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What are Chargebacks and Deductions?

In supplier-vendor dynamics, chargebacks are penalties imposed by retailers like Amazon for late deliveries or compliance lapses. They can hurt profitability and operational efficiency, making effective management crucial.

Our product streamlines and automates deduction management for suppliers and vendors dealing with retail giants. Designed with simplicity in mind, it saves time, reduces errors, and helps you recover lost revenue. Navigating chargebacks has never been easier, fostering a smoother and more profitable supply chain.

Let's delve into the entire process in detail for better understanding and clarity. We'll discuss the challenges associated with deduction management and compare the solutions available in the market.

 

Understanding Chargebacks and Deductions

Chargebacks and deductions, in our context, are not consumer protection measures against fraud. Instead, they are fees imposed by major retailers like Amazon or Walmart on their vendors. These fees are a response to perceived violations related to shipping, compliance, or other vendor responsibilities.

Common Categories and Areas:

Shortages

Fees for quantity discrepancies between orders and received items

Pricing Claims

Deductions related to disagreements over pricing, discounts, or promotional deals.

Transportation Issues

Delays or problems during transportation that impact delivery times.

Purchase Order Issues

Problems with aligning purchase orders with actual shipments.

Packaging and Labeling Issues

Discrepancies between what was ordered and what was received.

Advanced Ship Notice (ASN) Issues

Failures to provide accurate advance notice of shipments.

The Problem: Struggle with Chargeback Management

Suppliers frequently encounter frustration with chargeback and deduction processes, which seem to change arbitrarily and are guided by complex algorithms. There's a belief among vendors that retailers like Amazon and Walmart intentionally complicate chargeback processing, adding hurdles for vendors to dispute these claims, thus enhancing their profit margins.

Reduced Margins

Large retailers mandate claim and documentation uploads, a meticulous and time-intensive endeavor. This usually involves training personnel to collect, evaluate, and manually upload claims to retailer portals. Each portal varies in terms of navigation, data, documents required, and the sequence for assembling each claim package.

Tight Deadlines

In a study on Warner Brothers, manual claim processing by motivated and trained employees took around 5 to 8 minutes for organization and 5 to 7 minutes for portal uploads. This accumulates to 15 minutes or more per claim, and vendors often deal with hundreds or thousands of claims monthly.

Manhours Wasted

A study on a Walmart apparel distributor revealed that each deduction claim demanded 8 to 15 minutes for manual completion. With nearly 3,000 deductions per quarter, this results in over 400 hours spent solely on attempting to recover losses.

Cashflow Problems

Processing chargebacks from retail giants like Amazon and Walmart becomes a burden, consuming time, pressuring departments, and raising doubts about its worth in terms of required human capital.

Manual Dispute Management: A Struggle to Scale

As a Supplier's volume grows (a fantastic problem), it is imperative to immediately implement a strategy for managing chargeback disputes that will also grow with this volume. In the beginning, these simple steps will help with simplifying chargeback management:

Seasonal Hiring

Consider hiring staff on temporary basis to meet the seasonal demand.

Effective Organization

Categorize chargebacks based on issue types and associated documentation.

Structured Procedures

Create written standard operating procedures (SOPs) for chargeback processing.

Structured Processing

Utilize standardized spreadsheets for streamlined processing and research.

Guided Support

Offer hands-on guidance to address queries and resolve processing issues.

Threshold Definition

Determine a chargeback threshold, ensuring it justifies team member involvement.

Unlock the Better Path: Embrace Automated Chargeback Management

Suppliers frequently encounter frustration with chargeback and deduction processes, which seem to change arbitrarily and are guided by complex algorithms. There's a belief among vendors that retailers like Amazon and Walmart intentionally complicate chargeback processing, adding hurdles for vendors to dispute these claims, thus enhancing their profit margins.

In the current scenario, the most effective and efficient route to address chargebacks and deductions lies in the realm of automated chargeback management. The essential strategy involves automating chargeback responses by harnessing advanced robotic technology akin to that employed by retail giants like Amazon to initiate chargebacks. This approach isn't just a possibility; it's a reality that can be seamlessly integrated into your company's standard operating procedures.

