Drop Ship Vendor (DSV) Policy Central

Updated 1 week ago ​by Merch Transformation Change Management

Program policies are derived from the Walmart Supplier Agreement and the Direct Ship Vendor Schedule. Compliance with program policies ensures good standing in the DSV Program and provides an excellent customer experience. Failure to comply may result in account suspension or termination. 

To ensure the best customer experience, we have compiled our DSV policies to support customers.

Onboarding

DSV Program Requirements

DSVs are required to comply with the program requirements listed below. Failure to comply may result in account suspension or termination.

  • Suppliers will fulfill orders Monday through Friday up to 12:00 pm local time.
  • Suppliers will submit Operational Outages (scheduled closures) in Supplier One at least 14 days in advance.
  • Suppliers will ship with all carrier and shipping methods. Walmart assigns a carrier and ship method to each order. The supplier must ship with the Walmart assigned carrier method.
  • Suppliers will ship in plain, unbranded boxes.
  • Suppliers will not include packing slips or marketing materials in packages.
  • Suppliers will comply with 3rd party billing policies. Walmart provides FedEx & UPS account numbers that must be used. Suppliers must not misuse FedEx & UPS account numbers; these accounts must be used only for Walmart.com orders sent to suppliers by Walmart.com. For USPS, the supplier agrees to pay USPS upfront and invoice Walmart monthly for reimbursement. Click Help > Manage tickets within Supplier One to create a case for Partner Support. Select Finance > USPS shipping cost reimbursement for the issue. For additional information and help regarding USPS reimbursements, please review USPS Shipping & Reimbursements for DSVs​​​​​.
  • Suppliers shall ship all orders with the carrier and shipping level designated by Walmart.com at a rate of at least 99%. Using a different carrier or shipping level than designated will incur a chargeback. Carrier Compliance is calculated on a monthly basis.
  • Delivery of customer orders will be completed through the shipping carrier that Walmart.com designates.
  • Suppliers will only ship from the contiguous 48 states. Suppliers will not ship from Hawaii or Alaska
  • Suppliers will provide an error-free inventory feed per day. Error-free means all current stock and available inventory of each item are included in the feed. Multiple feeds can be sent each day to keep inventory quantities current and prevent POs for out of stock items.
  • Supplier shall ship all orders from the Distribution Warehouse location designated by Walmart.com. The ship-from location is derived from the inventory feed provided by the supplier.
  • Supplier will not internally re-shop Walmart.com orders to their other facilities.
  • Suppliers will keep contact and warehouse information up to date in Supplier One. Failure to provide accurate email addresses in Supplier One means suppliers will not receive pertinent business information.
  • Suppliers will maintain complete and accurate Distribution Warehouse information in Supplier One. Suppliers will provide at least sixty (60) days written notice of Distribution Warehouse modifications, including closings, shutdowns, relocations, new facilities, changes to normal operating hours, and any changes to business contact information.
  • Supplier will provide at least five (5) business days written notice of all supplier system changes and modifications that could have any potential effect on supplier-Walmart communications, including but not limited to: inventory uploads, order transmission, on-time shipping
  • Suppliers understand prohibited activities and will adhere to Walmart Supplier Guidelines.

    Carrier Guidelines

    DSV Carrier Standards and Expectations

    Walmart assigns a carrier method to each order. Walmart uses an algorithm that chooses the best carrier based on the partner location and the delivery location to ensure the best possible experience for the customer. DSVs are required to ship using the assigned carrier method. Failure to comply will result in a Transportation Chargeback and may result in suspension from the DSV program.

DSVs are expected to comply with all carrier methods. If a DSV has a valid business reason to be exempt from a carrier method, the exemption request must be submitted to Walmart Transportation Team and is subject to approval. To contact the Transportation Team, click Help > Manage ticktets within Supplier One to open a case for Partner Support. Select Orders and Shipping > Others for the issue. Failure or inability to comply with all carrier methods may result in suspension or termination from the DSV program. 

DSVs are expected to manage the relationship with local carriers to ensure all orders are picked up and scanned on time. Walmart does not manage the carrier relationship on behalf of DSVs. Failure to manage the relationship with local carriers may result in suspension or termination from the DSV program. 

