Amazon’s Vendor Central program has offered exciting e-commerce opportunities for businesses of all sizes, but the number of purchases processed through it has caused an increased reliance on automation. While this has made the system much more efficient, it also has the unfortunate and unintended consequence of hurting vendors when it does not work as planned.
For sellers and vendors, loss prevention is one of the most important aspects of their operations since it can make or break their profitability. There are some obvious sources of loss, such as theft and fraud, but there are also other, less apparent factors — employee mistakes and system errors, for instance — that can significantly eat into a business’s profit. An effective loss prevention program will address these issues to maximize the company’s efficiency.
Loss Prevention in E-commerce
In e-commerce operations, loss prevention takes a very different form. There are no physical store shelves for a customer to shoplift from, so the loss primarily comes from fraudulent returns, refunds, and chargebacks. Although Amazon has a customer-friendly return policy that allows returns with no questions asked, this has allowed some people to exploit the system. When a vendor wants to dispute these chargebacks, it’s often their word against the customers, and the customer tends to be favored in these matters.
One hidden form of loss in e-commerce that could be prevented is chargeback and shortage fees from Amazon. Although the system of fees was put in place to protect both buyers and vendors, it is — as is the case with any automation — imperfect. The result is that vendors will often have numerous fees leveled against them that they did not deserve, significantly cutting into their profits.
Disputing Chargeback and Shortage Fees
The first step a vendor should take is to determine how much they can recover in fees from Amazon. Vendors can embark upon a dispute process to attempt to recover lost fees and prevent future ones from being incurred. Vendors can even have a company audit their chargeback and shortage fees to determine how much they can anticipate receiving back and decide whether or not it is worth the investment of pursuing the dispute process.
Nevertheless, this dispute process is more often than not a tedious, convoluted, and labor-intensive one. The time, effort, and resources that go into filing these disputes could be better allocated to more fundamental aspects of the business’s operation. Thankfully, new systems combining proprietary technology with direct human expertise have been developed that can process thousands of these disputes without the vendor having to do any of the work.
With such programs, Amazon Vendor Central vendors can often see returns of up to 70 percent of chargeback fees with a period stretching back as many as five years. Although each fee might only be a few dollars, when your company deals with thousands of transactions monthly, these fees begin to rapidly stack up. For a struggling business, recovering these fees can be a much-needed lifeline to help keep the business afloat in times of economic uncertainty.
In addition to these programs’ ability to recover more fees for vendors, they can also offer supply chain management and coaching, as effective supply chain management can prevent these fees before they are even assessed on the vendor. This not only saves sellers and vendors money by eliminating the fees themselves, but also saves them the labor hours it takes to handle the appeals process down the road.
Chargeback and shortage fees can be a thorn in the side of vendors using Amazon’s Vendor Central, but this no longer has to be the case. Many new programs have the potential to not only help vendors recover these unjust charges that have been levied against them, but they can help them prevent further charges from being levied against them in the future, improving their bottom line in the long run.
The author, John W. Collins is the Chief Executive Officer at chargeguard.
