Where your margin actually leaks, and the slice we recover
Revenue leakage is the margin a wholesaler loses after the sale: money invoiced but never collected, taken back by retailers as deductions, chargebacks, compliance penalties, and claims. The largest and most recoverable slice of it is retailer deductions.
Retailer chargebacks and deductions quietly drain 2 to 5% of every wholesaler’s revenue, and most go undisputed. Roy, our AI agent, reviews every deduction, builds the evidence, and files the disputes to win that money back. Live in weeks, no rip-and-replace, no new software.
Where margin actually leaks
Margin leaks out of the retailer-supplier relationship in five places: shortage and receiving claims, compliance and routing penalties, pricing and allowance discrepancies, freight and returns costs, and claims that expire before anyone works them.
The first category is measured. GS1 US, announcing its Claims Compliance Implementation Guideline for the Apparel Industry, reported that the retail industry faces more than $36 billion in claims annually. That is a 2022 figure.
Source: GS1 US (2022). New GS1 US Guideline Supports Retail Industry with Claims Compliance. https://www.gs1us.org/industries-and-insights/media-center/press-releases/new-gs1-us-guideline-supports-retail-industry-with-claims-compliance
Compliance penalties are a second and separate leak, and the buyer sets them. An FTC staff report found that Walmart tightened its on-time in-full requirements in September 2020, requiring suppliers to achieve 98% OTIF compliance to avoid fines of 3% of the cost of goods. The same report found that larger customers generally imposed more stringent OTIF requirements and penalties on their suppliers than smaller customers did.
Source: U.S. Federal Trade Commission (March 21, 2024). Feeding America in a Time of Crisis: The United States Grocery Supply Chain and the COVID-19 Pandemic. An FTC Staff Report. https://www.ftc.gov/system/files/ftc_gov/pdf/p162318supplychainreport2024.pdf
The third finding is the one suppliers feel and cannot prove. Peer-reviewed research in the Journal of Operations Management, drawing on supplier compliance manuals collected from 111 retailers, found that execution-quality errors (labeling, ASN, packaging, and carton problems rather than price, quantity, or delivery date) account for roughly 60% of the dollar value of all chargebacks a retailer issues, that fulfillment errors are associated with nearly 7% of purchase orders, and that the chargeback assessed for an execution-quality error deviates from the true cost of that error by between 38% and 75% on average.
Source: Craig, N., DeHoratius, N., & Klabjan, D. (2021). Execution quality and chargeback penalties in retail supply chains, Journal of Operations Management. https://doi.org/10.1002/joom.1092
That last number is the argument for disputing. A chargeback is not a measurement of damage. It is an estimate, and the estimate is frequently wrong.
The fifth leak, claims that expire before anyone disputes them, is real and widely asserted, and it has no independent measurement. Every widely circulated figure for the share of deductions that goes unrecovered originates with a deductions-recovery vendor. ROI-AI does not publish a number it cannot source.
What ROI-AI addresses today
ROI-AI addresses one of those five leaks: the retailer deduction and chargeback dispute path. Roy reviews every deduction, assembles the evidence, and files the dispute, end to end, across shortage, concealed shortage, compliance, pricing, UPC, and packing claims.
We do not audit your pricing, your allowances, your freight bills, or your returns. Those are real leaks. They are not what we recover. If a retailer took money out of a remittance as a deduction or a chargeback, that is our lane.
This page describes the dispute path running in production today. It is not a general invoice-to-collection monitoring product.
Chargeback, deduction, allowance: what is the difference?
A deduction is any amount a retailer subtracts from a remittance instead of paying the invoice in full. A chargeback is a deduction issued as a penalty against a specific reason code, such as a shortage or a routing violation. An allowance is money the supplier agreed to give up in advance, negotiated into the trading terms. Deductions and chargebacks are contested on the evidence. Allowances are a commercial negotiation, and they sit outside what Roy touches.
What Roy does in that lane
Roy monitors every retailer deduction as it lands, classifies the reason code, and flags the ones worth disputing. Roy reviews every deduction, not just the big ones, so no dispute window closes on money you could have recovered. Disputes are filed 24/7 across every retailer.
Roy knows each retailer’s portal, reason codes, and evidence rules. Adding a new one takes days, not months. Roy disputes across the retailers you sell to, including Dollar General, TJX, Kohl’s, Burlington, Ross, CVS, Target, Kroger, Family Dollar, and Walmart.
Roy is not always a yes. It reads a case and recommends not disputing when the charge holds up.