Carrier Relationship Guidelines 

It is your responsibility to manage the relationship with your local carrier representatives. You are an agent acting on behalf of Walmart.com and we expect you to conduct these relationships professionally and respectfully. Always provide accurate, current information about your Walmart.com DSV account to your carrier representatives and respect all carrier employees who provide support to the Walmart business. Failure to comply with the Carrier Guidelines will result in an immediate 7-day (minimum) suspension from the program. 

Carrier Escalation Process 

 If you are having difficulty securing enough carrier capacity (pick-up volume) from carriers, you must:

  • Speak with your local carrier representative and find out what volume they can commit to picking up on a daily basis. It is your responsibility to manage the carrier relationship and we request that you follow the Carrier Relationship Guidelines outlined above.
  • If you ship less than 1000 orders per day, reduce your Warehouse Capacity to the volume your carrier can commit to picking up. Failure to decrease your capacity to reduce your late shipments will result in late shipment chargebacks and/or account suspension.
  • If you ship 1000 or more orders per day, reduce your Warehouse Capacity AND submit a Carrier Escalation case with Partner Support by clicking Help > Manage tickets within Supplier One and selecting Orders and Shipping > Others. You must provide a completed DSV Carrier Escalation Form when you submit the case. Walmart will review your case and the decision to request increased carrier capacity will be made at Walmart's discretion. If carriers are unable to accommodate increased volume, Walmart will recommend reducing your Warehouse Capacity. 
  • Prioritize and load all Walmart.com orders first on the equipment provided by your carrier, as escalations cannot include capacity issues due to other retailers' orders.

Order Management

Inventory Feed

The supplier will submit at least one error-free inventory feed per day. Error-free means all current stock and available inventory of each item are included in the feed. 

Please do not submit on-hand quantities for items that are not available to ship. If you are waiting for items to be replenished in your warehouse, enter the item in the inventory spec with a quantity of 0.

Types of Order Alerts

Walmart.com may send two types of Order Alert Notifications for orders that breached the Service Level Agreements (SLAs) found in your DSV contract. This article discusses each order alert type and provides details on how you should respond if you receive an order alert.   

We do not send email alerts for new orders. 

Late Ship Notifications

The supplier will inform Walmart.com immediately of any failure to ship any part of a customer order on the shipment date specified. Late shipments will incur a chargeback.

You will receive a Late Ship Order Notification when there are several orders that have not been updated to shipped status by their assigned Expected Ship Dates (ESD). Your Walmart.com DSV contract states that you are required to ship and update all orders by the assigned ESD. Failure to ship and update orders by the ESD will result in a $5 late shipping chargeback penalty per late order. Details about chargebacks can be found in the DSV Fulfillment Chargebacks article. 

If you receive a Late Ship Order Notification, you should respond immediately. Carefully review the options below to determine the appropriate action for your situation. 

  • If the orders in the alert notification have physically shipped from your distribution warehouse, please update the orders directly in Supplier One, re-send the ASN 856 ship confirmation via EDI, or use the ship order API call. Additionally, you should respond to the alert notification email explaining the reason for the delay or to let us know if you need help troubleshooting. The DSV Operations team monitors the responses and will help you troubleshoot any issues.
  • If the orders in the alert notification have not physically shipped from your distribution warehouse, please respond to the alert notification email providing the reason for the delay and when you expect the orders to ship. Our DSV Operations team monitors the responses and will help you troubleshoot any issues.
  • If you have not received the orders referenced in the alert notification, please respond to the alert notification email to let us know you have not received the orders. Our DSV Operations team will resend the orders to you.

Unrecognized Order Notifications

You will receive an Unrecognized Order Notification if you have rejected orders with an unrecognized status. 

If you receive an Unrecognized Order Notification, please respond to the email and provide the reason why the orders were rejected with an unrecognized status. The DSV Operations team will work with you to correct any issues. Once the issues are corrected, the DSV Operations team will retransmit the orders with the corrected information. Please note, a retransmitted order may not always go back to you, depending on other offers and the availability of the item. 

