Walmart has announced some changes in the way it deals with chargebacks or post-audit claims. The retailer makes deductions to correct pricing discrepancies or to offset costs arising from shipping or labeling errors.
As of July 15th, there are some changes in how these charges are dealt with.
- The biggest change is that Walmart will now make automatic deductions up to $100,000 rather than the previous $25,000.
- The second major change is that buyers are no longer involved in the process. Walmart’s audit department will work directly with supplier teams to sort out any issues, without involving buyers. Buyers may still be involved if the deduction is larger than $100,000.
- Walmart says they’ll provide an explanation of their deduction and supporting documentation. Suppliers have 30 days to report any disputes, and Walmart will refund any amount they agree should not have been deducted. According to CityWire, a Walmart representative said that any errors will be rectified by a payback within 24 hours, but that is after Walmart agrees that they’ve made an error — which could take six to nine months.
- A less recent change is the establishment of an electronic Dispute Resolution Portal. Walmart has partnered with Direct Commerce to create this portal, where suppliers can submit disputes and documentation and then track the progress of the dispute. Taking the relationship out of the process may have both positive and negative consequences; suppliers can’t benefit from positive relationships with their buyers in the dispute process, but they also won’t risk damaging that relationship. The electronic portal won’t mind how obsessively suppliers check on their disputes.
- Claims that are not contract-based, such as specials or Co-ops, will not be automatically deducted but will be presented to your team first for approval.
A 2009 study found that American manufacturers lost an average of 2% to retailer chargebacks, but Walmart says that they’ve reduced the number of claims in recent years.
How can suppliers avoid chargebacks? The first line of defense is vigilance. It’s easy to end up with errors or shrinkage, especially during the hectic holidays. Streamlining your supply chain and putting safeguards in place at potential points of failure can make a difference. The second essential is documenting compliance through Retail Link. Without documentation, suppliers have no hope of successfully disputing a claim.