By Martin Heubel, Amazon Strategy Consultant at Consulterce
Should you increase your Damage Allowance with Amazon? Here’s a data-driven approach to finding the answer.
Damage Allowances are a highly controversial trade term, as Vendor Managers want to get compensated for customer returns and damaged goods received from suppliers.
But Amazon refuses to share the underlying data, which leaves brands with no way of judging the legitimacy of the proposed fee.
So what should you do?
Conduct your own research
Here’s how:
- Go to Vendor Central » Retail Analytics
- Find the number of customer returns (Sales Report)
- Find the unsellable on-hand inventory (Inventory Report)
- Download both reports at the ASIN level
- Calculate the DA% entitlement (Volume x Cost Price / Net Receipts)
The resulting percentage is the maximum value you should limit your investment for damage compensation.
If Amazon wants you to invest more, demand precise data points from their side.
Otherwise, reject the claim, saying that you cannot be held liable for Amazon’s operational performance that is outside your control.
Pro Tip: Invest in Amazon’s Warranty Repair Services if high return rates keep you up at night. It can help drive good CX and significantly reduce customer returns to your warehouses.
For further information and support, contact Martin Heubel here
