Most vendors don’t know how to manage Amazon from a pan-European perspective right now. The online retailer has moved to a centralised approach, where one buyer manages the entire pan-EU relationship.
But brands are set up very differently. They have local P&Ls with expert hubs in each country and cannot just change their entire business for one retailer. So how should brands respond?
Let’s break down the main three options:
1️. Do nothing
If your teams are not ready for an EU-wide setup, Amazon will appoint a lead Vendor Manager to simulate an EU-wide approach. In other words, previous buyers from local markets will no longer support the account. As a result, the lead VM will negotiate commercial terms with your local market teams separately.
This approach allows brands to prepare their pan EU ambitions in the background. The P&L remains managed locally. However, Amazon will gain visibility on your EU-wide margins, and your teams will face increasing pressure to benchmark markets with better terms.
2️. Appoint a leading locale
Rather than letting Amazon unilaterally drive its EU ambitions, this approach aims to consolidate commercial negotiations. The P&L is still managed locally, but the vendor appoints a central team with a mandate to negotiate cost prices and terms on behalf of all EU markets.
The main advantage is that the commercial alignment between the brand and Amazon is reduced to fewer stakeholders, which speeds up the process of making commercial decisions. However, this also comes with a high coordination tax, as internal stakeholders need to be kept informed of any progress and reassured that their account targets don’t get jeopardised.
3️. Move towards a pan-EU P&L setup
The most advanced option is to move to an EU-wide P&L management. In this setup, local markets continue to manage the Amazon account but no longer make decisions that impact the Amazon P&L.
A centrally deployed team aims to harmonise cost prices and trade investments to reduce cross-border sourcing conflicts. The competitive landscape of individual markets is then addressed through a local layer of investments.
Choosing the right option can be difficult and will largely depend on the importance of Amazon to your business. If you need any support in your decision-making on which approach to take, make sure to send me a message.