 

Automated Solutions v/s Manual
Advantages of Cloud robotics  Cloud robotics automation  Manual
Time to organize and file a Claim 24 Hours 3 to 6 Months
Cash flow 0 to 1 Month 3 to 6 Months
Retailer upload resource effort per 1000 claims (A Month ) 0 Hours 240 FTE Hours
Yearly Training / retraining 0 Hours 200 Hours (10% Annually )
Cost Per Claim $1* $ 5.28

Success Story: How a $2 Billion Client Tackled Deductions with iNymbus

 

Transforming a 40-Person Team into an Efficient Few

Within a mere 90 days, a book distributor adopted robotic processing, resulting in a remarkable transformation. Their chargebacks dwindled to an astonishing zero, marking the first-ever occurrence of this achievement. The transition to automated chargeback management incurred minimal costs compared to the conventional manual approach. This remarkable success underscores the undeniable potential of automated solutions to effectively counter the challenges of chargeback and deduction disputes, regardless of volume.

Reducing deductions processing time from 3-4 weeks to mere minutes.

iNymbus chargeback management proved essential for the book distributor, offering a quick solution that not only cleared backlogs efficiently but also allowed the team to stay current on Amazon chargebacks. The cost-effective and time-saving nature of the automated tools made it a logical choice for improved efficiency and strategic planning.

Retail Deduction Management

 

Success Story: How an Walmart book distributor cleared a backlog of two years' worth of deductions within a few weeks.

 

A Unique Solution for a Two-Year Backlog

Within a mere 90 days, a book distributor adopted robotic processing, resulting in a remarkable transformation. Their chargebacks dwindled to an astonishing zero, marking the first-ever occurrence of this achievement. The transition to automated chargeback management incurred minimal costs compared to the conventional manual approach. This remarkable success underscores the undeniable potential of automated solutions to effectively counter the challenges of chargeback and deduction disputes, regardless of volume.

Key Benefits of iNymbus' RPA Solutions

iNymbus chargeback management proved essential for the book distributor, offering a quick solution that not only cleared backlogs efficiently but also allowed the team to stay current on Amazon chargebacks. The cost-effective and time-saving nature of the automated tools made it a logical choice for improved efficiency and strategic planning.

 

Walmart Deductions

 

Success Story: Distributors Tackle Thousands of Walmart Deductions Every Month With iNymbus RPA.

 

High Volume Being The Biggest Challenge

Walmart's deductions pose a persistent challenge, potentially equating to thousands of monthly chargebacks for suppliers and distributors. A multitude of deduction codes significantly erode bottom lines. The sheer volume, coupled with ongoing deductions, often overwhelms distributors, rendering it near-impossible to challenge each charge.

Distributor 1: A Video Game Case

A video game distributor, grappling with up to 1,500 Walmart chargebacks monthly, found itself dedicating substantial resources to manual chargeback management. An overwhelming volume necessitated a full-time employee and interns solely focused on Walmart chargebacks. Cloud robotic automation rectified the situation, eradicating the backlog and enabling efficient chargeback resolution.


Distributor 2: An Apparel Challenge

An apparel distributor, responsible for renowned sleepwear and loungewear brands, devised a quarterly settlement agreement with Walmart to address the chargeback volume. However, low settlement offers prompted individual claim disputes. With over 3,000 quarterly claims, manual disputes proved impractical due to time constraints. Automated chargeback mitigation swiftly resolved the challenge.

 

Empowering Deduction Management: Success with iNymbus

These accounts underscore the game-changing potential of automated chargeback management solutions provided by iNymbus. Overcoming Amazon's and Walmart's complexities, these tools offer the necessary efficiency and cost savings, making them an undeniable choice for distributors and suppliers alike. Download our insightful case studies to delve deeper into these successful transformations.

 

Walmart Deductions