Retail compliance requirements are more numerous than ever these days, creating challenges for retail vendors as they try to meet routing guide demands and avoid chargebacks. These chargebacks – vendor penalties for not following the retailer’s shipping guidelines – add a layer of stress for retail vendors and a solid revenue stream for the retailers themselves. In this article, we’ll examine the most common retail chargebacks that we see and tell you what you can do about them.
All major retailers issue chargeback penalties for non-compliant shipments from their suppliers. The specific penalties are explicitly laid out in each retailer’s routing guide and range from, in our experience, about 1% to 5% of a supplier’s gross invoice amount.
For example, Walmart’s On-Time in Full program charges 3% of item value for products that are late or missing.
If you’re a manufacturer, supplier or any other type of company seeking to do business with big box retailers, a key word to consider is “compliance.” Every retailer has its own distribution infrastructure – complete with its own processes and procedures that allow products to flow through to stores in the most efficient manner possible. They expect vendors to adhere to these processes and procedures. In this article, we’ll examine the most important aspects of retail compliance so that you can enjoy successful, long-lasting relationships with your retail partners.
True or false: when a retailer issues a chargeback penalty to you, the fine is permanent and indisputable.
In our experience as a 3PL provider, we find that chargebacks can be based on incorrect or incomplete information and are often worthy candidates for dispute.
In this article, we’ll provide tips to help you fight these chargebacks and reverse unwarranted penalties.
Are you receiving chargeback after chargeback after chargeback? Well, you are not the only one my friend. Companies can lose hundreds of thousands in profit if they do not resolve inadequacies in compliance.
Over the past few decades retailers have amped up their vendor compliance with a view to speeding their order-to-cash cycle times and making their distribution centers maximally efficient. When goods are not received before or after the expected date or contain errors in labeling the vendor is subject to a chargeback based on the percentage of the value of the shipment.
Seven of the most frequent chargebacks by category include:
Retailer chargeback fines for non-compliant shipments are a profit-draining reality for many consumer goods manufacturers.
Literally trillions of dollars in CPG merchandise is sold and shipped to retailers around the globe annually. The cost of research and development is enormous and you have successfully brought your quality products to market. Your brand is a household name and well recognized by consumers at the retail level. The margins are good but it seems that a percentage of your profit is left on the table. What can you do about it?
It’s a new year, and with it comes a new cycle for chargeback deductions. Hopefully, if previous errors do not reoccur and the wrongs have been righted, then vendors stand a better chance of warding off chargebacks for 2014.
If your primary focus in reducing chargebacks has been keeping human errors at bay, you may want to refocus efforts on the errors that can arise from an overlooked system or automated function.
We rely enormously on technology to help streamline warehouse processes and create efficiency gains, but often we take these automated processes for granted. Sure, you may encounter an occasional system bug or glitch that you can’t prevent. But what happens if there is an oversight in coding an application? What happens if a retailer updates or makes revisions to their label, paperwork, or EDI requirements and that information fails to pass on to the parties responsible for making the warehouse system changes? This kind of oversight can lead to hundreds or thousands of dollars in chargeback deductions.
To ensure that your technology continues to deliver and not present you with that surprise chargeback, conduct a periodic review of your automated and pre-programmed solutions for vendor compliance. UCC-128 label specifications and paperwork requirements may change over time. If you have these items designed to auto-map data to generate compliant labels or paperwork, it’s essential to have that mapping done correctly. A retailer can change something as small as a character length requirement of a Store/Unit number present on a label. A change this small has large consequences, in terms of chargebacks, due to the high impact of printing numerous labels.
Here are 8 technology-linked requirements for vendor compliance that would benefit from a periodic review:
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