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Monthly invoice amazon for Logistics

for [Music] [Music] hi everyone and welcome to another live episode of marketplace Masters sponsored by Merchant spring your go-to for vendor analytics and agency client reporting as part of these sessions and conversations we dive deep into the challenges that Amazon vendors face as they strive to improve their performance on the Amazon platform I'm your host Paul seld and today we're talking about the recent changes that are reshaping the Amazon vendor Logistics landscape in the US as well as in Europe now I have invited a very good friend of mine uh Chris coup to join me and to share his expertise and perspectives on what's been happening and more importantly how vendors should adjust too and even take advantage of some of these changes now let me give you a quick introduction Chris is the founder and sales director at C Commerce a family run software development business that helps onep Amazon vendors process purchase orders and ASN efficiently his main passion is solving problems engaging with businesses and getting into the the detail of Amazon vendor operations Chris is a CA Cambridge graduate with a robust background in sales and joined the family business in 2019 since then he's LED C Commerce to process over one billion dollars of orders millions of items of course and you know helping companies really worldwide saf time and money on Amazon orders Beyond these professional Endeavors Chris enjoys his local church football group and walking in nature with his wife please join me in welcoming Chris as we dive into these critical developments and their implications for the e-commerce industry thank you so much for being with me today Chris my pleasure Paul thanks for having me on fantastic um now um before we dive into our conversation just a reminder for our audience we've had many people sign up despite the fact that it's summer so you know I'm I'm absolutely honored we got so many people with us it's a live session so if you do have questions mainly for Chris uh please pop me in the uh LinkedIn comment section or in the comment section on YouTube and we will try and do our best to get to all of them so uh thank you very much okay Chris let's get straight into our topic um what have you seen when you're in a unique position because you're really on the purchase side of the whole Amazon vendor ecosystem from a logistics point of view and from a purchase order processing point of view you know what are the big changes and themes that you've been observing really in 2024 you know what's new what's different uh what's on your radar and the radar of your clients yeah it's been a really really busy year really busy time uh we've seen lots of movement in the supply chain space in Amazon last year as well as this year uh obviously we have had quite extreme inflation lots of supply chain issues price of containers has been coming down uh we've had lots of news also on the 3p side to do with um the FBA placement fees that's been a real challenge for some Brands and businesses uh particularly those of you that operate a hybrid model um we've seen some challenges with forecasting it's not something we personally get into that much but a lot of brands are talking about trying to find better ways of predicting Amazon's ordering patterns and then finally as you know we know we're going to get into more depth here we've seen some of the changes about Amazon uh requirements to their ASN their version two both in the US and abroad and then in Europe as well so quite a few changes there uh I was going to add that uh at least this year there's been no large bulk carriers or container ships uh being stuck in the sez Canal you don't want to jinx feels like everything has been uh very smooth this year um and you're right container rates have come down I do remember those crazy days um but yeah let's talk more about some of those specific you mentioned there um I know there's been some talk about the new new forecasting tool but let's jump into the ASN topic um before we get into what are the changes what's all this ASN what does it stand for and what do it what is it let's just go through the basics here sure so the ASN is the advanced shipment notification so when you send your goods to Amazon you have to tell them which order which item which quantity and which box and you got to send all that information in either through through their interface or you can send it through an EDI message through the ASN 856 message to their systems and really it's letting them know we're sending you some products so that when they receive that they can scan the items receive it in on their side and uh inbound those goods effectively and efficiently if you don't do it you run the risk of getting shortage claimed quite quite extensively risk of shortage claimed as well as they'll charge you for labeling issues not on time issues uh defect issues and all sorts of other types of non compliance yeah we'll um we'll get into those so ASN just to I many years ago before I was in the Amazon space I used to work for a retailer and we also used uh ASN so I wanted to ask you is is ASN ASN something that's specific to Amazon or actually is it an industry standard that is used by by other channels as well yeah it's it's an industry standard so you know if you ship to Target Walmart Tesco John Lewis any of the other major retail or wholesale Partners they they might also be asking for airn messages um they vary in how much depth and granularity you need to send them um Amazon is actually one of the more uh granular requirements in fact even with these latest changes getting even more granular so for example with some Retail Partners you just need to say hey we're sending you a th000 units of this product and 500 units of that and that's enough uh it's all to do with the hierarchy level you know they have the shipment order tear package item hierarchy level and some