Many companies who sell to big-box retailers encounter difficulties associated with their strict compliance requirements. With little leverage, complex routing guides, and potentially severe penalties, suppliers and manufacturers face a huge impact on profitability from the resulting chargebacks. Ignoring errors on paperwork or fees for missed deliveries can significantly cost you over time, so don’t just view them as a necessary cost of doing business.
Suppliers on any scale can feel the effects of chargebacks; however, small- and mid-sized suppliers run the risk of not getting stocked on store shelves at all. Here’s a few suggestions that can make shipping to big-box retailers a little easier.
The best way to reduce chargebacks for companies of all sizes is to be compliant with the retailers’ regulations. When a supplier is not compliant with the retailer’s shipment specifications, like if the packaging or pallet configuration fails to meet their standards, retailers can enforce chargebacks. It is important to know and understand retail requirements, especially with new retailers, before every delivery because they will vary.
Make sure the correct packaging specifications are clearly documented, and that your employees are well trained before they prepare shipments and load them on outbound trucks.
Utilize EDI Communication
Electronic Data Interchange offers a method of communication that can help suppliers ensure accuracy in their shipping processes from order processing to pickup and delivery. This solution compensates for outdated manual processes that are unable to keep up with a large number of retailer regulations. Transferring data using this tool will help with ensuring compliance and maintaining consistency with your customers.
Abide by ASN Requirements
Meeting the scheduled delivery appointments and abiding by Advanced Shipping Notification (ASN) requirements of the consignee can also help manufacturers or suppliers reduce chargebacks. You will typically be forced to pay a fee (which can cost up to $300 per late day for one delivery) when you can’t meet a scheduled or contracted delivery window. If you have a process in place that notifies a retailer of late deliveries, you can reschedule the appointment and avoid these fees by being proactive.
Leverage Carrier Relationships
Another way to reduce the number of chargebacks is to leverage carrier relationships with retailers. Smaller suppliers don’t have the leverage to negotiate retail requirements or fee amounts that larger companies possess. Carriers who know dock personnel may have a little extra consideration when a problem occurs, or even have the ability to help suppliers get fees waved.
Chargebacks are issues that need to be taken seriously because of the negative impact they can have on the bottom line. They can’t be entirely eliminated since delays and issues with shipping are inevitable, so suppliers and manufacturers should focus on reducing their frequency. Take the time to identify where breakdowns happen when they occur and fix the issue as soon as possible. With documented processes, internal training, and a little assistance from a persuasive carrier partner, most chargebacks can be avoided.