Have you been billed with a “chargeback?” If you’re thinking about moving into the business to business space or already have, you should know about the potential of getting hit with a retailer chargeback. Chargebacks can be costly, to the point that it does serious damage to your profit margins. The best way to avoid retailer chargebacks is to outsource your shipping to an experienced 3PL warehouse that can stay in compliance with each retailer’s guidelines.
What is a Chargeback?
When you contract with a retailer who will handle the product distribution of your merchandise to their stores, they give you an instruction manual. This super thick vendor compliance manual explains exactly how you’re supposed to send items to them. If the manual says that each pallet should have exactly 40 items on it, you’d better put 40 items on each pallet, or you’re going to face retailer chargebacks.
When you don’t meet the retailer’s guidelines, you create a lot of additional work for them. When you send improperly fulfilled merchandise to their warehouse, their workers have to tear down the pallets and rebuild them. It’s a lot of additional work for them to sell your products, so they pass the cost on to you directly.
More Reasons for Chargebacks
Although the most common reason for chargebacks is improperly packed products, there are several other reasons they can occur.
- Sending the Wrong Data or No Data – When you don’t send the right electronic data interchange or advanced shipping notice data you can get a chargeback. Your retail partner needs to know when your shipment will be arriving, who’s bringing it, and how many items are coming.
- Using the Wrong Shipper – Your retailer will have a shipper or two they prefer to work with for various reasons. It may be because the trucks fit more easily into their loading bay. Disregarding their preference can mean a fine.
- Incorrectly Packaged or Labeled Items – When you don’t meet the packing and labeling standards of your retail partner’s instructions you create more work for them. A misplaced label can create a ton of extra work in a heavily automated warehouse that relies on labels for sorting and tracking.
Avoid chargebacks by outsourcing your packing, labeling, and shipping to an experience centrally located 3rd Party Warehouse. Our Omaha 3PL Warehouse is in the middle of the country, so we expedite shipping to any part of the country. Call today, and we’d be happy to walk you through the process of getting started.