Because They Said So:  The Challenge of Retail Compliance

April 28, 2020 by Amware Fulfillment

There are some books that we all enjoy reading.  There are others that we have to read, whether we want to or not.   

Retailers’ routing guides and vendor manuals definitely fit into that second category.

Like War and Peace, they can often be epically long, not to mention mind-numbingly detailed.

Yet you can’t skip over a single page or paragraph, because anything you miss could wind up hurting your company and its bottom line.

We recently sat down with Orly Trieber, one of several professionals responsible for helping Amware’s clients stay on the right side of retail compliance requirements, to learn more.

It’s often been said that retail compliance is one of the toughest aspects of running a fulfillment operation. Agree or disagree?

retail-compliance-requirementsIt’s definitely an area most multi-channel merchants struggle to stay ahead of. Every retailer has a different set of shipping and receiving expectations with its own nuances and idiosyncrasies. And deciding not to comply with them isn’t a viable business option.

On a scale of one to ten, with one being laid-back and ten being intense, how rigorous are retailers’ compliance expectations?

It can be a ten for some retailers – such as those who publish 200-page routing guides – and a one for others, including those whose routing guides clock in at five pages or less.

However, as a rule, most retailers skew closer to a ten, with complex requirements for everything from how they want to see incoming goods packaged to where labels should be applied, what kinds of dunnage should be used, and how high a pallet can be stacked. Many of them also have different requirements for various product categories, which can make matters even more complicated. 

Regardless of whether their requirements are simple or complex, all retailers have the ability to enforce their rules in the form of chargebacks to their vendors.

How much do these chargebacks run?

We’ve seen some chargebacks that are just pennies and others that cost $200 per infraction.  Either way, they can really add up quickly and create significant financial havoc if a shipper is not careful.

Are there any requirements that seem to trigger more chargebacks than others?

We pride ourselves on having very few chargebacks, so I can’t speak for every company.

However, I can say that labels are a huge potential stumbling block for many businesses. That’s because there’s a wide range of information that a label can include (PO#, box contents, SKU# and quantities, just to name a few) and many different ways that this information can be organized and presented.  Plus, there’s the question of where the label is placed on a package (often down to the nth degree). Any deviation from these requirements, however small, can result in a chargeback, as can labels that are missing, ripped or even dirty. When labels are incorrect or misplaced, retailers often can’t process these boxes in an automated way at the distribution center, so they become exceptions requiring added labor. 

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What are some other trouble spots?

For some companies, the challenge is shipping – and how to package different shipments that are going to different kinds of destinations. For example, if an item is being sent to a retailer’s DC it may need to be palletized one way, whereas if it’s going to a retailer’s store, it may need to be sent and stacked differently. And if it’s being drop-shipped, there may be some packaging changes required, because some retailers may be okay with receiving branded shipping materials, while others aren’t. 

Other companies may struggle with what goes inside the package. Should there be dunnage or not? What kind? And where does the packing slip go? 

But ultimately it depends on the shipper.

How can automation help with compliance?

EDI integration can be a huge help in terms of ensuring that labels are printed correctly.  A WMS can deliver huge amounts of helpful direction and updates to workers and managers that facilitate considerably higher levels of order- and package-filling accuracy.

A formalized commitment to process improvement and daily visibility to fulfillment warehouse KPIs can also help because these allow companies to identify and address small performance issues before they become large non-compliance trends.

You mentioned that Amware has a very low rate of chargebacks. How has the company managed to help its customers avoid them?

Among other things, we have people like me who eat, sleep, and drink retail compliance. We’re focused on carefully going through every routing guide for every retailer that our clients deliver to, and we’re fully committed to becoming subject matter experts and understanding each guide’s contents so that our clients don’t have to. 

A big part of our job is creating the Cliff’s Notes versions of these guides so that associates on the warehouse floor have easy access to the most important requirements. We’re also heavily involved in employee training and coaching – and making sure that our associates are well-versed in all of the essentials for shipping out to a particular retailer before a new account goes live. We even create large-scale reference boards that hang over pack-out areas in the warehouse for each client (see image above).

And of course, our company has a lot of experience in freight shipping to many retailers already, which means that knowing how to comply with shipping requirements to the Amazons, Wal-Marts, Targets, Home Shopping Networks and other large retailers of the world is already part of our organizational DNA.  It makes onboarding new clients who work with these retailers considerably easier, because we’ve already got the necessary compliance track record and knowledge.

How often do various retailers’ compliance requirements change?

Most routing guides or vendor manuals are good for about a year, and retailers are generally very good about letting companies know when there are updates. So even if you think you know everything there is to know about retail compliance today, don’t get too comfortable, because some amount of change goes with the territory.

Amware works with companies on a multi-channel fulfillment strategy to meet all distribution requirements. The company is equally adept at pick and pack services for direct-to-consumer orders and bulk retail distribution to mass retail chains and specialty stores. If you are looking for a single fulfillment provider for all your sales channels, contact Amware today

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