Chargebacks are fees charged to a vendor by a retailer, and relate to everything from customer returns and advertising fees to mislabeled products and incomplete orders. Over the past decade, chargebacks have become a contentious issue between retailers and vendors in the apparel industry. Privately, vendors describe chargebacks as a necessary burden of doing business with big retailers. Some vendors complain, calling chargebacks “abusive” and “unnecessary.” Smaller suppliers say meeting compliance requirements to avoid chargebacks is an expensive barrier of entry for doing business. From a retailer’s perspective, chargebacks are simply a way to maintain gross margins. Retailers also say chargebacks are critical to running a retail operation in the most efficient way possible. WWD asked retailers and vendors to anonymously weigh in on this important topic.

Methodology: This survey of online subscribers was conducted exclusively for WWD by Demographix during the third quarter of 2005. There were 98 respondents; 27 were retailers and 71 were either vendors, suppliers or manufacturers.

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