charges on units or shortages can result in getting the money back within seven to 14 days with a success rate of 95%.
- Amazon has improved their team that addresses claims, so it's worth giving it another try.
- For direct import fulfillment, Amazon may attribute units to different purchase orders, so it's better to invoice based on where they've attributed the units rather than fighting them on the original PO.
- Track any price reductions given to Amazon because they will apply it to all vendor codes and not just the specific one.
- Failed transmissions between yourself and Amazon for invoices submitted through EDI or API may not always make it through, so it's important to check if the invoices were successfully submitted.
- Payment terms are based on when Amazon receives the goods or the invoice, whichever is later. Invoices can be sent up to five years back if you have all the data.
Cash flow issues and accounting considerations
28:24 - 35:52
- Payment terms determine when you get paid by Amazon.
- You can invoice up to five years back if you have all the data, or three years if you're getting the data from the vendor.
- Amazon will still pay for goods even if they never received the invoice, but they will make you wait for your payment days.
- EDI API outages can cause cash flow issues if invoices don't go through.
- Automating the process of checking missed purchase orders is recommended due to their frequency.
- Accounting irregularities should be considered when expanding internationally on Amazon.
- Recovering trading term overcharges takes longer in the UK and Germany compared to the US.
- Submitting correct invoices is crucial in the UK and EU as governments expect payment regardless of collection accuracy.
- Brands should double-check Amazon's proactive audit claims and not assume their accounting is more robust than Amazon's.
- Ensure all incentives are applied correctly and keep accounting teams informed about trading terms and price per vendor code per unit on Amazon.
- Systematic issues on Amazon's side require ongoing monitoring rather than one-time fixes.
- The discussed practices are standard for clients working with the podcast host's company.
Amazon's global expansion and industry trends
35:38 - 42:53
- Amazon is globalizing for vendor central vendors, offering global DI and a program to purchase from US-based brands and import abroad.
- Direct import program with Amazon discussed in another podcast episode.
- DSP spend on Amazon has increased, with more brands shifting from PPC to DSP.
- Finding a backup for marketplace sales is important as Amazon shrinks its overall warehouse size.
- Lifetime value of a customer and generative AI are key interests in the industry.
- Slowing down allows brands to evaluate their partners and focus on saving money.
- Retail media has died off as a hot topic.
- AI is both exciting and scary due to its rapid changes and potential impact on the industry.
- Multi-touch attribution tool using AI could be a game-changer.
AI, content creation, and targeted advertising
42:24 - 45:42
- AI could be used to create a multi-touch attribution tool for advertising
- Short form video and influencers are in demand for content creation
- OTT and CTV platforms can provide targeted ad serving with little fraud
- Getting more specific with targeting can lead to better performance
- Thanks to Hannah for her time and contribution to the podcast