..8 Reasons Why, and What You Can Do About It.
Go ahead. Talk to any vendor selling on Amazon. Chances are the majority find the chargeback screens and procedures frustrating, with changes implemented seemingly randomly, and governed by increasingly complicated algorithms. Vendors speculate that Amazon makes processing chargebacks deliberately complex, to make it harder for vendors to dispute chargebacks; thereby increasing Amazon’s own profit margins. At iNymbus we disagree. We strongly believe Amazon’s chargeback processing has the strategic goal of making Amazon more efficient, with the unintended consequence of driving their sellers crazy.
How many of you can relate to these 8 Amazon Chargeback processing issues?
#1: Where oh where has the chargeback menu gone?
Over the past several years we have seen the chargeback screen location bounce around Vendor Central. For a period of time, the Chargeback screens were listed under Payments. Then, all of the sudden with no warning, Chargebacks disappeared from Payments. It took some digging for our Chargeback experts to locate Chargebacks under a really odd and unexpected menu item.
Why would this change be made? Somehow it facilitated Amazon’s efficiency. However, for the 5-30 temps that our clients sometimes hire to process chargebacks in the first quarter after holiday sales, menu changes like this cost temp time, plus manager time, figuring out where the menu went and how the new screens were organized. Hours end up being wasted in hard human resources costs.
And we have even seen changes to the login screen itself. The login below didn’t always look like this. The current Vendor Central Login screen, requires an extra click to “Sign In” and the new customer “Register” fields look mistakenly look like a login. Confusing? You betcha!
#2 – Penny chargebacks
When a vendor opens their Chargebacks screen and sees a row of penny chargebacks, one could argue that this is insanity.
At iNymbus, we do not believe the reasons for thousands of penny chargebacks are nefarious. Invoice chargebacks are tied to many different rules and algorithms having to do with Shipping, ASN, PO Compliance, Preparation and the like. As Amazon evolves, these rules evolve and change as well. Amazon doesn’t mean to be ridiculous; its robots are just infinitely more efficient and better at calculating chargebacks and do not differentiate between a chargeback for $101.01 and one for $0.01. And Amazon robots can perform these calculations in the blink of an eye.
#3: High Amazon chargeback volume
In our experience, it is not unusual for a typical high-volume Amazon vendor to receive tens of thousands of chargebacks a month. The volumes can rise and fall suddenly. There may be multiple violations on a single shipment which could be at the item level, the truck level, or even the carton level. And, the Amazon dispute time limit is 30 days. If a rule changes, which triggers the Amazon rules engine to calculate chargebacks, a vendor can quickly be assessed thousands of chargebacks and have to react very quickly. In the case of our customer below, 27,444 chargebacks at an average value of $0.10 each, or thousands of dollars in chargebacks showed up over night with no warning. And, these chargebacks are not immaterial, especially when retail margins are razor slim.
Currently, Amazon has no automation available to process these chargebacks (e.g. easy software API or uploading process). Because of the labor costs of processing these tiny chargebacks, our client, in the past, was forced to pick and choose, only disputing chargebacks of $10 or higher, as anything less did not justify the cost of staff time.
#4 – Evolving chargeback issue types
Amazon chargeback Issue Types notoriously grow and shrink. Just when you have your Standard Operating Procedure written explaining to your temporary work force how to process chargebacks, Amazon will modify the Issue Types, throwing a curve ball at your processing rules.
And, more than occasionally, Amazon will combine several Chargeback Issue Types into one. Witness a change this September, 2017 having to do with PO Chargeback Issue Type Consolidation (excerpted from Amazon training material).
“Why?” says Amazon. “To simplify your lives.” But did it? First of all, you and your managers need to train the army of temps you hired to process this new Issue Type. But even more harmful, if Amazon had provided you a threshold of say 10% or $100, meaning if your chargebacks are less than $100 by Issue Type, Amazon might waive the violation; but by combining Issue Types you have gone over the Threshold of $100, and you now have to move fast, and start disputing these Chargebacks quickly. Once you figure out what exactly happened!
