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Do Chargebacks Strain Your Retail Relationships?

by simon
As big retailers continue to adapt to the age of eCommerce, their suppliers can feel the pressure. Competition is fierce, so retailers rely on fast, efficient supply chains.

Consequently, they won’t tolerate suppliers that slow them down. If you sell to big retailers, you follow their instructions of pay the penalty (referred to as chargebacks).  You can’t afford to let chargebacks strain your retail relationship and eat at your bottom line.

Retailers and Suppliers Expect Chargebacks to Rise

So how much do chargebacks strain retailer-suppler relations? Suppliers don’t like chargebacks, but retailers may have good reasons to impose penalties. Generally, if suppliers get more orders to retailers correctly if they know mistakes will cost them. And the fewer mistakes, the more efficient the supply chain. However, suppliers often see these chargebacks as revenue-generating scheme. Research suggests both perspectives have some validity Among a small group of big retailers, 42% say they use chargebacks to both improve supply chains and generate revenue. Only 35% report using chargebacks to improve supply chains.

Chargebacks Strain, But They Won’t Go Away

Still, most suppliers and retailers in the study rated their relationships as strong. So if chargebacks strain business, they don’t end them. If nothing else, suppliers are more sensitive to chargebacks. In fact, 58% of suppliers in the study expect chargebacks to rise over the next five years. Only 42% of retailers expect that. Whatever happens, chargebacks can be seen as the cost of doing business. But suppliers can take steps to avoid them.

Direct EDI: Reduce Chargeback Risk

Big retailers typically require their suppliers to send and receive transaction documents via EDI. For example, when retailers place orders or when a supplier submits invoices, it’s done through this technology. And retailers will apply chargebacks if suppliers don’t submit EDI documents correctly and on time. Cin7’s Direct EDI can get you trading with big retailers faster and more cost-effectively than traditional EDI providers. Moreover, Direct EDI integrates out-of-the-box with your inventory, eliminating the need for costly software integration. Best of all, we will be releasing features that will automate and visualize your EDI transactions. Altogether, Cin7 helps suppliers reduce the strain of chargebacks in the retail relationship.