As an Amazon vendor, maintaining compliance with Amazon’s vendor agreement is crucial to avoid costly deductions and chargebacks. These deductions can cut your profit margins and impact cash flow. Understanding the different types of deductions and implementing preventive measures is essential for protecting your bottom line.
Types Of Amazon Deductions
Amazon Compliance Chargebacks:
These are the most frequently issued types by Amazon. They are issued when vendors fail to comply with Amazon’s vendor agreement. The most common Amazon compliance reasons are as follows:
- Cartoon too heavy or too large
- Product labels that don’t meet Amazon’s requirements
- Not notifying Amazon about shipments in advance
- Using unapproved packaging materials
- Not shipping items in their original packaging when required
- Missing agreed shipping timelines
Shortage Deductions:
These deductions happen when the number of products Amazon receives is less than the quantity listed on the vendor’s invoice. Common reasons include:
- Human errors in counting or handling items during shipping that cause damage
- Inaccurate shipment documentation that doesn’t match the actual number of items
- Products getting lost or stolen before reaching Amazon
Also Read: What Is An Amazon Storefront?
Pricing Deductions
These deductions occur due to pricing mistakes – when invoice prices don’t match the agreed prices with Amazon. Common causes are:
- Invoice prices differ from product label prices
- The invoice total differs from Amazon’s purchase order pricing
See how we helped a giant supplier with $2 Billion in revenue with Walmart Deduction Management.
How To Avoid Amazon Deductions
Compliance Deduction Prevention Practices:
- Thoroughly review and understand Amazon’s vendor agreement, guidelines, and policies to ensure compliance.
- Strictly follow Amazon’s requirements for product labeling, packaging, and shipping to maintain compliance.
- Provide accurate and timely Advance Shipment Notices (ASNs) to facilitate Amazon’s inventory management and logistics operations.
- Maintain open communication with Amazon and promptly address any compliance issues that arise.
Shortage Deductions Prevention Strategies:
- Implement robust counting and quality control measures to ensure accurate item counts and identify potential issues before shipment.
- Ensure accurate labeling and documentation to minimize discrepancies between shipment quantities and invoices.
- Work with reliable carriers and logistics partners to minimize the risk of pilferage or damage during transit.
Pricing Discrepancies Prevention Strategies:
- Double-check that invoice prices match Amazon’s agreed-upon prices to avoid pricing deductions.
- Implement systems to ensure accurate pricing data entry and invoice generation.
- Promptly reconcile and address any pricing discrepancies with Amazon to avoid escalation.
- Leverage electronic invoicing and data exchange systems such as Electronic Data Interchange (EDI) to minimize manual errors.
Now that we’ve learned prevention strategies, let’s discuss how automation with iNymbus can streamline the deduction management process.
How iNymbus Automates Amazon Chargebacks
iNymbus harnesses Robotic Process Automation to dispute Amazon deductions. Our AR Deduction Management Software is tailored to align with your company’s SOPs and integrate with your system. It covers all types of Amazon deductions, and categorizes them, ensuring faster and more targeted responses. It is capable of handling a high volume of deductions as your business grows.
Benefits of Automation:
- 30 times faster at processing deduction claims
- Reduces cost per claim by 80-90%
- Eliminates duplicate work and unnecessary manual tasks
- Automatically disputes and follows up on all valid claims
- Shows the status of all claims across all retailers in one place
Conclusion
Managing Amazon deductions can be tough. They can cut your profit margins and impact cash flow. Following prevention strategies can help improve your workflow and recover more revenue. But an automated system like iNymbus works even better. It automatically handles tasks for you, gives you helpful information, and makes managing deductions much easier overall.
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