A chargeback is a fine or penalty issued by a customer or a retailer towards a vendor or shipping company. This is similar to when a customer disputes a transaction and their bank issues a credit card chargeback, reversing their payment.
While not quite as frequent as in the world of e-commerce, chargebacks are still common within the freight industry and can significantly harm businesses—leading to financial losses, reputational damage, and increased operational costs. However, most chargebacks are caused by errors in invoicing, shipment discrepancies, or issues with delivery, and are preventable with the right processes and support.
What are Amazon retail chargebacks and why do they happen?
Amazon retail chargebacks are penalties that Amazon issues to vendors when they violate operational process requirements. The most common reason for chargebacks is that a Purchase Order (PO) failed to be delivered within a specific time frame set by Amazon, with the second most common reason being inconsistencies with the Bill of Lading (BOL) number entered throughout the shipping process. A BOL number is a unique identifier issued by a carrier that outlines the terms of shipping and serves as both a receipt and document of title. As a result, missing or inaccurate BOL numbers can disrupt the payment process and make it difficult to verify shipments, potentially causing disputes and delays.
Another reason for chargebacks is referred to as “No Call No Show”, which occurs when carriers who book an appointment in Amazon’s Carrier Appointment Request Portal (CARP) and get confirmation of their assigned delivery slot fail to show up at the Amazon fulfillment centre (FC) at the time that they were scheduled for their delivery. The final reason for a chargeback is a rejected delivery; however, rejected deliveries very rarely happen.
These chargebacks impose significant financial costs on both shippers and carriers, including lost revenue, additional fees, and increased operating expenses. Reputationally, they erode trust and credibility, leading to damaged business relationships and potential loss of future opportunities. Overall, chargebacks threaten both immediate profits and long-term business success for all parties involved.
The real-world impact of chargebacks
Admin burden and relationship strain with key customersEven if they are infrequent, chargebacks cause immediate administrative burdens, as teams must investigate disputes, gather supporting documentation, and respond to payment processors within tight deadlines. This causes a drain on resources and staff, and uses time that could be spent on other tasks to fix avoidable mistakes.
Chargebacks also weaken relationships with key customers and stakeholders. This erosion of trust can lead to reduced repeat business and missed opportunities for future collaborations.
Frequent chargebacks can erode profit marginsIn addition to the direct loss of profit from a chargeback’s refund, frequent chargebacks can also erode profit margins by compounding these direct financial losses with added fees, higher transaction costs, and increased resource allocation for dispute resolution.
Tips to avoid chargebacks
Here are some tips so that your business can avoid chargebacks when you’re shipping freight:
Clear labelling and documentation
Clear labelling and documentation helps to prevent chargebacks by making shipment details transparent and easily verifiable for all parties involved. Accurate labels ensure the right goods reach the correct destination, minimising disputes over delivery or product type.
As inaccurate or missing BOL numbers are the second most common cause of chargebacks, it is important to make sure that all BOL numbers are properly labelled and documented. Always ensure that the BOL number you generate within the Advanced Shipper Notice (ASN) is entered correctly in the designated field of the Amazon Freight booking portal to prevent any mismatches.
A wrong or missing BOL defect occurs when the BOL number in the vendor’s Advanced Shipping Notice (ASN) does not match the BOL that was used by the carrier when booking their delivery appointment. To ensure a BOL match and avoid a chargeback, the correct BOL information must be added to the appointment at least four hours before it takes place.
Comprehensive documentation—such as accurate BOLs, signed delivery receipts, and detailed invoices—provide critical evidence to resolve any claims quickly and effectively, reducing the likelihood of chargebacks.
On-time delivery
On-time deliveries ensure that customers cannot complain about their goods arriving too late, which is a common cause for chargebacks. This plays a key role in preventing chargebacks by meeting customer expectations and fulfilling contractual obligations. Consistently delivering on schedule also builds trust with partners and customers, making chargebacks less likely to occur.
Understanding retailer or customer routing guides
Understanding retailer or customer routing guides helps to ensure that shipments meet specific requirements for packaging, labelling, and delivery methods. Adhering to these guidelines reduces the chance of errors that could trigger costly disputes or refused loads. By following routing instructions precisely, businesses can protect their revenue and maintain strong relationships with their partners.
Tech and tracking
Leveraging technology and tracking tools can provide real-time visibility into shipments and delivery statuses. Advanced tracking systems allow all parties to monitor progress, quickly address issues, and confirm proof of delivery. This transparency reduces the chances of disputes and offers valuable documentation to support claim resolutions, making chargebacks less likely.
Open communication
Open communication works to keep all parties informed about shipment status, potential delays, or issues as they arise. Proactively sharing updates enables quick problem-solving and reduces misunderstandings that could lead to disputes. This transparent approach builds trust and cooperation with customers and stakeholders, making chargebacks less frequent and easier to resolve if they do occur.
How Amazon Freight can help you avoid chargebacks
With Amazon Freight, shippers get the reliability of 96% on-date deliveries. This helps to reduce the probability of shippers getting a chargeback due to delayed shipments. This is particularly helpful when it comes to avoiding a No Call No Show, as it dramatically reduces the chances of missing a scheduled delivery appointment at the Amazon fulfillment centre. Additionally, we look at our top vendors to observe patterns of potential errors, offering advice on how they can avoid chargebacks in the future.
Amazon Freight works as a strategic partner, not just a carrier. Our shipper experience team also works with our vendors to help them plan ahead when they are scheduling their orders. This ensures that whatever slot they have allocated to them is within the right window so that they can avoid chargebacks due to not delivering within the correct time frame.
Get started with Amazon Freight today
Partnering with Amazon Freight means gaining access to advanced logistics technology, dedicated support, and a team committed to your success and helping you to avoid chargebacks; tapping into Amazon Freight’s services is quick and easy. Just create a free shipper account to request an instant quote, and you can start booking shipments immediately. We guarantee every load—once your shipment is booked, we’re fully committed to delivering it.
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