retailers don't need all of that granular information they're just happy for you to say it's a you know purchase order this number this item this quantity and that's it but you know Amazon at a bare minimum requires you to break it down to the package level as well so you need to say actually box one contains this item and 24 units and box two is a mixed carton contains five of this and three of that and so on and capturing storing and sending all that information can be a real difficulty for some uh vendor ERS who are sending Goods into Amazon particularly if they're doing mixed cartons yeah that's uh so it's an industry standard but um that the implementation of it often varies by retailer makes sense and perhaps the obvious question why does Amazon want all that information in advance can't they just you know look at the truck open up the boxes see what's there and uh you know pay the invoice I mean I'm being a little bit factious in asking that question but um you know what does Amazon do with that information why do they care well in theory it helps them plan their inbound uh receiving process so you can imagine there's many many trucks arriving at a given Amazon fulfillment center in a particular day and they use that information to book those slots with the carriers um I'm sure there will already be people watching who say hey but you know we booked the slot we made the ASN I went to request the delivery and Amazon just rejected it or they offered us one outside the delivery window and the idea that they use that information to help their planning inbound process is almost seems a bit laughable but in theory that's what they do with that information and sending that in advance of the receive process means that when they receive your carton they don't have to in theory open up each box and and check each item in but they can actually just pass it through a tunnel they have cameras on all six sides take a picture of the label receive it in and then let the robots handle it when they store it away in the Fulfillment center but if they don't have their information up front has to go to a problem solving team you have to get humans involved who have to to scan each item one by one and that's going to really greatly lead to the number of defects and uh discrepancies you have between what you believe you sent and what they believe was received and that's one of the core problems that happens when it comes to shortage claims yeah I will um we will definitely get I promise the audience we will get onto those um but so tell me what's what's changing in the world of Amazon vendor um right now when it comes to asns yes I be making a lot of noise about this on my uh LinkedIn page and you probably would have received the emails from Amazon as well whether you are a Us North America vendor or a European UK vendor um even indeed our Australian and New Zealand vendors are seeing the same emails too but they're rolling out what they are calling ASN version 2 um so for the UK and EU that was launched June 1st uh for the US and Canada that was launched July 1st so it's still very fresh news um and the big change that they're making is their require IR iring pallet label information so I mentioned earlier that the ASN typically you have to track the order the item and the quantity and which box so you know purchase order one two 3 item a quantity 24 box number one uh what they're asking now is another layer where you say box number one is on pallet number one or box number 26 is then pallet number two and then you know boxes 100 through 200 is pallet three and that's the main change that they're asking for um which it means you then need to also label the pallet but it does also mean that you then have to try and capture that information on the ground so in the warehouse teams when they're picking and packing the products rather than just saying you know I've got a thousand cartons and it's gone into five pallets you'll now need to break that down to say one to 200 is pet one and 2001 to 400 is pallette two and uh we saw a lot of noise in the community indeed probably some of the people on this call kind of scratching their heads saying hey we don't actually currently capture that we don't have a way of capturing that uh that's present a real problems for our Logistics teams and is there something you can do to help us of course we can um but that was a bit of a challenge and that's something which has made a bit of a bit of a wave through the whole Community right now and what are the what timelines is Amazon imposed I mean you mentioned the launch dates but when do they expect compliance with that new direction or the the extended uh information that's coming through the ASN yeah um like you say it is technically already live uh for now it seems to be a bit of a soft launch so you can opt in you can say yes I want to choose version two uh if you go through the vendor Central interface they've updated that so you can now download and reupload the spreadsheet that goes with that it's a little bit clunky in my opinion but it kind of works currently there's no associated chargeback with it um yesterday actually there was an email at least on the Europe and UK side where they say they're aiming for full deployment by mid August so that's probably about three four weeks away um that's given vendors a grace period of about 12 weeks since their official launch of when they said it was live um I believe we're likely to see the introduction of a few additional chargebacks probably we called something like a pallet label compliance chargeback for example a package if you don't put the label on the package currently they're charging maybe 12 P 15 cents or 20 cents uh depending on your currency for the the package label missing I think it would be reasonable to expect that Amazon will impose a pallet label non compliance charge uh potentially maybe in the region of three four probably 5 per pallet um it probably doesn't matter how many