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Reduce or Stop Shortage Claims from Amazon Vendor

Christopher Khoo
31 March 2020 12:00

Amazon Vendor can be fraught with chargebacks for a number of reasons.

Along with 'regular' chargebacks, Amazon can also shortage claim your goods if what they received is different to what was invoiced to them in the advance shipping notice. 

A good place to read more about this in more detail is on the resources section within VC itself. Support ->Resource Centre -> "Self Service Training - Shortage Claims" and "Express Training - License Plate Receive"

Why do I get shortage claims?

Shortage claims occur when Amazon believes what arrived at their fulfilment centres differs from what you claim was shipped. The most plutonic way of reconciling the difference is to say it was lost in transit. However sometimes it is well established that a courier has proof of delivery, and the orders are packed in such a way that there is no possibly that an order is part-shipped. For example, you send 6 crates of 12 items that are each in a box, and then sealed in a larger carton. On arrival, only 70 of the 72 items are marked as present. None of the items could have broken, and so its strange that 2 items went missing. All these can add up to quite a substantial cost in the long run. 

The reason for this shortage claims are human error, courier issues, compounded with smart matching system. 

1) Human error - Vendor side

  • Pack error - items were missed out of the package(s)
  • Label error - missing labels
  • Label error - label info incorrectly completed on Vendor Central 
  • Incorrectly configure pack size within Vendor central. Eg. You send one box of 12, but it is received as "1" unit, rather than 12*1 units.
  • Unreadable barcode printed

2) Human error - Amazon 

  • Amazon receive the box and manually scan each item, and miss some. This is the most likely cause of minor discrepancies.

3) Courier 

  • Breakage
  • Lost in transit
  • Theft 
  • Partial delivery 

 4) Smart Matching Artefact 

When a package goes missing, Amazon will search future orders for the same SKU and reconcile these SKUs agains the missing ones from an older PO. This means you gain extra time to deliver goods, but it also means a given shipment may not necessarily have been incomplete. 

Eg. 

  • You ship a PO with 2X, 3Y. 
  • Amazon claims 2X, 2Y arrived. (1Y short)
  • The next week, you get another order for 2X, 3Y, and ship all units perfectly. 
  • Amazon receive all units for the second order. One of the "Y" units in the second order is reconciled against the older PO. 
  • The first claim is cancelled, and instead transfers onto the new order. 
  • You get a new shortage claim raised against your more recent shipment, again for 1Y Short.  

 

Note:  Vendors only get a shortage notification when multiple matching attempts are unsuccessful. 

This system is good for buying you extra time to handle and deliver goods. However it can be difficult to pull apart which is a genuine, situational error, compared to a 'hangover' from a previous order. This can make picking apart the detail quite tricky. In theory these claims should settle out over time, but make A/B process testing tricky when changing couriers, label printing etc. 

How can I dispute shortage claims? 

Firstly, make sure that your contact information in Settings and Contacts - Remittance is correct. This ensures you get a notification every time Amazon raise a claim with you. 

Old process:

Submit Proof of delivery for entire PO. This requires:

  • Deliver Receipt, signed by Amazon with Courier tracking Number 
  • Packing Slip, with Courier number and PO number
  • Invoice, with PO number and Invoice number.  

 However this is slow and so Amazon introduced a new portal to dispute claims. 

New Process:

Shipment date, Quantity, Barcodes of relevant SKUs only

  • Payments ->Invoices  
  • Review/Dispute Shortages
  • Actions - "Dispute Shortage by ASIN"
  • Enter dispute quantity, Shipped Product, Date, comments. Comments doesn't need to be more than "Items Shipped" 
  • This will then trigger the "create a dispute" screen 
  • "Upload Supporting Documents" - We recommend attaching any ASNs, PODs from couriers and other documents you have. 
  • NB if you agree with a claim leave, click "Cancel invoice" instead of "Dispute shortage by ASIN". The credit note can be submitted by EDI or manually. 

 

Note: You can also contact Amazon using Support - Still need help - contact us - Accounting - 03. Shortage Claim or POD.  

How can I stop Shortage claims? 

Besides ensuring the courier is delivering all items on time, there is more to reducing shortage claims than just courier problems: 

1) Change your invoicing window. Too early and Amazon may raise a shortage immediately, as the goods are still a day or two before they arrive. Too late (more common for non-electronic vendors) and the goods are received with no invoice against them.

2) Duplicate invoice. This can happen if a second invoice is raised to correct an error on a previous invoice. To avoid this, issue a credit note before resubmitting an invoice to prevent accidental duplicate invoicing. 

3) Incorrectly defined unit quantities. Setup invoicing and delivery units in your catalogue to accurately reflect the contents. 

4) Switched items. Amazon might think that the ASIN they have received is different from the one they requested. Avoid this by delivering the item exactly as ordered, and keeping your catalogue up to date. 

5) Incorrect labelling. Ensure that what is in the box matches the label that is on the box! Also worth checking the DPI on the printer and that it is clear and legible, after transit. 

6) Delivery to wrong fulfilment centre. 

7) Lost in transit 

8) Deliveries for unconfirmed POs

9) Deliveries outside of the delivery window. Ensure that your POs are arriving in the desired delivery window. 

10) POs delivered without a supporting ASN, or incorrect ASN.

 

Other Tips

Your invoices will be marked with the suffix "SC" for Shortage Claim if a claim was raised against them. They will be marked with "SCR" for Shortage Claim Reversal if this is removed. These suffixes can stack, leading to "SCRSC", "SCRSCRSC" etc. 

How can I label properly to ensure more accurate reception?

Amazon recommends the "License Plate Receive" Process to ensure more accurate reception of goods. This allows for multiple items in a single carton with an SSCC label, which can identify its contents in a single scan at the time of delivery. 

SSCC (Serialised Shipment Container Code) is the EDI version of AMZNCC (Amazon Container Code).

In this case, multiple units can be added into a carton and then covered with one SSCC barcode. Alternatively many cartons can be added into a larger master carton and then this is sent with one covering SSCC code. 

LPR Requirements: 

  • An ASN with the shipment details must be sent with each shipment. 
  • A label linking the ASN reference and the SSCC is displayed on the outer carton. 
  • Label details: From, To, Bill of Lading (ASN) as text and barcode, SSCC Code, ±Carton number, tracking ID, Carrier name, Product GTIN if applicable. 

 

See the Resource Centre -> Operations -> "Express Training - License Plate Receive" for official guide from Amazon. 

How can KhooCommerce help?

We understand that for many businesses shortage claims can cripple margins and reduce the profitability of selling to Amazon. 

The first thing we'd encourage you to do is to get in touch - we'd love to hear from you and explore if we can help. Even if we can't help we are happy to resource you with more information. 

As a quick overview, we provide a series of automations that make handling Amazon Vendor must easier and reduce the burden in administration.

We provide a License-Plate Compliant ASN system that could reduce your shortage claims. It also considerably speeds up the process of making labels for the shipments. We also work closely with you and your operations team to make sure they are happy handling shipments to Amazon FCs to increase the margin on shipments.  

Alongside this we also provide a way to bulk allocate and confirm all the POs for a country in just a few minutes. This can normally take hours! 

Still got questions? Feel free to get in touch.

This can be a frustrating topic for many people and we speak with businesses all the time that are looking to improve their processes. If you'd like a bit more support then please email us

We also work with a number of agencies and teams who have good relationships with Amazon, we would be happy to refer you to them and find one that is a good fit for your business.