Amazon Chargebacks Eating Into Your Profits? How and What to do. PART 1

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?

Read Amazon Chargeback Issues 1 thru 4 Below.

Part 2 of this post, will contain Issues 5 thru 8 and what to do!

What are the issues?

#1: Where oh where has the chargeback menu gone?

Over the past several years we have seen the chargeback screen locations 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, thousands of chargebacks at an average value of $0.10 each, or $thousands of dollars 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 then $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!

Read Next Part 2 of this post with Amazon Chargeback Issues 5 thru 8.

AND, what to do about it!