#5 – Complex and ever-changing algorithms
We admit, you do need to have some serious math and Excel smarts to design spreadsheets to calculate Amazon Chargeback algorithms. Not to mention, the algorithms change frequently. Here is an example from a recent Amazon training. If you are left scratching your head, we don’t blame you:
Vendors end up building spreadsheets that look a bit like the below training slide from Amazon in order to double check Amazon’s calculations.
Can we just gnash our teeth for you?
#6 – Uploading proof documentation required at the item level
Populating line item data can be very time consuming. But to successfully dispute Amazon chargebacks, it has to done line by line. And it is necessary to upload individual supporting documents for every disputed line item. The process of finding the proper supporting documents like FedEx Shipment information on every line item on an invoice is time consuming, but is the only way to get your money back from Amazon.
A clever processor can take advantage of some consolidation available, particularly in the pricing area, by utilizing filters and combining common issues into one dispute. For example, on this screen, multiple items can be clicked and disputed at once. But any mistake, will cause the whole group of items to come back for re-processing.
#7 – Amazon portal gets overloaded
We have seen instances, over the years, where the Amazon Vendor Central portal gets a bit overloaded and slows down. Sometimes it throws errors at unusual times. Any Temp Staff has to be trained on this occurrence. And, the inevitable slow down costs money in increased Staff and Temp Worker time.
#8 – Nobody to talk to
Our Amazon Seller clients get frustrated because there is no real way to communicate with Amazon. Many of the larger established retailers have communication channels in addition to online in order to provide vendors advice, facilitate problem solving and even negotiating (e.g. Target, Walmart, Costco, etc.). However, Amazon’s strategy is not conducive to one on one communication. This doesn’t surprise us. Amazon does not have human beings processing chargebacks at just pennies an item. These detailed chargebacks are being calculated by robotic automation. Even recommendations of how to improve your business with Amazon are made by robots.
What to do?
As a Seller’s Amazon volume grows (a fantastic problem), it is imperative to immediately implement a strategy to deal with the chargebacks that will also grow with this volume. In the beginning these simple steps will succeed in containing chargebacks:
- Plan to hire seasonal temps
- Organize chargebacks into categories by Issue Type and related documentation
- Establish written chargeback processing SOPs
- Utilize standardized spreadsheets to organize processing and research
- Provide close supervision to answer questions and troubleshoot processing issues
- Establish a chargeback threshold – minimum amount that is worthwhile for a team member to process.
But quickly, especially after the holidays, volumes can get out of hand with thousands of penny chargebacks adding up to thousands of dollars.
At this point, the only way to dispute these chargebacks on-time and successfully, is to automate processing and use similar robotic technology that Amazon used to create the chargebacks in the first place. It is 100% possible to take your company’s SOP and automate the document matching and uploading, the algorithm calculations and data entry required to dispute Amazon chargebacks. Truly, this is the only possible way to win with Amazon chargeback disputes at any kind of volume. Request an Amazon Chargeback Audit from iNymbus and find out if your Amazon Chargebacks are at the volume and dollar amount where dispute and resolution automation will pay back.
We think you’ll be surprised at how quick and easily a solution can be implemented that essentially pays for itself in a matter of a month or two.
iNymbus DeductionsXchange resolves and disputes deductions and chargebacks automatically, while increasing speed and efficiency by 30X. DeductionsXchange introduces cloud robotic automation for uploading denied claim packets to retail vendor portals and submitting disputes on the customer’s behalf. Not only are processing costs reduced dramatically via elimination of manual labor, companies can take back revenue from previously invalid and undisputed chargebacks and deductions. iNymbus is a business-to-business software as a services (SAAS) solution provider for Consumer Package Goods and Equipment Manufacturing industries with a laser focus on cutting costs and reducing processing time through utilization of cloud robotic automation.
Article written by Sreedhar Narahari, CEO and Founder, iNymbus and creator of DeductionsXchange
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *