Amazon Profit Recovery for Vendors

1. How lost Amazon profit / revenue errors occur
2. The different ways that agencies can help
3. Pros and Cons of these Amazon revenue recovery methods
4. MinsterFB’s approach to recovering Amazon revenue

How Amazon revenue errors occur

Amazon revenue errors usually occur in one of three broad areas:

• Amazon received more product than was on the PO – Do Amazon owe you for this additional stock?
• Terms deductions – Amazon may apply VAT incorrectly in the calculation, or may be deducting an incorrect % that differs from the agreement, or may be deducting an agreed % from an incorrect receipt value
• Short payment of the Vendor’s invoice

Amazon’s reporting in all these areas is complex, and dispute processes can be difficult to navigate. It’s no surprise that Amazon account managers working without specialist support struggle to stay on top of these potential revenue losses. We frequently begin conversations with new clients because they aren’t making the margin on their Amazon business that they feel they should be. Often the fees for our first month or two are covered by the Amazon profit recovery we are able to deliver from long-standing arears.

The different ways that agencies can help

There are two main approaches to these issues:

• Amazon recovery agencies who specialise in a one-and-done service
• Full service Amazon agencies who tackle these issues as part of a long term partnership

Some full service agencies also out-source this service to recovery agencies where they lack the internal resource/expertise to deliver it internally.

Recovery Agency Audits

How they are Paid

Recovery agencies typically receive around 20% of any monies they recover from Amazon

What they are trying to achieve

These agencies are trying to recover money from what has happened in the past. They aren’t invested in changing anything that will prevent losses in the future. And as a result of the remuneration arrangement, recovery agencies will typically look for the maximum possible value of funds recovered and will specifically only be looking for errors in your favour. They will not pay any attention to what may be matching/mirroring issues in Amazon’s favour which net out to zero.

What will they actually do?

• Issue invoices/suggest that you issue invoices for any stock that Amazon has received against an individual purchase order which is over and above what was ordered on that purchase order
• Find where Amazon has paid you for surplus stock over and above what they ordered on the purchase order. They will then ask Amazon to return to you the terms deductions that they made against that stock
• Find invoices where Amazon has not paid you the full amount and request that they pay the remainder

What usually happens next?

Amazon will pay a proportion of the claims made against the list above. This is good news. The agency will take their cut and the vendor client will receive the rest of the money. However, Amazon may subsequently challenge those payments and re-raise shortages to the vendor. This may be because they have genuinely received the stock, but have received it against the wrong PO. Or it may be because there was a genuine shortage which, upon checking, is still there on the system. There is not usually a clause in the recovery agency agreement that allows for getting the fee % returned in these instances. In addition, nothing has changed at the vendor’s end to reduce the value and frequency of these issues going forwards.

In-House full service agency support

How are they paid?

Full service agencies’ remuneration agreements work in any number of ways, and this will be important to bear in mind. If your agency service is delivered on a menu basis (ie you pick the services that you want and they are supplied to a pre-agreed cost), then you may find that any profit recovery service you choose is outsourced to the type of agency described above.

However, if your agency relationship is more of an ‘all in for a fee or a % of sales’ then you are more likely to receive an ongoing service as described below

What they are trying to achieve

An agency engaged in a long term relationship with you will want you to be happy with your financial results. They will look at the root causes of discrepancies and work with you to fix those, minimising profit loss on a permanent basis. At the same time, they will conduct longer term audits that take account of mis-matching. They will also raise one-and-done disputes with Amazon to recover genuine revenue losses.

What will they actually do?

Here at MinsterFB we use multiple data sources to ensure we are clear about what (if anything) is going wrong. For example:

1. PO discrepancies occur a lot, Amazon often misattributes stock against the wrong PO due to labelling or ASN data inaccuracies. We find with a macro level reconciliation of PO’s and Invoices they will often balance out, meaning there is (often) nothing to claim. If you have a concern about over-received stock, we will conduct a quarterly reconciliation to ensure POs, Invoices and Receipts from the CoOp backups all align. If not, we will support you in making an Amazon profit recovery claim.

2. CoOp Reconciliation (making sure your agreed % trading terms deduct in the right way) is vital. But, as well as comparing against PO accepted values, it’s critical to ensure that Amazon are applying the right % fee, on the right products included (or excluded) in the agreement and that they are applying VAT correctly. At MinsterFB we check every CoOp & Promotional deduction and challenge if it is incorrect.
   
3. We also run spot check reconciliations of POs & CoOp back up data. The MinsterFB difference is that we bring in our clients invoice data as a third data point. This means that if the CoOps receipts is lower than the PO accepted value we then also check the invoice, did the supplier actually send the stock? Is this a shortage or just a supply chain defect that needs investigating? By putting in the time to look at all the data points we get to the most accurate answer and avoid circular debate with Amazon.
   
4. Shortages. Accessing shortage information on Vendor Central isn’t straightforward. There’s no easy dashboard to look at giving you a view over the last couple of years, and when you do get reports it’s hard to tell what has or hasn’t been disputed and whether it’s been repaid or not. At MinsterFB we support our clients with ledger reconciliations. Using their data we cross reference it against Vendor Central, training on how to dispute shortages and escalating outstanding shortages to Amazon for revenue recovery.

What usually happens next?

We find that we are often able to gift recent new clients both:

• Some re-couped funds from incorrect application of Coop deductions or incorrect shortage claims, and
• A confident supply chain, able to send goods into Amazon with full compliance, dovetailing with Amazon system, generating fewer errors.

Pros and Cons of these Amazon Profit recovery methods

One-off recovery service	Longer term agency-ops relationship
✔ Cash recovery	✔ Cash back in genuine cases of loss
✖ No reduction in charges going forwards	✔ Ongoing reduction in incorrect charges
✖ % fee paid on money recovered which may be re-charged by Amazon	✔ Predictable fees agreed in your contract

MinsterFB’s approach to Amazon revenue Recovery

The MinsterFB difference: Finance issues are usually the result of supply chain issues. Looking into the root cause is critical for reducing claims by Amazon in the first place. Whether that’s getting the Goldlist updated, GDSN feeding the right data or ASN’s being built correctly with corresponding labels. Our team will work through your supply chain processes to ensure compliance throughout, minimising lost revenue to Amazon. We don’t charge anything additional for this service. It’s part of what we offer all vendor clients as part of their agreed contract. This way we’re incentivised to reduce financial discrepancies ongoing with process improvements, rather than let issues accumulate.