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✋ Should you agree a Damage Allowance with #Amazon? Here's a data-driven approach to finding the answer:

Many vendors are facing demands to pay a damage allowance or liquidation fee right now.

Both are commercial trade agreements to compensate Amazon for damaged goods received from customers within the warranty period.

It's a highly controversial trade term, as the underlying data are rarely shared, and brands have no way of judging the legitimacy of the fee.

So what should you do?

» Conduct your own calculations.

Here's how:

𝟭. 𝗗𝗼𝘄𝗻𝗹𝗼𝗮𝗱 𝘁𝗵𝗲 𝗻𝘂𝗺𝗯𝗲𝗿 𝗼𝗳 𝗽𝗿𝗼𝗱𝘂𝗰𝘁 𝗿𝗲𝘁𝘂𝗿𝗻𝘀 𝗳𝗿𝗼𝗺 𝗩𝗲𝗻𝗱𝗼𝗿 𝗖𝗲𝗻𝘁𝗿𝗮𝗹

𝟮. 𝗥𝗲𝘃𝗶𝗲𝘄 𝗽𝗲𝗻𝗱𝗶𝗻𝗴 𝘂𝗻𝘀𝗲𝗹𝗹𝗮𝗯𝗹𝗲 𝗶𝗻𝘃𝗲𝗻𝘁𝗼𝗿𝘆 (𝗱𝗮𝗺𝗮𝗴𝗲𝗱) 𝗶𝗻 𝗩𝗲𝗻𝗱𝗼𝗿 𝗖𝗲𝗻𝘁𝗿𝗮𝗹

𝟯. 𝗖𝗮𝗹𝗰𝘂𝗹𝗮𝘁𝗲 𝘁𝗵𝗲 𝗗𝗔% 𝗲𝗻𝘁𝗶𝘁𝗹𝗲𝗺𝗲𝗻𝘁 (𝗩𝗼𝗹𝘂𝗺𝗲 𝘅 𝗖𝗼𝘀𝘁 𝗣𝗿𝗶𝗰𝗲 / 𝗡𝗲𝘁 𝗥𝗲𝗰𝗲𝗶𝗽𝘁𝘀)

The resulting percentage is the actual value to which you should limit your investment for any damage compensation.

If Amazon wants you to invest more, demand precise data points from their side. Otherwise, reject the claim, saying that you cannot be held liable for poor operational performance outside your control.

🕵️‍♂️ Pro Tip: Invest in Amazon's Warranty Repair Services if high return rates keep you awake at night. It can help drive good CX and significantly reduce customer returns to your warehouses.