What are the Most Common Deductions by Retailer?

By Sharon Hayford, Content Writer

Last Updated November 24, 2025

7 min read

In this article, learn about:

Overview of common deductions for Amazon, Target, and Walmart

Explanation and definitions for common deductions

Dispute process for common deductions

Deductions are a regular part of the supply chain process for suppliers. Roughly 70% of invalid and disputable deductions are left untouched, costing suppliers millions in potential revenue.

There are two types of deductions: valid and invalid. Valid deductions fall into to two primary camps, planned and unplanned. Planned valid deductions are often called allowances and are previously agreed upon payment terms between the supplier and retailer. Unplanned valid deductions typically take the form of a supplier compliance infraction, resulting in a deduction from the invoice. Invalid deductions are deductions taken in error, due to a variety of reasons.

For valid deductions, a supplier’s focus should be prevention by addressing the underlying issues that led to the deduction. For invalid deductions, a supplier’s focus should be revenue recovery. However, valid or invalid, a supplier’s best defense is to first understand each retailer’s deduction process, and second, to be prepared to dispute invalid deductions.

This guide provides an overview of common deductions, with their definitions, for Amazon, Target, and Walmart. There is an FAQ section at the end that includes more detailed information about deductions and disputing.

Overview of Amazon Deductions

Amazon breaks down its deductions into three categories:

Deductions: Amazon defines deduction the same way many retailers do, as a payment deducted from the invoice due to errors in the supply chain process.

Chargebacks: This category encompasses charges that are billed to the supplier after the face, usually due to noncompliance. Chargebacks encompass issues with Purchase Orders (POs), Advanced Ship Notices (ASNs), as well as packaging, shipping, and fulfillment issues.

CoOps: These are previously agreed upon terms and charges, usually related to promotions, that are included on the invoice. Other retailers might call these allowances.

Related Reading: Amazon Co-Op Cheat Sheet

Some of the most common deductions for Amazon suppliers are:

Missing invoices: Amazon defines a “missing invoice” as one that cannot be matched to the products received. Sometimes, a missing invoice is due to delays, or because the invoice was rejected for noncompliance or another error.

Invoices that cannot be processed: When an invoice cannot be processed by Amazon it falls to the supplier to fix the issue. Typically, an invoice that cannot be processed is one that fails to adhere to Amazon’s invoicing requirements.

Potential shortages: Amazon’s system allows it to note whether a shipment’s product quantity matches what is said to have been received. When these does not match, suppliers are hit with a “potential shortage” deduction. But this deduction functions more like an alert.

Remaining shortages: An unresolved “potential shortage,” will escalate to a “remaining shortage,” which is defined how most retailers define a shortage: the product quantity received does not match what was invoiced.

Defects: More particularly called Supply Chain, Invoicing, and Catalog Defects, this deduction type functions as catch-all for supply chain errors that do not fall under the previous deduction types.

Overview of Target Deductions

Target divides up its deductions into five primary categories:

Shortages: This category encompasses all possible shipping-related issues that could occur. Shortages make up the majority of deductions from this category.

Pricing: Deductions under the pricing category involve invoicing errors, particularly related to the invoicing not matching the PO or what was shipped.

Returns: This category is combination of deductions rolled out weekly based on damaged or destroyed products.

Miscellaneous: This category encompasses deductions issued due to Target having to process a manual check.

The most common deductions across all categories for Target suppliers are:

Shortage: This appears as a Code A030 and is a manual deduction issued when what was invoiced does not match what was received, when the majority of difference is due to carton shortage(s).

Cost Differences: This deduction is taken when what was invoiced does not match the cost of what was received.

Substitutions: This deduction is taken when what was invoiced does not match what was received due to item substitutions.

Auto Chargeback: This deduction is an automated process that may be due to any or multiple of the above deduction types.

Related Reading: Target Deductions Explained

Overview of Walmart Deductions

Walmart breaks down its different deductions into five primary categories:

Invoice Deductions: These deductions occur when Walmart receives a shipment that does not match what is listed on the invoice and/or other documentation, such as the Purchase Order (PO) or Bill of Lading (BOL). This discrepancy can occur due to shortages, damages, substitutions, pricing discrepancies, or duplicate billing.

Allowances: These are previously agreed upon deductions, usually related to promotions or supplier benefits.

Compliance: These deductions come from Walmart’s Supplier Quality Excellence (SQEP) and On-Time In-Full (OTIF) programs, which track supplier compliance across various areas of the supply chain, such as shipping, timing, packaging, etc.

Audits: These deductions, which Walmart calls Post Audits, are fines applied later after a review by Walmart into old transactions.

The most common deductions across all categories for Walmart suppliers are:

Price Differences as Documented: This deduction occurs when there is a pricing discrepancy between the PO and the invoice.

Goods Billed not Shipped: This deduction occurs when the Advanced Ship Notice (ASN) is missing or submitted after the delivery.

Carton Shortage/Freight Bill Signed Short: This deduction is a standard shortage deduction, occurring when the amount of product received is less than what is listed on the BOL.

No Merchandise Received for Invoice: This deduction occurs when the Proof of Delivery (POD) is sent late or missing altogether.

Common Deductions Across Amazon, Target, and Walmart

Deduction Type	Retailer	Deduction Code/Name
Shortage	Amazon	Purchase Quantity Variance (PQV)
Shortage	Target	A030
Shortage	Walmart	Code 24
Invoice/PO/Shipment Mismatched	Target	A036
Invoice/PO/Shipment Mismatched	Walmart	Codes 11, 12
Labeling/Packaging Noncompliance	Amazon	Packaging Defects or Labeling Errors (under the Compliance Chargebacks category)
Labeling/Packaging Noncompliance	Walmart	Code 83
Late Delivery/Shipment	Amazon	“No show” or “Import PO On-Time Non-Compliance”
Late Delivery/Shipment	Target	D12, D19
Late Delivery/Shipment	Walmart	Code 65, Code 99 (OTIF)

Disputing Best Practices for Amazon, Target, and Walmart

Not every deduction will be valid. For example, an Amazon supplier may receive a deduction for a late shipment, but the reason that the shipment was late is because of a weather incident. In circumstances like these, when suppliers are hit with invalid deductions, the necessary next step is to dispute.

Some best practices when it comes to disputing invalid deductions:

Determine if the deduction is valid or invalid.

Understand the retailer’s required process for disputing.

Gather the necessary documentation for a successful dispute, such as copies of the PO and invoice, and other proof documentation such as the POD and BOL.

Ensure that all details are accounted for, including any extra documentation such as proof photos or emails.

Review the retailer’s process for re-disputing, should the first dispute be rejected.

Make sure that you are fully informed on all retailers’ compliance programs, and consistently track your compliance score.

Review entire supply chain process to avoid future valid deductions.

Related Reading: What is Amazon’s DisputeGPT?

Conclusion

When it comes to deductions, and disputing them, the overarching best practice suppliers should adhere to is validating every deduction they receive. Some suppliers find it easier to simply dispute every single deduction they receive, regardless of its validity. Other suppliers may choose to never dispute. In both cases, it is typically because the supplier does not feel they have the capacity to go through the necessary process of validating the deduction.

However, “there is relational cost to bad disputes,” says Eric, Director of Product on SPS Commerce’s Revenue Recovery team. Some retailers, such as CVS and Target, are even implementing fines for suppliers who dispute valid deductions. But even for retailers that are not implementing such fines, it is important to validate deductions prior to disputing. One of the many benefits of good disputing (i.e. focusing on disputing invalid deductions) is a stronger relationship with both buyer and retailer.