UNFI and KeHE together dominate natural and specialty food distribution in North America. For CPG brands, working with them is often non-negotiable—but so is understanding their complex deduction structures.
The reality: 25-35% of your gross revenue with these distributors will go to deductions. Some are legitimate costs of doing business. Others are recoverable if you know where to look.
UNFI: Where Deductions Multiply
UNFI Key Challenges
East/West Divisions
Process payments separately, requiring duplicate tracking and reconciliation efforts
Fill Rate Penalty
3% fine below 95% threshold—a significant hit if your supply chain has any hiccups
MCB Documentation
Only 1 recipient per company allowed, creating bottlenecks in dispute processing
Slotting Fees
$500-$1,200 per SKU per retailer—costs that add up quickly across your portfolio
KeHE: Speed is Everything
KeHE Key Challenges
Baseline Fees
3.5% before any promo activity—this is your cost of entry
UDR Response WindowCRITICAL
48 hours or deduction finalizes—miss this and recovery becomes nearly impossible
New Item Launch Costs
$140+ per SKU + 15% allowance—plan for this in your launch economics
UDR Win Rate
73% win rate when properly disputed with documentation
The 48-Hour Rule
KeHE's UDR response window is the most aggressive in the industry. If you don't have a system to catch and respond to these within 48 hours, you're leaving money on the table every single week.
Retailer Compliance: The Machine Never Sleeps
Beyond distributors, major retailers layer on their own compliance programs. The cumulative burden can consume 5-10% of shipped COGS if you're not careful.
| Retailer | Key Metric | Penalty | Dispute Window |
|---|---|---|---|
| Walmart | OTIF: 90%/95% | 3% COGS | 24 months |
| Target | Perfect Order (May '25) | $0.75/carton | 2 weeks to act |
| Amazon | 250+ reason codes | 97% shortage claims | 30 days optimal |
| Sam's Club | OTIF: 90% on-time, 100% in-full | 3% COGS non-compliant | 2 years via APDP |
Costco & Sam's Club: Special Considerations
Costco
- Slotting: None (uses marketing support instead)
- Demo fees: $35/day ($20 space + $15 CDS fee)
- Payment terms: Net 30 after delivery
- Dispute deadline: 30 days for demo/roadshow invoices
- Key portal: eam.costco.com + hub.costco.com
⚠️ Post-audit can go back 3+ years. Prevention is critical.
Sam's Club
- OTIF thresholds: 90% on-time, 100% in-full
- OTIF penalty: 3% COGS on non-compliant
- SIDE fines (item data): $638 + $122/location after warning
- Dispute window: 2 years via APDP
- Key difference: OTIF in separate app from Walmart
⚠️ Keep dimensions within 10% or SIDE fines hit.
Amazon Vendor Central: Recovery Rates Decay Fast
Amazon's shortage claims have some of the shortest effective windows in the industry. Recovery rates drop precipitously after 30 days:
Dispute Windows: Your Quick Reference
Amazon
30 days from shortage claim
KeHE
6 months (hard cutoff in K-Solve)
UNFI
1 year dispute window
Target
30 day dispute window
Walmart
24 months standard / 12 months shortage
Sam's Club
2 years via APDP
Documentation That Wins Disputes
Across all issuers, the same core documentation drives recovery:
Bill of Lading (BOL)
Proof of shipment with quantities and dates
Proof of Delivery (POD)
Signed confirmation of receipt
ASN (Advance Ship Notice)
Electronic notification of shipment contents
Original PO
Purchase order with agreed terms
The Bottom Line
Brands that internalize issuer-specific rhythms recover what others write off. The differences in dispute windows, documentation requirements, and response times between UNFI, KeHE, and major retailers mean a one-size-fits-all approach leaves money on the table.
Build issuer-specific calendars. Track your dispute windows. And never let a 48-hour KeHE UDR deadline slip by.