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A recent report reveals that almost 2 million small-to-medium businesses operate through Amazon. Considering the benefits of doing so, it’s no small wonder why: one survey of brands
partnering with Amazon finds that 91% say they acquire new customers, 91% say they increase sales volume, and 90% say they were able to successfully expand their total market share — all through conducting e-commerce through Amazon’s platform.
While selling through Amazon can be profitable, hidden fees and complicated chargebacks can eat into those profits. According to chargeguard, Amazon levies $12 billion in deductions and fees each year, and a large portion of those charges are erroneous. “We help businesses recover what Amazon owes them and enable brands to reduce their fees in the future,” says John W. Collins, Founder and CEO of chargeguard.
How vendors encounter fees on Amazon
While Amazon’s global reach provides benefits to online vendors, its fees are the fly in the ointment. Amazon erroneously claims millions of dollars that rightfully should be in vendors’ pockets, and small to medium e-commerce businesses need that money to replenish marketing budgets and scale. Of course, companies have the option to dispute each fee and take their revenue back. However, fighting to reclaim that money from Amazon and navigating constantly-evolving charges in the future saps companies of the time and manpower they need just as desperately.
One of Amazon’s most common penalties is known as a Purchase Quantity Variance (PQV). Amazon levies this charge when it believes vendors did not send the number of items stated on the purchase order, or PO. Although this does happen from time to time, the truth is that, in many cases, vendors do ship the agreed-upon amount and are charged by mistake.
Another common fee encountered by vendors is called Purchase Price Variance (PPV). This charge occurs when Amazon decides it does not owe vendors the amount they claim in their invoices. Discrepancies between items’ list prices and how Amazon believes they should be
priced happen for a variety of reasons. Contractually, though, Amazon owes vendors the list price in many cases.
Amazon also levies small cash penalties called chargebacks when it feels vendors fail to comply with its guidelines. Vendors can incur over 48 kinds of chargebacks due to minuscule details in the ways they prep, package, and ship items. These charges can be difficult for vendors to keep up with because they are always evolving.
“If staying on top of all the fees seems overwhelming, that’s because it is,” says Collins.
“Amazon’s fees are numerous and constantly changing. Without focused attention, they can easily spiral out of control.”
How chargeguard helps brands reclaim erroneous Amazon fees and more
Brands clearly have a lot to keep track of on Amazon, and the aforementioned fees are just a drop in the bucket. Amazon automates fees on its vendor central platform, and flaws in the system fall heavily on vendors. While automation makes the process possible, it gives
rise to mistakes.
“We see automation as a catch-22,” Collins explains. “AI transformed Amazon from a garage-based internet business into a global marketplace, and its worldwide reach offers huge benefits for brands. That is the upside to automation, but on the other hand, those machines can make mistakes. While those errors may not be large ones, they add up over time and cut into a brand’s bottom line.”
As such, brands are often left spinning their wheels trying to understand, dispute, and recover erroneous fees and chargebacks from Amazon on their products. “Most businesses don’t have
the resources needed to track Amazon accounts,” says Collins. “Brands can easily rack up 15,000 chargebacks from Amazon, and then they have to take the time to dispute each of these $2 and $3 charges individually. It’s death by a thousand cuts.”
With chargeguard‘s help, brands can recover their money without becoming mired in thousands of disputes and conflict resolutions. The chargeguard team steps in and enables businesses to focus on what they need to do to grow their companies. On average, the company’s proprietary process is able to recover an average of 70% of fees and chargebacks for its clients. Furthermore, the chargeguard team can extend recovery efforts to dispute charges as far back as five years.
Enabling companies to recover past fees and put disputes on autopilot is just one benefit chargeguard offers. In addition, chargeguard helps brands minimize new deductions before they happen. Daily insights inform businesses how much they are charged, the types of chargebacks they incur, and how those chargebacks and shortages impact their business. The combined savings from reclaiming erroneous charges and mitigating future penalties can have a huge impact on a business’s bottom line.
“It’s time to stop fighting Amazon and start focusing on your business,” remarks Collins. “When
we help you recover prior shortages and minimize future chargebacks, you will see your profits increase by up to 20%.
