Reclaiming shortages: How vendors can ensure full payment for goods shipped to Amazon

November 16, 2021

If you've been trading with Amazon for some time, you've likely built up a balance of financial deductions through chargebacks, shortages, price discrepancies or all of the above!

Amazon will only pay for what they have received. Unlike other retailers, they don't go off of proof of delivery; they go off what Amazon has physically scanned and received into stock.

As a result, there are many reasons why things might get misplaced or put in the wrong place but still land up in stock and get sold to customers. In this scenario, Amazon will short pay, which involves paying for what stock was received on its system, but not the misallocated stock. 

But working with our Amazon specialists, you can analyse the evidence and pull together all the data sources, finding instances where goods were eventually sold to customers.

With this evidence, you can then go back to Amazon and have the conversation about getting paid in full for the invoice.

Why shortages are a problem for vendors

Short-paying or 'shortages' means to underpay an invoice to a vendor because Amazon believes a part of stock sent is missing or has not arrived. Usually, this is due to missing or incorrect barcodes, or your errors with the Amazon ASN (Advance Shipment Notification). These problems will affect how the vendor pays, which then causes a dispute between Amazon and the vendor.

When dealing with shortages, there are different ways of approaching them. The holistic approach looks at the situation from start to finish to solve the problem that caused the deficit, and also from an operational perspective, which consists of looking at the outstanding balance, then deciding how much we can reclaim back. After these processes, we would suggest that the vendor works with a consultant to stop these shortages from happening in the future. 

A reclaim service can pull information from different data sources that show goods were sold to customers, meaning Amazon received them, just not in the right place at the right time (electronically speaking). There are many reasons why stock doesn't get received, but the full invoice is still owed to the vendor. The amount of money missing is a constant moving target on the vendor side, as invoices are continuously being sent in and amazon paying bits and pieces on each invoice.

It's not just stock shortages, other financial deductions also impact revenue

Amazon has high expectations. These expectations are critical for Amazon to meet customer expectations, but also means vendors can face additional charges if these expectations aren't met. 

For a better understanding of this, let's take the example of selling glasses on Amazon. There is a customer complaint because the glasses arrived at a broken customer due to insufficient packaging. Amazon would provide better packaging for the replacement glasses, for example, bubble wrap. But Amazon would then charge the vendor for the bubble wrap. This situation is just one example of an erroneous charge - often confused with other problems such as incorrect labelling or late deliveries. However, these issues are usually quite specific, and not everyone will have the time to go into enough detail to find the root of the problem.

Because Amazon deduct from payment, rather than issue an independent invoice for money they believe is owed, it's money that, sadly, vendors don't realise is missing, which means there is a potential to lose revenue as payment is not being made or unnecessary charges are being levied. 

The beauty of a reclaim service is it can come in to raise the problem directly with Amazon, to get this money back. Often, this is done in tandem with operational consulting, so not only looking at getting the money back but understanding why the money was missing in the first place. Therefore, operational consulting provides a root cause analysis and helps vendors with an action plan to ensure this doesn't happen again. 

From packaging problems to technical errors in transmitting EDI, make sure you receive payment for all goods you ship to Amazon. Find out more about our Operational Excellence service offerings here.

Molzi Operational Excellence - Contact Us




Zoe Cantley-Wright, Head of Operational Excellence

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