Amazon Merging Chargebacks for Purchase Order Fulfillment
Amazon is merging three related chargebacks in order to simplify the compliance structure associated with Amazon’s purchase order fulfillment.
The unified chargeback, called PO On-Time Accuracy, consolidates the following:
- PO On-Time Non-compliance
- Excessive Backorder
- Unfilled by Cancel Date chargebacks
Effective September 1, 2017, all confirmed units are subject to PO On-Time Accuracy.
You will receive a chargeback for PO On-Time Accuracy if more than 10% of your confirmed products do not arrive within the purchase order window, including items placed on backorder. However, Amazon will waive these charges if the previous four-week average on-time rate was greater than 90%.
If the trailing four-week rate is below 90%, all units received outside the delivery window in a given week will be charged 3% of cost of goods (COGS), and all units cancelled in a given week will be charged 10% of COGS. This means that backordered line items will be counted as confirmed units and should be accompanied by accurate updates to avoid incorrect cancellations or unexpected ordering changes.
If you cannot meet the ship/delivery windows, Amazon encourages you to use the 10% grace for either backordering or shipping confirmed units later, or you can reject the PO.
To learn more about this unified chargeback and how to prevent it, go to Amazon Vendor Central > Help > Vendor Operational Performance > Chargebacks – Problems With Purchase Orders > About PO On-Time Accuracy.
Amazon encourages you to prepare your operations teams for any updates you might need to make in your order fulfillment processes.
If you believe you have been incorrectly charged for any non-compliance, you can dispute it via Reports > Operational Performance within 30 days of the notification.
To learn how to become EDI compliant and avoid costly chargebacks with Amazon or any other trading partners, Contact 1 EDI Source today!