packages are on a specific box but where I think we'll actually see the biggest impact financially for vendors won't so much be on the chargebacks which you know could be on the scale of maybe 1002 200 pound a month but probably more on the shortages side is where I suspect we'll see a much bigger impact for vendors um you know even a few boxes going missing could easily already go over that one or2 200 or dollars that I mentioned there so I think that the shortages and the associated information related to that is going to be uh one of the things that Brands really need to watch out for uh when it comes to both implementing or not adhering to this new requirement from Amazon yeah that makes sense and as you speak to your client base and I'm sure you're helping a lot of them but but how how do vendors solve this is this around enhancing their own you know where warehous management or Logistics system is this asking their 3pl to to do something for them you know what to touch points in this whole supply chain uh does avender need to fix this particular well not just fix but you know respond to Amazon's requests around you know ASN changes or ASN I think you call it version two yeah that's a really good question and really comes down to having a very joined up conversation about the whole topic um a lot of times the problem and the pain is felt by one department but the benefit or the um the reason for change is felt by a different one so uh particularly when it comes to chargebacks and shortages it might be the finance teams or the uh you know the account director level which is seeing that charge but the people that really need to make the change and the ones that need to implement the change of process are going to be probably most likely in the warehouse side so you called out there the 3pls the warehouse team the logistics team they're exactly going to be the type of people that need to be involved in that conversation um the first thing I would suggest is to scope out the full structure of changes so you know what is it we need to change then figure out how we can Implement that it might be a lot of businesses you know already scan and and monitor which items go into which pallets that's fine some businesses won't do that at all um so you're going to need to build some sort of process in place for your Amazon shipments to do that uh and then it will actually go about well how can we Implement that and then what's that going to look like and the reality is it is going to take a little bit more time it's going to take a little bit more uh work is going to take a process change um but the question is what the costs of not doing that if you don't adhere to it what could that look like and as I mentioned earlier that will be potentially charges and then most likely uh some some impact on the shortage rates as well so I would recommend a really nice joined up conversation between the different teams um and often having that conversation is a good place to start sometimes businesses can be a bit siloed between you know who does what and it takes some confidence and some courage for someone to say hey I think we need chat between us all to make an improvement I'm as you're talking I think about Bruno I see him in the chat uh and I'm already hearing talk hearing him speaking my voice he's probably watching this so um for sure um I want to ask you I don't you may not know the answer this or you you you may have a hunch but you don't know the real answer but to Amazon is implementing something you know clearly Amazon is getting a benefit from doing this right why why ask why roll this program why even hire a program manager to communicate to all the vendors right they're making a change what are the benefits that you think they're looking for from this program sorry from V2 versus V1 why change it right if it's not broken um it's a good question I think that you know they want to be able to support vendors of all sizes so the small parcel shipments aren't being changed too much by this um I called out pallet labels for example but one of the other changes they're making in version two is to allow carrier level um tracking on individual small parcel shipments to so if you've got uh small parcel shipments version two also facilitates multiple tracking numbers for a small parcel shipment that's a change only in the European region that already existed on the American side um but for the palletized shipments I think it's going to improve their inbounding of pallet level shipments too um and overall increase that speed so I think for them it's kind of harmonized across the board so you know we see an improvement on the US and then actually the UK and EU is coming into the line with that I think that's one of their motivations and also it's to do with helping to inbound their palti shipment program which we know that Amazon you know goes to Brands and says hey do you want to join pix or do you want to have some sort of consolidation model um it's not called pix in the US but you know that that idea is I think something that they Keen to uh Implement and Keen to make as easy as possible for Brands and I think this standardization move is them just continuing to lean a bit deeper into making the supply chain as smooth as possible yeah absolutely makes sense I mean clearly some benefits there um uh I'd love to hear if there's any venors I know we're probably a little bit uh we're not yet completely in uh you know vendor negotiation annual vendor negotiation Cycles here but uh you know I'm wondering to what extent you can use this a little bit maybe to get your your uh Freight allowance down or you know uh you know try and extract some of that benefit because obviously you're incurring some additional cost uh here as well um Chris before we move on to shortages final question from me is around any differences is the program identical I know other than the timing the roll out you know June versus July but are you observing any