A chargeback is a fee or penalty imposed by a retailer for poorly performing barcodes on shipments received from vendors. Walmart is most often blamed (or credited) with inventing the chargeback, and other big box retailers have followed suit, since their business models are built on logistics.
When barcodes don’t work right, logistics don’t work right and there is a cost to correcting the problem: the cost of labels to cover the bad barcode and the cost to affix the label, all of which must be done quickly to get the goods to the retail outlet and generating revenue.
There is also a cost to preventing the problem, but whereas a chargeback is an ongoing liability if the cause is not brought under control, the cost of prevention is more like an asset. It actually is an investment. It is the chargeback pushback. It is barcode verification.
Consider the following authentic case histories:
- New Jersey clothing distributor saved $50,000 in prevented chargebacks with (2) verifiers that cost a fraction of a potential chargeback.
- Medical device manufacturer was threatened with fines for non-compliance to FDA’s Unique Device Identification rule for non-working barcodes on hydration bags. The threatened fines would have cost more than ten times the cost of a verifier.
- Chinese garment manufacturer paid $20,000 in chargebacks on one 40 foot ocean freight container of shipments to stores. A 1D verifier costing $2600 (MSRP) could have prevented the problem.
- Big Box retailer saved $5000 the first week they had verifier on a sales demonstration—they had not even purchased yet
In all cases, the verifiers paid for themselves quickly–in some cases immediately–and then protected the bottom line over and over again, in preventing future chargebacks. These savings and protections are also available to companies who use a barcode test service.
These are not extreme or unusual scenarios. These are companies, large and small, who have learned by paying attention and not accepting the idea that mistakes are an inevitable and unavoidable cost of doing business.
Chargebacks may have become a welcome line item on the income side of the balance sheet of retailers. But vendors are not powerless: they can deploy the chargeback pushback and strengthen their own balance sheets and their trading partner relationships.