KhooCommerce Headline Sponsor for AmafestUK
KhooCommerce were pleased to be the headline sponsor at the recent conference AmafestUK 2023.
AmafestUK is an annual Amazon conference hosted in the UK by OnlineSellerUK, run by Prabhat Shah. At the event, Sellers and Vendors from all over the world come together to share ideas, best practice and network with each other.
Chris, Sales Director of KhooCommerce, presented on how to minimise your Amazon Vendor Shortage Claims and Chargebacks through analysing your internal processes to maximise profitability.
Here’s a summary of the talk:
1. Vendor vs Seller
Amazon Vendor is similar in many ways to Seller central, but with a few key differences.
|Topic||Amazon Vendor||Amazon Seller|
|Product Ownership||Purchased by and owned by Amazon||Still owned by the seller|
|Pay for Fulfilment?||No||If using FBA, yes|
|Sale Price||Wholesale to Amazon||Retail price to end customer|
|Returns||Typically handled by Amazon *contract dependent||Usually returned to FBA stock or to seller|
|Prime eligible?||Yes||Yes, unless FBM and not SFP|
|Are there charges for Operational Defects?||Yes||Yes|
|Joining method||Invite only||Self sign up|
2. Review Your Chargeback Impact
The next section of the talk focussed on how to analyse your operational performance and profitability.
Go to the Operational Performance dashboard in Vendor Central to assess your chargeback performance. This dashboard offers a comprehensive overview of chargebacks associated with your account within a selected timeframe. It classifies process defects by their current status, showcases the rate of policy violations, and furnishes details regarding the amounts charged by Amazon.
Analysing Amazon Vendor Chargebacks starts with knowing your data.
Export your chargeback data. We advise using specific time ranges like quarters, halves, or whole years while avoiding data from the last two months, which might be incomplete. Import this data into a CSV spreadsheet.
Firstly, perform an Account-Level Overview. Choose all your Chargeback data and create a pivot table. Set the columns as "Status" and the rows as the type and sub-type of non-compliance. Set the Sum of Financial charge as the values field. This provides an overview at an account level. Common charge types include those related to PO On-time Accuracy, SIOC, Prep issues, and ASN accuracy.
Next, conduct an ASIN-Level Analysis. Add ASIN into the pivot table. Adjust the columns to represent the types of non-compliance. This aids in understanding the charges associated with each type for each ASIN. You can focus on the "charged" values, as these directly affect your bottom line, or consider all charges to assess the total potential impact.
Now, merge with your sales data for the same time period. Combine your sales data for each ASIN within the same time frame you shipped to Amazon Vendor. This should yield columns for ASIN, quantity shipped, average sale price, and total revenue. Merge the sales data with the chargeback data by type to analyse the total cost of chargebacks by type and the total revenue for that period.
If you would like a free resource to help as a template for this analysis process, download here.
3. Amazon Shortages and their sources
Previously at KhooCommerce, we’ve covered the root causes of shortages and what you can do to prevent them. In the presentation at Amafest we looked specifically at the receive process in Amazon Fulfilment centres to do with “manual receive” or “efficient receive”. If you're not familiar with the term, efficient receive is when the whole carton is scanned using the barcode on the outside of the carton, rather than each item being individually scanned and counted (manual receive). This process carries a large risk of shortages being generated.
Implementing end-to-end integration with your ASN and warehouse process, such as the type provided by KhooCommerce, can really help improve the accuracy of your dispatch process and reduce the shortage defect rate into Amazon. In a recent case study, one of our clients found they had 83% fewer shortage claims since switching to SSCCs and KhooCommerce software, compared to manually making the ASN inside Amazon’s systems.
The talk mainly focussed on providing a practical insight into how to analyse chargebacks and break them down by sub-types. The talk also discussed a few origins of shortage claims and how implementing SSCC codes (see guide: AMZNCC vs SSCC, which is right for me?) can reduce the shortage claim rate compared to a manual method.