Reducing Chargebacks and More Benefits to SIOC
Over the years, Amazon has taken measures to ensure the packaging used to ship its products is more sustainable. And, in August 2019, the marketplace began enforcing its Frustration-free packaging initiative. Those who did not comply with at least one of the three tiers of the program are subject to costly chargebacks. ‘SIOC’ or ships in own container is the second tier and the focus of this blog post. Continue reading to learn more about the benefits of SIOC how and why your brand should prioritize being SIOC-compliant.
What is SIOC?
As mentioned, the acronym SIOC stands for ships in own container. Brands must sell products that can be shipped without an overbox. In other words, the products can be shipped to the customer without added effort from fulfillment center staff.
The Many Benefits of SIOC
Many of our clients have benefited from embracing SIOC, especially when it comes to reducing chargebacks. This is crucial because the cost of chargebacks can be upwards of hundreds of thousands of dollars per product for major brands. And although there are countless reasons brands receive chargebacks, it’s often difficult to discern the exact cause. When brands are SIOC-compliant, the guessing game lessens because it’s no longer likely packaging is responsible.
Further, chargebacks are often cited as a ‘manufacturer error’. When this is the case, whether the manufacturer is truly responsible or not, the relationship between Amazon, the brand, and the manufacturer can become strained. Therefore adhering to SIOC guidelines can protect a brand’s relationships.
Transitioning to SIOC requires brands to complete testing, meet the minimum and maximum size requirements, and ensure there’s no prep required by the fulfillment center. But, in our clients’ experiences, it has been worth the effort. In addition to eliminating a source of chargebacks, SIOC-compliant products also reduce the risk of damaged goods. As a result, more cost-savings can be found as defect rates decrease.
Finally, when it comes to waste reduction, brands need to consider how to package products in such a way that also prevents damage. In some cases, brands can reevaluate packaging and include bubble wrap or packing peanuts to serve as a safeguard. This approach reduces materials, an overbox, and meets guidelines, and ultimately prevents chargebacks.
There are many similarities between the first tier (frustration-free packaging) and the second tier (SIOC). Because of this, many brands believe the first tier is the most cost-effective. However, if not executed properly, brands can increase the risk of receiving chargebacks. And compared to the first tier, SIOC is arguably easier for brands to obtain.
The best tier for your brand will depend on a number of factors, as we mentioned. We strongly recommend doing your research and taking the necessary steps to certify your brand. If you could use the support of a strategic partner, schedule a free consultation. And, as always, we’re here to answer any questions about your Amazon strategy.