Managing retail chargeback costs with PIM

What are chargebacks?  

Retail chargebacks, also known as vendor or supplier chargebacks, exist to encourage suppliers to uphold the high standards they’ve been contracted to deliver and discourage careless mistakes that can prove costly for retailers. Imagine that a supplier states its goods comply with a certain regulation or have a certain material composition, only for the retailer to find out from angry, out-of-pocket customers that they don’t. Chargeback fees can vary, but they’re typically around 1-5% of the gross invoice amount – and are predicted to rise in the future.  

As Melissa Dyke, Product Data Information Data Steward at leading apparel brand Carhartt, explains, these fees can quickly add up. “Wholesale is about 70% of our business,” says Melissa. “If we’re getting even a 10% chargeback on that customer base, that’s a significant amount.”  

Why do chargebacks happen?

There are many reasons why retail chargebacks happen – and not all of them are the supplier’s or manufacturer’s fault.  

• Late or early shipping: Late shipping can lead to delayed orders and dissatisfied customers, but early shipping can be just as problematic. For goods with a shelf life, early orders mean a shorter sales window and can cause storage problems. Retailers that sell high volumes of goods every day need precisely timed supplies, so it’s important that your logistics partners can deliver on that requirement.   
• Other shipping errors: Everything from shipping to the incorrect location to using the wrong carrier can lead to a penalty, even if it doesn’t cause a delay.  
• Damaged products or packaging: If your goods aren’t shelf-ready, you’ll likely incur a chargeback and have to replace them – losing out on a whole batch of goods.  
• Quantity mistakes: Too many, too few, or even entirely incorrect varieties of a product are frustrating for retailers, particularly if you haven’t told them about your supply chain issues before delivery.  
• Incorrect or non-compliant labels: If products’ UCC128 labels are incorrect, retailers may sell them for the wrong price, so it could be grounds for a chargeback. Worse still, incorrect labels put retailers’ customers at risk of non-compliance, injury, or illness, potentially harming the brand’s reputation.  
• Invoice and ASN errors: Forgetting to send an ASN (advance shipping notice) or inputting the wrong details about price, contents, and purchase date on an ASN or final invoice can disrupt retailers’ processes. 

“With inriver, we’ve reduced our risk as a company, increased our profitability, and are keeping customers updated about essential product information. It’s about getting the right information to the right people at the right time.” 

Melissa Dyke

Product Data Information Data Steward, Carhartt

Why are chargebacks so costly for suppliers? 

Retail chargebacks can eat into profit margins in a number of ways. First, there’s the chargeback fee itself, which needs to be paid. Then there’s the cost of fixing the error, which could involve writing off or re-shipping goods. Shipment compliance errors could also mean retailers are less likely to work with you again, compounding the impact of the initial error. 

As new regulations such as the EU’s Digital Product Passport (DPP) emerge, shipment compliance is set to become even more stringent, and the fees associated with non-compliance are only likely to increase as new and evolving product regulations come into play. As Melissa explains, new compliance attributes have historically been difficult to manage, particularly those that require cross-departmental collaboration. “What used to happen is that we’d have all the data somewhere in our system, but we didn’t have the means to collate that data together and push it out to all our wholesalers and websites. 

How product data helps manage retail chargebacks 

In a fluid, fast-paced industry like apparel, it can be hard for manufacturers to navigate the issue of shipment compliance without the correct technological solutions in place. As Melissa notes, too often compliance activities would be time-consuming and duplicative. “Pre-inriver, our teams had to build every template from scratch because we had no data repository,” she says. “Something as simple as ‘does this have a battery?’ hadn’t been captured centrally in the company. If we have 40 vendors asking the same question, we have to manage it on a vendor-by-vendor basis. You can imagine the kind of duplication across these 40 syndications.” 

Melissa also shares that not having effective, foundational systems to manage product data made it hard to know what to share and with whom, even if the correct data was available. The burden of manual processes and inefficient software showed Carhartt that it was time to invest in new solutions.  “The difficulty of keeping our data up to date made us extremely susceptible to chargebacks and product returns due to bad, incorrect, or missing data.” That’s why Carhartt sought a fully adaptable PIM solution that could meet their evolving needs. 

Helping Carhartt reduce the burden of chargebacks with PIM 

Working with solution partner Valtech, Carhartt began its PIM journey with a set of key KPIs for this chapter of its digital transformation, which included reducing the burden of costly retail chargebacks. At the heart of this KPI was product data, and the need for an accessible and reliable repository of market-ready product information. Without this repository, Carhartt’s teams were wasting time building templates from scratch to answer its many vendors’ questions – and often making errors. 

“Taking away that spreadsheet cumulation of data allowed us to do real-time updates of enrichment – getting us into that efficient, effective, and immediate enrichment state instead,” says Melissa. “That’s the key turnaround point that I feel we’ve built together.” 

Using the inriver PIM solution to capture, collate, and publish the right product information has made the process far simpler. Thanks to the inriver PIM, Carhartt can now:  

• Reduce errors in product descriptors and publish quality assets, ensuring the products retailers see are the products they receive 
• Harness the power of syndication to share accurate, timely information with their partners and wholesale customers  
• Automate manual processes and reduce human error-related chargebacks, with clear process workflows to follow 
• Secure better visibility over every stage of the product life cycle, from the factory floor to fulfillment, to keep retailers updated about any supply chain disruptions 

Now, Melissa says the process is as simple as “select information, syndicate, and send” to share product data, leaving her confident that every shipment meets compliance requirements.  

inriver: The complete PIM for shipment compliance  

The right software can greatly minimize the number of retail chargebacks you encounter. Even if third-party partners occasionally let you down, the right PIM solution takes human error out of your processes and puts you well-placed to avoid these costly fees. With the composable inriver PIM solution it’s never been easier to collate data from across the organization into a single, centralized repository of market-ready product information that gives you the transparency and oversight you need to be confident that your next retail shipment is not going to be hit by any costly retail chargebacks.