Amazon Vendor Chargeback: Hidden Costs and How to Recover Your Funds

Amazon Vendor Central provides businesses with a direct pathway to sell products to Amazon as a first-party supplier, offering increased visibility and bulk purchasing benefits.  However, the financial advantages of the Amazon Vendor Central model come with a set of strict compliance guidelines. Vendors who fail to meet Amazon’s stringent requirements can face vendor chargeback fees, which quickly accumulate and eat into profit margins. 

A vendor chargeback is a penalty imposed by Amazon when a seller fails to comply with specific operational and logistical requirements. 

These charges can arise from a variety of non-compliance issues, including late shipments, incorrect labeling, inaccurate carton information, and import documentation errors. 

Vendors who do not proactively manage compliance can find themselves losing thousands of dollars annually to Amazon chargebacks. 

What Is Amazon Vendor Chargeback?

An Amazon Vendor chargeback is a penalty fee issued to vendors who fail to meet Amazon’s operational standards. The chargeback system is designed to encourage vendors to maintain a high level of accuracy and efficiency, ensuring a seamless fulfillment process. 

Chargebacks are deducted automatically from vendor payments, making it important to monitor them closely. If a chargeback is issued in error or without proper justification, vendors have the right to dispute an Amazon charge through Vendor Central. 

Amazon chargebacks can significantly impact profitability, especially for businesses operating on tight margins. Vendors must implement proactive compliance strategies to prevent unnecessary deductions and recover lost funds whenever possible. 

Different Types of Amazon Vendor Chargeback

Amazon issues chargebacks for a range of infractions, each categorized under specific compliance violations. Understanding these categories can help vendors take preventive measures to avoid chargebacks and reduce Amazon vendor central fees. 

PO On-Time Accuracy

Amazon requires vendors to fulfill purchase orders (POs) on time. Late deliveries lead to stock-outs, supply chain disruptions, and customer dissatisfaction, resulting in a chargeback. 

Vendors must confirm POs promptly and ensure shipments align with Amazon’s required delivery schedule. 

ASN Accuracy 

The ASN Amazon (Advanced Shipping Notice) must accurately reflect shipment details. If discrepancies exist between the ASN and actual shipment, Amazon imposes a chargeback. 

Vendors should verify all information before submission. 

Carton Content Accuracy 

Mismatched carton contents result in errors at Amazon’s fulfillment centers. Each shipment must contain the exact SKUs and quantities listed in the purchase order to avoid chargebacks. 

Carton Information Compliance 

Amazon requires cartons to be labeled with correct shipping and product details. Any missing, incorrect, or unreadable labels result in a chargeback. 

Import Documents Late Delivery 

Late submission of required import documents can delay shipments, impacting fulfillment timelines. Vendors must ensure import compliance by providing all necessary paperwork on time. 

Import PO On-Time Non-Compliance 

Amazon enforces strict timelines for import POs. If vendors fail to meet deadlines, they lead to a manufacturer chargeback. 

Import Shipment Late Booking 

Failure to book shipments on time disrupts Amazon’s logistics flow. Vendors should coordinate with freight forwarders and ensure timely bookings to prevent penalties. 

No Show 

If a scheduled delivery does not arrive at the designated fulfillment center, Amazon imposes a chargeback on Amazon for failure to fulfill the agreement. 

Oversized Carton 

Cartons exceeding Amazon’s dimensional limits result in vendor chargebacks due to inefficient use of warehouse space. 

Overage PO Units 

Shipping excess units beyond what was approved in the purchase order leads to an automatic Amazon charge back. 

Overweight Cartoon 

Exceeding Amazon’s weight limits per carton can cause handling issues at fulfillment centers. Vendors must ensure that all cartons meet Amazon’s weight requirements. 

Paper Invoice

Amazon requires vendors to submit electronic invoices. Submitting paper invoices results in a chargeback under Amazon Vendor central fees. 

Prep Issues 

Products that are improperly prepared (e.g., missing polybags, incorrect barcodes) cause fulfillment disruptions, leading to chargeback alerts on Amazon. 

Rejected Delivery 

Amazon may reject a delivery if it does not meet compliance requirements, resulting in additional chargebacks and logistical delays. 

Ships In Own Container 

Some products require packaging guidelines. Failing to comply with Amazon’s shipping standards results in chargebacks. 

The Impact of Amazon Vendor Chargeback on FBA Sellers

FBA sellers who supply Amazon through Vendor Central must recognize the hidden costs of chargebacks. These fees reduce net profits, increase operational inefficiencies, and create ongoing compliance challenges. 

Excessive chargebacks can affect a vendor’s relationship with Amazon, leading to restrictions on new POs or account suspensions. Businesses that fail to dispute Amazon charges or implement corrective measures may struggle to maintain long-term profitability. 

Common Reasons for Amazon Vendor Chargeback

Not Confirming POs

Delayed PO confirmation disrupts Amazon’s supply chain, triggering chargebacks. Vendors should accept POs promptly to avoid penalties. 

Late Shipment 

Timely shipping is important to avoid delays. Missed shipping windows lead to vendor chargebacks, impacting seller ratings and fulfillment efficiency. 

Incorrect Labeling 

Labeling errors, including missing ASINs or UPCs, cause fulfillment issues. Vendors should follow Amazon’s barcode and labeling standards. 

Packaging Issues 

Failure to use Amazon-approved packaging results in chargebacks. Vendors must comply with carton size, weight, and protection guidelines. 

A Step-by-Step Guide to Avoid Amazon Vendor Chargeback

Confirm Purchase Orders Quickly

Accept and confirm purchase orders immediately to ensure timely fulfillment and prevent vendor receiver Amazon penalties. 

Ensure On-Time Shipment

Use a reliable logistics partner to avoid shipping delays and reduce the risk of chargebacks. 

Correctly Label Items 

Follow Amazon’s labeling guidelines to ensure compliance and avoid chargebacks related to missing or incorrect barcodes. 

Follow Amazon’s Packaging Guidelines 

Ensure all shipments meet Amazon’s packaging standards to prevent damage and avoid chargeback alert on Amazon

Maintain Sufficient Inventory

Monitor inventory levels to prevent stock shortages and fulfill POs without delays. 

How to Dispute Amazon Vendor Chargeback in Vendor Central

If you receive an incorrect or unjustified vendor chargeback, you can dispute an Amazon charge through Vendor Central. The process involves: 

  1. Review the chargeback details in Vendor Central. 
  2. Gathering supporting documentation (shipping records, invoices, compliance evidence). 
  3. Submitting a claim reversal Amazon request via Vendor Central’s dispute portal. 
  4. Following up on the claim to ensure resolution. 

Amazon provides a limited window for chargeback disputes. So vendors must act quickly to recover funds.