differences in the way this is rolled out or the way that it's being implemented between Europe and the US is there anything you can point to or is it homogeneous across the globe um it's it seems pretty uniform um we actually heard about the communications about it much earlier in the US than we did in Europe so probably from January or February we knew this change was going to happen in in the Americas um but it was only around April actually that those changes got communicated in the European region so for most businesses particularly in the UK European space there's there's almost been a bit of a almost like well if we don't need to let's not change kind of attitude um which is understandable because vendor likes to just spring I mean know they do this with everything they do really just like to you know surprise you with a change um typically our experience we see that the US is the region where they'll they'll launch change as a trial and then start to clamp down on it and to enforce it and then it goes from there across the rest of the world so I really wasn't surprised with that roll out model from them they started in uh you know Continental us and then and actually moving over to Europeans with the launch out and I wouldn't be surprised if we saw that same thing with the chargeback structure too so the moment that I see a chargeback related to pallet label noncompliance appear in the US I would think we're 3 to six months away from seeing that um over here in Europe as well yeah makes sense actually there was a I'm just going to throw a question here because the user I don't know who this is is coming through Anonymous but um he's he's asking exactly about the point youve been been talking about you know do you believe that the quality of communication on this particular matter from Amazon has been clear enough to vendors and do you believe that the majority of these vendors will be able to understand and content with this in terms of you know fewer future compliance CH changes I mean it's a big question what's your perspective regarding the quality of your Communications um and whether it's been clear enough to vendors yeah that's a good question um when it first came out I was quite surprised with I think how much they were asking vendors to do in such a short time frame um in theory the changes they write on paper don't sound too bad um but when you actually think about implementing them on the ground I think it can be quite it's quite a tall order I think to say to you know Warehouse hey you've got six weeks to jump and if you don't jump we're then going to find you for it um which is why I think they have tried to extend a bit more of a grace period um but I'm not going to defend Amazon on this case I feel like they uh I think the guidance is quite clear what they need what they need businesses to do um how a business actually goes about implementing that and what that's going to look like on the ground I think is going to be quite messy and with regards to the second part of the question I think there was a question about uh the point about is it you know will we be able to contend with future compliance charges um that is a good question across the board generally speaking with all compliance charges you know are vendors equipped with the sufficient information to be able to dispute them and even if they do dispute them is it sufficient for Amazon to back down you know we see that with pods on shortage claims or on delivery signatures from your carrier doesn't necessarily mean that you're going to actually get the dispute through with Amazon that's true of both seller and vendor um but I think that having uh you know obviously I'm I'm biased on this point but some sometimes when you submit all the information by Amazon they only keep it for 90 days whereas when you do it yourself electronification um arm vendors with well not arm but you know what I mean like give them all the information that they need to be able to raise those cases and and have that audit trail of who did what when did it happen and make that as clear as possible yeah give them the ammunition sort of ready to go with the fingertips let's let's change to shortages I mean we've got about 10 minutes left and I'm Keen to talk about shortages as well um let's just set the scene what are shortages I mean I know for some of us we've spent our lives thinking about this but for those uh who don't what are shortages and then we'll get into some some practical questions there yeah if you don't know what shortage claims are either you're very lucky uh or you're not too involved with the the Amazon uh financing and and shipping space um but it's basically a very very simply it's a discrepancy between what you believe was shipped and build versus what they believe was received um so you invoice a th000 units and they say hey we only got 990 and they will shortage claim you for those 10 units um there's a lot to talk about on this whole uh space we actually have a Blog on our website with the eight main root causes where we break down here are the eight uh major things that we see um in short some of them are on the vendor some are on Amazon and some on the carrier and the general aim and the advice we give is to try and minimize them across the board because shortage claims in general hurt cash flow they hurt Finance it becomes a real pain having to do the remittance some of you I don't need to tell you having to have someone tie up you know this was paid and it was shorted and then it was paid again it was claimed and you get a whole chain of events going on uh so for some of the companies we're talking to we actually see routinely over you know over 100,000 pounds or dollars or Euros every single month in shortage claims um which can have a really serious uh p&l impact and a lot of the time it's considered to be either a cost of doing business or just part of the workflow that people think is associated with vendor Central um but really