Share
Blog

Introducing Chargebacks: Recover the hidden wholesale tax that plagues retail vendors

Convictional Chargebacks
Share
Table of Contents
Close button icon
Convictional Chargebacks

We’re launching Convictional Chargebacks, our first wholesale product for vendors. Chargebacks reduces wholesale chargebacks levied by retailers and automates the dispute-handling process for retail vendors.

Chargebacks enables retail vendors to respond to a wholesale chargeback in minutes. 

It ingests new chargebacks and creates a chargeback ticket automatically. Chargeback tickets are then managed and analyzed in a single, easy-to-use dashboard. 

From there, disputing chargeback tickets is automated. Dispute evidence gets automatically integrated and merged into the appropriate chargeback ticket, enabling the user to respond and recover wholesale revenue. 

What are wholesale chargebacks?

Wholesale chargebacks refer to fines imposed by retailers due to issues in order fulfillment and EDI (Electronic Data Interchange) data mapping compliance. These chargebacks typically involve the retailer withholding a portion of the revenue from the invoices. 

Instead of paying the total amount due on a wholesale invoice, the retailer deducts a certain sum, corresponding to the severity of the compliance issues and the fines stipulated for violating their compliance standards.

We learned about wholesale chargebacks by spending time with hundreds of sellers (vendors) in our network who do a combination of wholesale and dropship to various retailers. These sellers shared that chargebacks represent 1-5% of their B2B revenue, which could eat as much as 25% of their profit. 

Inversely, chargebacks are a profit center for retailers. Retailer trade requirements for fulfillment, packaging, and data mapping are notoriously complex and often do not generalize to other retailers. These requirements are 1:1 — every person who touches a PO needs to be aware of the retail partner’s unique requirements. 

This complexity forces finance and operations teams within the vendor to ensure each pallet, each box within the pallet, and each item within the box, along with key documents like the advanced ship notice (ASN), are perfect for each order across each retail trading partner. 

It’s no wonder CFOs consider wholesale chargebacks a top problem. Fines are inevitable. 

Further, the complexity of wholesale operations requires coordination between wholesale managers, account managers, finance and operation leaders, and fulfillment staff within owned warehouses and 3PLs. Each purchase order (PO) is therefore error-prone at each step of the fulfillment process. 

Usually when onboarding to a new retail partner, the vendor must sign a contract called a “routing guide” which contains hundreds of pages of requirements that must be satisfied in order to avoid chargeback fines. It’s impossible for a human to contain all of this information in their head, which makes wholesale chargebacks an inevitable outcome at least some of the time. 

Using Chargebacks to recover wholesale revenue

In this quick demo video, we’ll show you how to use Chargebacks to manage and dispute retailer fines in minutes without any manual work:

In summary, Chargebacks automates the dispute process and makes it easier to manage wholesale chargebacks. We think you’ll love it. 

But what about preventing future chargebacks? Meet Requirements.

One more thing: 

If you want to prevent these wholesale chargebacks, you can also use our retrieval augment AI chatbot, Requirements, to generate chargeback-proof PO checklists for specific retailers. 

We’ve been a bit low-key about what Requirements can do, but it’s pretty powerful already and can even prevent future chargebacks:

Requirements leverages OpenAI’s GPT-4 along with proprietary pre-processing which enables it to ingest retailer requirements, like routing guides. From there, fulfillment, operations, and finance staff can action the current state of their retail partner’s requirements in order to avoid chargebacks. 

We have also embedded Requirements into the onboarding flow for Dropship. In Dropship, vendors can ask questions to Convictional’s AI chatbot while onboarding and receive instant answers without needing to email the retailer’s support staff. 

If curious about AI and retail, we’ve done a bunch of writing on how we’re applying Large Language Models here. Or you can reach out to Adam McCabe (adam.mccabe@convictional.com), our Head of AI at Convictional, with any questions.  

We suspect that most users will want to use Chargebacks before Requirements since it offers immediate value in automating disputes for any open chargebacks. But once you successfully recover wholesale revenue with Chargebacks, we recommend giving Requirements a try to see if it helps you prevent future chargebacks. 

Who should use Chargebacks? 

The ideal user for Chargebacks is a wholesale vendor who sells to a top North American retailer, like Nordstrom, Walmart, Target, and many more. Retailers also impose fines to dropship vendors, so feel free to use Chargebacks if you’re only doing dropship with your partners. 

Sign up for Chargebacks for free

If you’re interested in using Chargebacks, sign up for our waitlist here.

Note that you can use Chargebacks for any retailer. 

We are letting more vendors use Chargebacks on a weekly basis. There is no implementation or integration work here — it is completely self-serve. You just simply sign up and start using it. 

Chargebacks is also currently free in order to get as much customer feedback as possible. 

Please let us know how it’s going and we’d be happy to assist. Please feel free to reach out to us directly with feedback and questions by email: compliance-feedback@convictional.com

What’s next for Convictional? 

Chargebacks is just the beginning of Convictional’s next chapter. 

Our mission is to connect the world’s trading partners. In the first chapter of the company, we launched Convictional Dropship and scaled it to thousands of users — retailers large and small can connect vendors and onboard their products without holding inventory. Dropship continues to flourish for high-growth retailers. It is the #1 Modern Dropship Platform on G2 and others, consistently favored by vendors who are frustrated by legacy EDI solutions and monolithic marketplace platforms. 

Our commitment to continuing our market leadership with Dropship isn’t changing. As Dropship grew, so did our network of vendors who rely on it to sell their products to retailers. We built durable relationships with these vendors who expressed concerns that their wholesale chargebacks were amounting to CFO-level pain. We decided to answer their call for help by building Chargebacks.

Convictional’s second chapter will focus on growing Dropship while expanding Wholesale, a suite of products designed to connect the world’s trading partners. 

We are beginning this new chapter with the launch of Chargebacks which aims to make wholesale partnerships more profitable and automated. 

Speaking of automation, wait ‘til you see what’s next. 

Roger & Chris 

Powerful Infrastructure To Launch & Scale Your Digital Marketplace — Chat with us to learn more
Powerful Infrastructure
To Launch & Scale Your Digital Marketplace

Chat with us to learn more