For additional details about this process, please review the Order Management Page in Supplier One for DSV orders

Contact Updates for Order Alert Notifications

If you need to update your company's contacts that receive Order Alert Notifications, please respond directly to the Order Alert Notification with the names and email addresses of the individuals you want to add or remove. Our DSV Operations team will work with you to ensure the correct contacts are included in future Oder Alert Notifications. 

Order Cancellation Policy

Orders that are not updated to shipped status in our system will be cancelled 6 calendar days after their Expected Ship Date (ESD). To prevent these cancellations, please ship and update the orders by the Expected Ship Date (ESD). 

Order Cancellation FAQs

1. What if I ship an order that has been cancelled?

Per your Supplier Agreement, if you do not ship an order by the ESD, WM has the discretion to remedy the order which may include cancellation of the order. You may take a loss for inaccurately shipped orders that are in cancelled status.  

2. Will I receive a notification for orders that are cancelled?

No, you will not receive any email notification for cancelled orders. Check the Order Management page in Supplier One daily to review your Past Due Orders, which will be cancelled 7 days after their Expected Ship Date (ESD) unless you provide shipment information. 

DSV Response Policy

DSV Program Policy requires a same-day response to an Order Alert. Alert notifications are monitored and non-responsive suppliers will be identified. If you do not respond to two (2) or more alerts, you will receive a Program Suspension Warning and a request to respond within one (1) business day. If you do not respond to the Program Suspension Warning, your DSV account will be placed in suspension for a minimum of seven (7) days. 

Set Capacity

Capacity per distribution warehouse is set in an internal Walmart system. Walmart will work with the supplier to ensure an accurate capacity is set for each distribution warehouse. Daily capacity is set for all working days, in units, for each distribution warehouse. 

Because capacity is set in an internal Walmart system, it is important that you work with Partner Support to ensure your capacity is correct. If you have questions about your capacity or need support, click Help > Manage tickets within Supplier One to create a case with Partner Support. Select Orders and Settings > Change capacity for the issue. If you want to update your Distribution Warehouse capacity, please submit a completed DSV Capacity Template when you create your case. 

Important: If your warehouse receives orders at maximum capacity for 20 consecutive days, your items will appear to be out of stock for at least 24 hours to allow you time to catch up with shipping. If you can increase capacity within that time frame, your items will remain available for Walmart.com customers. To increase capacity, please fill out the capacity template and click Help > Manage tickets within Supplier One to create a case with Partner Support. select Orders and Settings > Change capacity for the issue.

Chargeback Policy

DSV Fulfillment Chargebacks

The terms of the standard DSV contract outlines the standards that Walmart has set for shipping POs. For example, a PO must be shipped by the Expected Ship Date (ESD), which is generally the same day if an order is received before your local warehouse cutoff time. If a DSV cancels orders, ships late, or ships via a different carrier, chargebacks can occur. 

There are two types of DSV chargebacks that the Walmart Performance Management team applies to orders.

  • Late chargebacks are calculated based on the number of POs shipped past the ESD, with an allowance of 1% of the total number of POs shipped in a chargeback period. A charge of $5 is applied to each late PO over this allowance. 
    • A DSV shipped 24 of 2,000 orders after the ESD. The calculated allowance in this example is 20, so they will see a late chargeback of $20 in the monthly report. 
  • Reject chargebacks are calculated by the number of units rejected with backorder or discontinue status, with an allowance is 0.1% of the total number of units shipped in the chargeback period. A charge of $5 is applied to each rejected unit.
    • A DSV backordered 100 units in the month of April. The calculated allowance in this example is 1, so they will receive a reject chargeback of $495 in the monthly report.

