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From the Desk of Kim Zablocky: An Open Letter to Executives Whose Companies Sell to Retailers

Posted By Administration, Thursday, April 9, 2015
Updated: Wednesday, April 8, 2015

I've had discussions with people that manage or own businesses that sell to retailers where they tell me they have chargebacks under control and there's no reason to spend money fixing something that's not broken. Maybe they do, but maybe they're not asking the right questions internally. On average, an RVCF membership costs your firm $3,700.00 annually. With that number in mind, go to your order management team and ask the following questions:

  • How many of our shipments arrived late and what has that cost us this past quarter?
  • How many charges have been assessed for "shipped, not ordered"?
  • How many of our tags and labels failed and/or were unable to be scanned? How much did that cost us?
  • Did we have purchase order and/or ASN violations and how much were we charged?
  • What about the costs for allowances, shortages, pricing discrepancies, etc., etc.?

Please don't tell us chargebacks aren't affecting your bottom line.

Chargebacks on average run between 1-3% of gross sales – and that's just compliance charges alone. Factor in the cost of researching claims and disputing them, if necessary? And if you don't have the proper systems in place, that adds even more costs.

Go to your Credit or A/R manager and ask what the collectability of those chargebacks is and if the difficulty of accomplishing this is getting easier?

Then sit down and calculate how much more in sales you have to make to recoup those lost funds. If your margins on average are 25%, you need $4 of sales to profit $1. So, $100,000 in chargebacks requires $400,000 in sales to just break even. Can you really afford this?

So, when you take the time to ask the questions and listen to what chargebacks are really costing you, I'm available at (646) 442-3473. RVCF can help and surely save you a lot more money than $3,700.00! Or, better yet, prevent the chargebacks in the first place, which what we advocate and give you the tools to accomplish. Head in the sand or head in the sky – what's your choice?

(646) 442-3473

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Tags:  RVCF Membership 

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