what we're trying to say is um go into what you can do to prevent prevent them at the start to do with the root course um there's a lot of talk in this space a minute about reclaiming them uh many services are available that help with that and I think that's a really great option uh to try and dispute them as best we can we talked about disputing but what our narrative is and what we're trying to encourage businesses to do is to have that conversation look at their process uh and Implement uh systems that help to prevent them in the first place and then reclaim the rest and actually going to them at the roote and then dealing with whatever comes out the rest of the machine um is the better way to go in our opinion because otherwise well not because you don't necessarily want to pay the commission fee uh to the reclaim company but it will just help cash flow overall um it will help smooth out that curve so that you're not waiting 60 90 days before that remittance actually comes back from Amazon yeah and look of course there's two sides to the coin here right because if I send less units to Amazon's Warehouse than what I'm what I'm invoicing Amazon for um uh then obviously the problem lies probably more on my end but likewise if I do send send out units and uh you know I don't re get recognition for all of those and therefore Amazon the duct set of invoice and the like that's uh probably the more painful scenario um in your experience where do you see the bulk of the issues and I'm talking root causes here in terms of things that you then go away and and do something about what side of the fence yeah there there are a few big ones that come up quite regularly when it comes to the root cause of shortages um and it's a tricky and quite a sensitive topic because no one really wants to take the blame and you don't want to point the finger a particular person um it's not really so much about saying you know this person in the warehouse made a mistake that's why you're losing 100,000 pounds every month it's more to do with examining the whole process as a structure because no one no one's trying to make a mistake but actually trying to figure out where the issue is going wrong so for example a very simple process problem that can happen is that the inv gets raised before the shipment is sent and then you short ship something and then the invoice isn't aligned with the shipment um many people won't be doing that but some people they receive the order they accept it they invoice it and then they ship it perhaps via 3pl 3pl reduces the quantity that was shipped but doesn't communicate that back to the uh the brand that they're doing the Fulfillment for they just say we didn't have it just shipped it and that is the case of a genuine shortage where Amazon is you know not able to resolve that discrepancy on their side one of the other ones we see is when um the goods are arriving at Amazon and they go through a manual receive process rather than through the auto receive efficient process so we touched on that earlier to do with going to the human-based problem solver team on Amazon side and that's where you're going to get the overage and the underage on what you shipped you know sometimes you goes the other way around you know you send 100 units and they receive we received 110 and then you have another purchase order where you ship 10 and they say they receive zero and across the two the numbers match but on a particular one you get a shortage and on the other one you get an overage and uh you can bet thaton and won't say oh no problem we'll pay you for the 10 on the other order they'll just short you on the first one but that's the kind of thing where um you need to be quite attentive to that process that's not something that we we don't do the reconciliation and get into that detail there are many people that do that however but that they're the kind of common scenarios we see uh I know we talked about it before we got on as well we've even seen issues with the carrier as well where um you know actually they can the carrier themselves can be removing the labels or stripping them away and that can be another sort where it's not even your fault it's not Amazon's fault but there's a middleman man who's taking your label that you've done hard work or your Warehouse made it perfect and then the carrier takes it and they just they just remove all that they they over label your sticker or something else and uh that can be a real pain because that's almost feels like it's beyond your control and when Amazon get it it's a genuine shortage from their side and when you dispatch it you did everything right so they they're probably the three big ones that I would call out there's other ones in there like theft um or catalog management can be a standard one as well you send the single but they're expecting the case or vice versa um that can be another one to look at particularly if you're managing a very large catalog size and cost price discrepancies do they fall into this bucket as well or is that a separate issue uh you know yeah sorry go ahead well well normally like so pqv is you know if you if you're selling it for a particular price and they're they're invoicing at another one or buying another one usually in the analysis we would treat them separately um but from a finance perspective in terms of the shortage amount it will appear similar to to the finance department because you'll say we invoiced $100 and we only got paid 90 um really there we would just encourage that the invoicing is based off the order price not of what you think the order price would be otherwise you're going to get misaligned um and that usually just comes down to integration and making sure your systems are well connected absolutely makes sense um as we wrap up Chris I I wanted to just um ask ask you uh obviously we're sort of halfway through the year we've just gone through through Prime day what are the most interesting and perhaps most painful uh most