The Transportation Compliance team applies transportation chargebacks for orders that are shipped using a carrier that is not indicated in the PO data (e.g. a package is shipped via FedEx instead of USPS). The chargeback is applied in two ways (depending on which is higher):

  • $5 per non-compliant shipment
  • The cost difference between the Walmart-selected carrier method and the vendor-selected (non-compliant) carrier method

DSV Virtual Refund/Replacement Chargebacks

Virtual Refund/Replacement chargebacks (VR chargebacks) are charges for items that required a customer refund or replacement. VR chargebacks are for items that have been refunded or replaced that do not arrive at a Walmart return center for a variety of reasons including but not limited to: not accepted at a return center, lost in transit, or too dangerous or damaged to ship. We cannot send these items back to your warehouse because they were not received at our warehouse. VR Chargebacks are the sister charges to damaged or defective merchandise charges, physical returns charges, that DSVs currently receive.  

Claim Notification

DSVs will continue to receive claim notification emails from claims@walmart.com. These are sent to allow you to continue to file claims against small parcel carriers to recover any losses. However, filing a claim with the carrier is NOT required by Walmart. Please note, this does not apply for LTL carriers. For more details about filling carrier claims, see the FAQ below.If you would like to update the email address that receives these notifications, click Help > Manage tickets within Supplier One to open a case with Partner Support. Select Finance > VR Chargebacks for the issue.

Disputes

VR Chargebacks are not compliance-based, like past charges, and are not eligible for dispute. Please note that there are no disputes for these charges. VR chargebacks are charges for items that required a customer refund or replacement. This is not a compliance-driven claim. VR charges are the sister charges to the damaged or defective merchandise charges, or physical returns charges, that you may currently receive. These charges are covered under your current vendor agreement.

Performance Suspensions & Appeals

DSV Performance Standards

DSVs are required to comply with the below performance standards. Failure to comply may result in suspension or termination.

  • Suppliers are responsible for submitting accurate inventory level to Walmart for each distribution warehouse.
  • Suppliers will submit a minimum of one full inventory feed each business day for each distribution warehouse. Walmart recommends submitting multiple feeds per day for high volume items.
  • Suppliers will provide a Line Level Acknowledgement within 4 business hours. All suppliers must communicate a Line Level Acknowledgement on all PO lines within 4 business hours.
  • Suppliers will ship each order by assigned Expected Ship Date (ESD) to make the promised delivery date to the customer. Suppliers will incur a $5 Fulfillment chargeback per PO for shipping after the ESD.
  • Suppliers will adhere to Performance Standards for Rejections, On-Time Shipping, and Order Defect Rate (ODR)
  • Suppliers shall maintain an on-time ship standard of at least 99%. The on-time ship standard is calculated on a calendar monthly basis.
    • The on-time shipping standard means supplier tenders at least 99% of orders to the carrier on or before the Expected Ship Date (ESD), including complete and accurate tracking information.
    • Suppliers must ship the remaining 1% (or other remaining percentages) or orders no later than one (1) Business Day following the expiration of the ESD.
  • Suppliers shall maintain inventory to fulfill Walmart.com orders at a rate that results in no more than 0.1% backorders. The backorder standard is calculated on a calendar monthly basis.

Performance Monitoring and Suspensions

Walmart’s Partner Performance team regularly reviews DSV performance and will notify you if your DSV account does not meet the DSV standards. Notifications are sent to contacts provided in Supplier One. It is your responsibility to ensure your contacts remain up to date in Supplier One. 

Accounts that fall below the performance standards may be suspended or terminated. Walmart will provide at least one warning before action is taken against your DSV account. 

DSV Appeals Process

Similar to other Supplier Account Suspension processes, you can appeal the suspension of your DSV account. There will be a 7-day grace period before Walmart will accept any appeals. You will be given a date in your suspension notice when an appeal will be accepted. To submit an appeal, click Help > Manage tickets within Supplier One to create a case with Partner Support. Select Performance and Suspension Appeals for the issue and attach your Business Plan of Action, which details the steps you will take to prevent further Walmart DSV Policy violations. 

The Business Plan of Action is an appeal to have your selling privileges reinstated as a DSV supplier and should always:

  • Identify the issues in your operations or business management practices that caused the violations.
  • Clearly address how proper changes were made to these practices.
  • Provide actionable steps to resolve them to prevent further violations in the future.
  • Provide the type of monitoring in place to ensure the issue does not continue.


How did we do?