Category: Chargeback Recovery, Automated.
How it works
One AI agent runs the entire dispute pipeline end to end, from the deduction hitting your account to the money coming back.
- 01
Detect the deduction
Roy monitors every retailer deduction as it lands, classifies the reason code, and flags the ones worth disputing.
- 02
Pull the evidence
It matches each chargeback against your invoices, BOLs, and proof-of-delivery, assembling the documentation that proves the deduction is invalid.
- 03
Build the dispute packet
Roy writes the retailer-specific dispute, formatted to that retailer's reason codes and evidence rules.
- 04
Submit and recover
Packets are filed to the retailer portal or emailed to the right contact, 24/7 across every retailer, and tracked until the money comes back.
Is a human involved?
ROI-AI’s analysts are the managed quality layer. To the customer, Roy runs autonomously. Most of Roy’s work is auto-submitted; ROI-AI’s own analysts review the exceptions that need judgment, and the auto-submitted share keeps growing. This is our AI-native Service-as-a-Software model: the oversight is ours, not yours, and it shrinks as Roy proves out.
Weigh in any time you want, but nothing waits on your approval.
What it takes to connect
Read-only connectors to your ERP and retailer portals. No data migration, no changes to how your team works. Live in weeks, no rip-and-replace, no new software.
The measure of a deduction agent
The value of an AI teammate is not only winning more disputes. It is knowing which fights are not worth having, and pointing at the cause instead.
On one case, Roy read the structured data, the documents, and the product image together, found the charge was actually valid, and recommended not disputing it.
The Deduction Code Library
Retailer deductions arrive as reason codes, and every retailer writes its own. We published the Deduction Code Library, a plain-English reference to what each code means, why it is issued, and what evidence disputes it.
Roy knows each retailer’s portal, reason codes, and evidence rules. Adding a new one takes days, not months.
Frequently asked questions
- What is revenue leakage for a wholesaler selling to retailers?
- Revenue leakage is the margin a wholesaler loses after the sale: invoiced money that is never collected because retailers take it back as deductions, chargebacks, compliance penalties, and claims.
- How much do retailer deductions cost a wholesaler?
- ROI-AI's research with fashion wholesalers shows retailer chargebacks typically consume 2 to 5% or more of gross sales. GS1 US reported in 2022 that the retail industry faces more than $36 billion in claims annually.
- What is the difference between a chargeback, a deduction, and an allowance?
- A deduction is any amount a retailer subtracts from a remittance instead of paying the invoice in full. A chargeback is a deduction issued as a penalty against a specific reason code. An allowance is money the supplier agreed to give up in advance as part of trading terms.
- Does ROI-AI recover pricing, allowance, freight, or returns leakage?
- No. ROI-AI does not audit pricing, allowances, freight bills, or returns. ROI-AI works the retailer deduction and chargeback dispute path only.
- Is the process fully automated, or is there a human in the loop?
- ROI-AI's analysts are the managed quality layer. Most of Roy's work is auto-submitted; ROI-AI's own analysts review the exceptions that need judgment, and the auto-submitted share keeps growing. The oversight is ours, not yours.
- How long does it take to go live?
- Live in weeks, no rip-and-replace, no new software. Read-only connectors to your ERP and retailer portals, with no data migration.
Sources
- 1.GS1 US (2022). New GS1 US Guideline Supports Retail Industry with Claims Compliance. https://www.gs1us.org/industries-and-insights/media-center/press-releases/new-gs1-us-guideline-supports-retail-industry-with-claims-compliance
- 2.U.S. Federal Trade Commission (March 21, 2024). Feeding America in a Time of Crisis: The United States Grocery Supply Chain and the COVID-19 Pandemic. An FTC Staff Report. https://www.ftc.gov/system/files/ftc_gov/pdf/p162318supplychainreport2024.pdf
- 3.Craig, N., DeHoratius, N., & Klabjan, D. (2021). Execution quality and chargeback penalties in retail supply chains, Journal of Operations Management. https://doi.org/10.1002/joom.1092
- 4.ROI-AI's research with fashion wholesalers. Source of the 2 to 5% of gross sales benchmark. First-party research.
Next step
Start with a mutual ROI analysis: we look at your deduction history and tell you what is worth recovering.
Mutual ROI analysis before any commitment. No setup fees. No long-term lock-in. If we can’t demonstrate clear ROI for a use case, we won’t take it on.
Estimate only, based on conservative industry benchmarks. Actual recovery depends on your retailers, reason-code mix, and available evidence.