Amazon Co-Op, also known as Contra CoGS, is a program that features a variety of agreements to help vendors to promote their products and to raise brand awareness by increasing traffic and sales of their products. In addition to marketing and promotion, Co-Ops can also include agreements that charge to cover inbound freight costs of shipping a vendor’s products to Amazon fulfillment centers (freight allowances), and the cost of damaged or defective returns of their products (damage allowances).
Why dispute these Co-Op deductions?
The way in which these Co-Op deductions are processed and charged by Amazon is heavily automated. While this automation allows for the process to be seamless and efficient, it can also cause discrepancies and errors that result in excess charges being paid by the Vendor. Co-Op deductions constitute a significant factor in Amazon's calculation of temporary credit memos known as provisions for receivables, which in turn, can affect Amazon's demand forecasting algorithm and the overall business relationship between a vendor and Amazon. Therefore, the accrual of these charges can hinder your cash flow and overall revenue of your Amazon business.
While disputing invalid Co-Op deductions is important, it is also important to avoid disputing any valid charges. Amazon's review process for Co-Op disputes is very meticulous and manual, so doing your due diligence and presenting Amazon's team with convincing proof for your disputes is vital to the maintenance of a good faith vendor-retailer relationship.
How do I dispute Co-Op deductions?
Disputing Co-Op deductions begins with the validation of whether the Co-Op charge is accurate or not. The are many types of inaccuracies and discrepancies that can take place:
Agreement-based: At times, Amazon may create a Co-Op charge using an agreement that expired, or apply the wrong rebate amount or percentage rate. These can be validated by simply reading through the agreement's start and end dates, funding type (amount/rate), and conditions to make sure the Co-Op balance agrees with the details of the agreement.
Off-script negotiations: Sometimes vendors will negotiate a grace period on a certain Co-Op agreement. However, Amazon's automation may still create charges. When this happens, vendors should dispute all charges that took place after negotiations concluded. When disputing these, it is best to include screenshots of the email thread as proof of the negotiation that took place.
Duplication: On rare occasions, Amazon will charge a Co-Op amount twice for the same product and/or agreement and for the same time period. The vendor should dispute one of the charges and point out the other Co-Op charge (Co-Op invoice ID) as proof of the duplicate charge.
Accrual errors: This is likely one of the most common discrepancies but also the hardest to validate. Other than straight payment Co-Ops, most Co-Ops are funded based on some form of accrual. In other words, when the Co-Op is not based on a flat fee, it is likely that Amazon will use a Co-Op deduction rate and apply it to either Net Receipts (what the Vendor sells to Amazon) or Net Sales (what Amazon sells to their customers). However, we find that in many instances, Amazon will apply the wrong rate, or apply the correct rate but to the wrong unit quantity or cost of any particular product. In this case, it is best to review the backup reports that Amazon will attach to each accrual-based Co-Op (Accrual, Vendor Funded Sales Discount...).
How does SupplyPike help with Co-Ops?
If you take away anything from the paragraphs above, it should be that Co-Ops are complicated and can be inflated in many cases, but the vendor must do their due diligence and attempt to avoid disputing valid charges. This is where we come in! Our Amazon team built a solution that will allow you to greatly reduce the research time and recover many dollars of excess Co-Op charges.
Because Co-Ops can be disputed at any time and as many times as you wish, our Co-Op solution places a primary emphasis on the meticulous validation of backup reports for each Co-Op, as this critical function is pivotal in assisting our users in promptly identifying any discrepancies. However, as we continue to enhance our Co-Op solution, the disputing process should remain the same:
Go to the Co-Op tab and look up all Co-Ops that we have tagged as "likely invalid" and dispute these first. As new Co-Ops keep coming every month, keep checking on our validity judgment for each individual Co-Op invoice.
Look for any Co-Ops you had disputed in the past that were either denied or approved for a lower amount than the suggested dispute amount. Once identified, feel free to re-dispute those until either you recover those excess Co-Op dollars, or Amazon provides a good reason for denying your disputes.
For all other Co-Op deductions we tag as "likely valid" or "unknown validity", please feel free to review them manually to either dispute them or archive them. If you find any discrepancies we weren't able to catch, please let our team know by emailing support@supplypike.com so we can continue to enhance our product over time.