So called retail chargebacks or deductions to vendors/manufacturers are always a contentious issue, as we have covered in SCDigest for many years.

Just recently, Attain Consulting released its 2018 Deductions Report, based on survey results from some 200 retail vendors, repeating a similar report last done in 2015.

There is a wealth of information in the report, but for our Supply Chain Graphic of the Week we have selected the chart below, which shows a breakdown on the amount of supply chain-related chargebacks as a percent of sales. The data is presented first across all respondents, then by different retail vendor sectors, and then in the end by size of company.

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At one level, the level of chargebacks were below what SCDigest would have guessed: 40% of respondents said chargebacks were less than 0.25% of sales. Another 22% said chargebacks were between 0.25% and 0.5%.

However, more than 20% said chargebacks where 1% of sales revenue or greater. And even at a level of even 0.5% of sales, the amount of chargebacks might be 6-10% of profits, so a significant factor in the bottom line.

Also interesting is that in general large companies with over $500 million in revenue had higher chargeback levels as a percent of sales than those under $500 million. For example, 7.59% of smaller companies said chargebacks were between 1.1% and 2% of sales, versus 13.7% of the larger vendors.

Do smaller companies pay more attention to chargeback levels? Do retailers ding large companies more so than smaller vendors, for whatever reason? Unclear, but these are interesting questions

There’s lots more interesting data in this new report, which you can request from Attain Consulting here.

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