educational moments let's put it this way that you have seen as youve worked with other vendors this year you know things that those vendors have really learned from that may be helpful to uh our audience uh as as we close out other um I used to call them like um pels and banana skins or something like that right things that that what can we learn from uh some other vendors that you may have observed yeah wow I mean I feel like we could talk about this for a very long time because there's lots of learns and uh you know having those Round Table discussions and events where vendors get together is a really uh it's a really great time to share best practice uh one of the things I would call out is we were able to reduce shortages and actually prevent them for Company by up to 90% so their shortage rate dropped quite substantially uh you know they were getting like we mentioned earlier hundreds of thousands each year uh and actually reducing that to just a fraction of what it was um and looking at that process where we went to their warehouse you know talked with their teams their labels got improved uh that receip process was much much better for them um so actually being able to reduce shortage rates by 90% um it's absolutely massive impact for a company so I would say to not my my to answer your question I would say not to be complacent about operational or um shipment defects within your process um not to just accept them as a cost of doing business but to really take a whole account overview uh we need to have a good focus on p&l profitability and making sure that your Amazon account is not just working on the top line sales are growing but the underneath processes are also still uh in line with where you want them to be and having a good vigilance on that being able to have those conversations internally and actually ask you know should we spending hundreds of thousands each year on defects and paying lots of time for the accounts team to go and reconcile this stuff or is there a way we can improve that and for some companies it will be just what it is they're doing the best they can but it doesn't hurt to ask the question and uh you know we touched on Bruno earlier and I I think that you know his narrative there is really relevant to that um and also a lot of these agencies out there who are looking at preventing and reclaim reclaiming shortages really there's a whole conversation that I would encourage companies to have about you know are we doing the best practice are we implementing these changes efficiently um obviously if people need help with it we're happy to help and happy to talk a lot of what we do is just uh you know let's have a conversation about it uh tell us how you work tell us what you know you're currently facing and if we could you know be of service to you um but I would encourage that internal conversation the dialogue and a good review of the account taking into consideration all those additional wider factors thank you Chris uh unfortunately we are getting to the end of um we're past the end actually but we're still live for some reason um we are getting to the end um you've already mentioned this I'm sure there are vendors that are watching this or going to be replaying this later um that are maybe just want to sort of go a bit deeper on some of these topics uh you mentioned you're very open to having conversations that's where it starts what is the preferred way for them to get in touch with you yeah I mean we understand that every business is unique every business is different uh it's not a one siiz fits-all approach standards are standards but the way they get implemented for you in your specific context will likely look different depending on how many warehouses you have and lots of other factors in your product type and so on um but yeah feel free to reach out to us we have our website cmer docomo our Instagram Facebook Twitter or X I should say um you know lots of different places you can reach us or just send me a message personally on LinkedIn um or a friendly bunch and we'd be glad to hear from you and help you we've got a phone numbers on our website for both the US and UK perfect uh well thank you so much uh Chris I really appreciate your time today thank you for uh taking us through some of the logistics changes that are happening especially ASN version two and all that um fancy pellet labeling and and you know I guess some of the consequences of not not doing that so thank you so much for taking it through that appreciate your practical tips on uh shortages too uh thank you for being super generous so uh yeah thank you and I look forward to having you uh again uh on one of our episodes in the near future thank you yeah you're very welcome I'm sure we'll speak soon all right everyone that is it for uh today's episode of marketplace Masters um thank you for tuning in I hope you found the session on the you know the recent changes particularly around ASN uh from an Amazon venor perspective I hope you found it useful if you are hungry for more uh don't forget to visit our you know free video on demand Library on our website it's really a treasure show for all sorts of Amazon uh vendor inze just head to Merchant spring.io and go to our research section and you'll find it there of course uh I'll be remissed not to say if you're a vendor and you are looking for much better uh analytics around your vendor performance or hybrid performance uh feel free to reach out to me or book a demo on our website and we love to share and like Chris does have a conversation uh to work through if merch spring can help you uh lastly I am all ears in terms of what you cover next if you're an Amazon vendor and you're enjoying these podcasts and you've got a particular question or topic that you want us to tackle send it through and I will do my best to get the relevant expert uh on the show and tackle that topic together thank you so much for listening and until next time take care [Music] [Music]