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Purchase Order Confirmation Rates: Navigating Amazon’s New Chargebacks

Fri, Oct 07, 2016 @ 05:03 PM / by Shandra Locken

3269874340_cdd9244475_z.jpgPhoto appears courtesy of Wendy.  This week's blog was written by Karen Blood from Aurora EDI Alliance partner, GraceBlood LLC out of Baltimore, MD.  Amazon recently announced a new type of chargeback that will initially impact Hardlines’ Vendor Central suppliers. While this might not seem to apply to you or your other trading relationships today, Amazon more and more (like Walmart in the past) is a bellwether when it comes to making demands on suppliers. The never ceasing effort to bring customers robust selection at competitive prices in a hurry puts the responsibility squarely on distributors and manufacturers to fill orders and maintain proper levels of inventory to support demand.

Your purchase order confirmation rate is the rate at which you accept or backorder the units ordered. Amazon is looking for your PO Acknowledgement (POA or EDI 855) to accept or backorder at least 80% of the quantity for each item they order. Failure to do so will result in a chargeback of 3% of the cost of goods sold for each item you are not either accepting or backordering.

You can reject fulfilling any item but the type of POA rejection code you use will either result in a chargeback (“soft” rejects) or may adversely impact Amazon’s ability to order the item in the future (“hard” rejects.) 

Here’s the list:

EDI POA Codes

 

Vendor Central Acknowledgment Codes

Hard/Soft Reject

AC

 

Accepted: In Stock

N/A

IB

 

Backordered

N/A

BA

 

Backordered: Not yet available

N/A

BX

 

Backordered: Not yet published

N/A

BR

 

Backordered: To be printed

N/A

IR

 

Cancelled: Temporarily out of stock

Soft reject

CA

 

Cancelled: Not yet available

Soft reject

CQ

 

Cancelled: Does not meet minimum

Soft reject

OS

 

Cancelled: Out of stock

Soft reject

IR

 

Cancelled: Temporarily out of stock

Soft reject

CK

 

Cancelled: Permanently out of stock

Hard reject

CX

 

Cancelled: Never published

Hard reject

CG

 

Cancelled: No geographic rights

Hard reject

CB

 

Cancelled: Not our publication

Hard reject

OP

 

Cancelled: Out of print

Hard reject

CP

 

Discontinued: Obsolete

Hard reject

KC

 

Cancelled: Considering reprint

Hard reject

R2

 

Cancelled: Invalid product information

Soft reject (but no chargeback)

R3

 

Cancelled: Temporarily suspend orders

Hard reject

Remember, an Excessive Backorder chargeback occurs if you POA backorder more than 10% of the units on Amazon POs in any given week. They will also assess the volume of products placed on backorder if you regularly enter a backorder code instead of fulfilling a purchase order. Skipping or issuing late POAs is not an option either due to other chargebacks like Unconfirmed PO Units and Late PO Acknowledgements. Fortunately, while Amazon is not famous for suppliers being able to discuss matters with actual Amazon personnel, with Vendor Central they do now have a much stronger platform in place for testing and self-monitoring, as well as many experienced and capable implementation partners like us.

To learn more about this new Amazon chargeback, sign in to Vendor Central and click Help. Then navigate to Vendor Operational Performance (Chargebacks) > Chargeback - problem with PO > About Purchase Order Confirmation Rate. Non-compliance notifications start this week with the new chargebacks scheduled for January 30, 2017.

MOST IMPORTANTLY, for doing business with Amazon or any truly customer-centric trading partner, continue to prepare your business for real-time, lights out trading, specifically:

  • Integrate EDI or other B2B transactions directly with your systems for Order Entry / Inventory / Fulfillment
  • Adhere to DWIAD “A Day’s Work In A Day” for realizing all other aspects of transactional activity in your systems
  • Implement daily, accurate Inventory Advice Feeds like EDI 846s while incorporating reasonable calculations for safety stock
  • Involve operations and sales to relentlessly incorporate processes and policies that support eliminating Chargebacks
  • Leverage your hard-won learnings and hard-spent initial investments across the organization with as many partners as possible

Topics: EDI integration, supply chain, EDI ROI, EDI document, electronic data interchange, chargebacks, amazon

Shandra Locken

Written by Shandra Locken

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