Amazon Vendor Economics · Glossary

Co-op Allowances

Updated October 26, 2026

Co-op allowances are the allowance agreements a 1P supplier funds under its Amazon Vendor Agreement, which Vendor Central files and invoices under Co-Op: base accrual (marketing co-op), damage allowance, freight allowance, promotions, and growth and volume rebates. In negotiation, "co-op" often means only the marketing allowance, also called base accrual or marketing development funds (MDF). Payment terms and Subscribe and Save funding are agreed alongside co-op but are not part of it. The rates are set in the agreement and revisited each year at the Annual Vendor Negotiation (AVN). This is the contract-and-billing frame: what a vendor negotiates, what it is billed, and what it can dispute. On Amazon's own books, these allowances are one part of contra-COGS, an offset against its cost of goods that also carries dollars agreed outside the agreement, such as straight-pay agreements and event participation. Which agreements a given vendor carries, and who pays for what under each, is set out in the co-op and contra-COGS guide.

Co-op is not invoiced ad hoc. Base accrual, damage and freight accrue monthly against net receipts into fulfillment centers, forecast receipts multiplied by the agreed rate, and the balance is billed on the agreement's schedule. Accrual against the wrong base is a named defect type, so the base matters as much as the rate.

What goes wrong with co-op, and what can a vendor dispute?

Until a negotiated agreement is signed, Amazon bills at provisional rates. SPS Commerce's guide says the negotiated rates are then applied retroactively and the difference credited or debited, so the true-up can take money back. Signed terms for every allowance type are a primary defense.

The highest-yield defect is a negotiated waiver charged anyway. The cause is a breakdown between the retail team that agreed the waiver and Amazon's automated finance system, and the waiver emails or the agreement amendment are the evidence.

Backup reports are not produced for lump-sum and volume-incentive, estimated-reconciliation, or price-protection agreements, so no report does not mean nothing to check. And Provision for Receivables, a temporary hold Amazon applies when forecast vendor costs exceed payments owed, appears in remittance with no invoice or PO reference; it is not a deduction and not recoverable, and a margin recovery audit separates it out first.

The dispute window for co-op is not publicly settled. It is commonly described as around two years, but some specialist sources apply the 30-day chargeback clock to co-op, so file anything current inside 30 days until your own Vendor Central record shows the window. Totals sit under Payments, then Co-op, and the backup report carries net receipts and the rate. The signed agreement, with its rate, base and dates, is what each deduction is checked against; menu paths change, so find where your account files its agreements before you start.