5 Reasons for Amazon Vendor Central Suspension (and How to Prevent Them)

For Amazon 1P vendors, poor operational performance is a silent threat to the health of your account. While a single chargeback might seem like a minor hiccup, a consistent pattern of these issues can lead to a dreaded Amazon Vendor Central suspension.

While Amazon evaluates vendors on standard metrics like revenue, Product Cost of Goods Sold (PCOGS), and Net Pure Profit Margin (Net PPM%), there’s also a “silent killer” that often goes unnoticed: operational performance failures that lead to chargebacks and deductions.

In the wake of Amazon’s recent “vendor purge,” understanding the link between deductions and account health is more critical than ever. This post will explore the top five reasons for suspension and provide actionable strategies to help you stay compliant and profitable.

1. Persistently High Chargeback Rates

Amazon Vendor Chargebacks are fines issued by Amazon for non-compliance with its operational requirements. While they directly impact your bottom line, they also serve as a measure of your performance as a vendor.

• Why it leads to suspension: A high volume of chargebacks signals to Amazon that your processes are inefficient and costly to their system. Vendors sometimes ignore these small fees, but they add up. Shelby Owens, Strategic GTM Lead for Amazon at Carbon6, describes this as a “death by a thousand cuts.” Consistently failing to meet standards for on-time shipping, proper packaging, and accurate labeling makes you a high-risk, less profitable partner.
• How to prevent it: Proactively identifying the root cause of chargebacks is the only way to stop them. As Owens notes, “Being able to dial in to the root cause of these compliance deductions and avoid them will result in not only alleviating that charge specifically, but it will also result in a reduction on those other categories as well.”

2. Poor Purchase Order (PO) On-Time Accuracy

Amazon’s supply chain is built on precision and predictability. When you confirm a purchase order, Amazon relies on you to deliver the right products at the right time.

• Why it leads to suspension: Failing to meet the agreed-upon shipping and delivery windows disrupts Amazon’s inventory planning and can lead to stockouts, which negatively impacts the customer experience. This includes not just late shipments, but also down-confirming (reducing the number of units you can supply) or canceling orders after confirmation.
• How to prevent it: Implement a robust inventory and order management system to ensure you only confirm POs you can realistically fulfill. If you do face a delay, communicate with Amazon immediately and provide an updated, accurate estimated delivery date.

3. Inaccurate or Late Advance Shipment Notifications (ASNs)

The ASN is a critical piece of data that tells Amazon what to expect in an incoming shipment. It’s the foundation of their automated receiving process.

• Why it leads to suspension: When your ASN is inaccurate or doesn’t arrive before the shipment, it creates a domino effect of problems at the fulfillment center. This can lead to receiving delays, incorrect inventory counts, and ultimately, shortages. Many vendors don’t realize that these issues are connected. Over 65% of chargebacks types and subtypes create a risk that a shortage claim can occur. You’re not only getting hit at the chargeback level, but it can also ding you in other ways via these shortage claims.
• How to prevent it: Ensure that your ASN is transmitted as soon as the shipment leaves your facility and that the information perfectly matches the physical shipment. This includes the correct PO numbers, ASINs, quantities, and tracking information. Automating this process can significantly reduce the risk of human error.

4. Packaging and Labeling Non-Compliance

Amazon has very specific requirements for how products must be packaged and labeled. These rules are in place to protect products from damage and ensure they can be processed efficiently in fulfillment centers.

• Why it leads to suspension: Improper packaging can lead to damaged products, while incorrect or unreadable labels can bring the receiving process to a halt. For example, a “No Carton Content Label” chargeback occurs when a carton in a non-palletized shipment is missing a valid label, forcing a manual and costly receiving process.
• How to prevent it: Regularly review Amazon’s packaging and labeling guidelines in the Vendor Manual. Conduct internal audits to ensure your team is following the correct procedures. For products that require it, consider getting certified in the Ships in Product Packaging (SIPP) program to avoid chargebacks.

5. Product and Food Safety/Compliance Violations

While not directly tied to deductions, product safety and compliance are paramount to Amazon. Selling products that are unsafe, mislabeled, or don’t meet regulatory standards is one of the fastest ways to get your account suspended.

• Why it leads to suspension: Amazon has a zero-tolerance policy for products that pose a safety risk to customers. This includes everything from products that don’t have the required safety warnings to food items that are not properly labeled with expiration dates.
• How to prevent it: Ensure that you have all the necessary safety and compliance documentation for your products, including Children’s Product Certificates (CPCs) and General Certificates of Conformity (GCCs). Regularly review your product listings to ensure they are accurate and include all required warnings and information.

The Real-World Impact of Proactive Deduction Management

For many vendors, the challenge lies in the sheer volume and complexity of Amazon’s requirements. As one customer from Wildkin, a consumer goods company, put it, “We’re in the process of collecting money from Amazon we wouldn’t otherwise have collected, as well as improving our internal processes in regards to our Amazon 1P business.”

Here’s how a focus on deduction management has made a tangible difference for other vendors:

• Farouk Systems (Beauty/Haircare): By auditing their vendor account and leveraging expert knowledge, they recovered $1M in 8 months and transformed their recoveries from single-digit to double-digit net profit.
• Global CPG Brand: A focus on historical recovery and root cause analysis led to over $2M in profit recovered in one year and a 30% reduction in future fees.

Take Control of Your Vendor Central Account Health

A Vendor Central suspension is a major blow to your business, but it is often avoidable. Protecting your relationship with Amazon starts with understanding the direct link between operational performance, deductions, and account health.

Ultimately, effective deduction management is not just a financial strategy—it’s a critical component of your compliance and a key to long-term success on the Amazon platform.

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