By Martin Heubel, Founder and Director of Consulterce, a strategy consultancy for B2C Household & CPG brands.
While that doesn’t happen very often, I recently spoke to several business owners who achieved just that.
But they weren’t happy.
In fact, the CPI did more harm than good to their business:
- Amazon CRAP’ed their products
Their advertising campaigns got turned off
Sales and product rankings dropped sharply
Amazon didn’t place any new orders
So what happened?
Their Vendor Managers agreed to an uncompetitive cost increase.
With Amazon being a price follower, it will never pass higher cost prices on to the customer, unless:
- Other retailers are increasing customer prices;
2. The Recommended Retail Price increases alongside the CPI; and
3. The new cost base translates into the market segment.
The bottom line?
Never obsess about cost increases with Amazon in isolation. Instead, make distribution control an equal part of the process.
Otherwise, you turn your Amazon listings with a decent margin into products with high margins but no sales.
For further insight and support, contact Martin Heubel here
