By Martin Heubel, Amazon Strategy Consultant at Consulterce
Are you facing pressure to raise investments in Amazon’s Vendor Service (AVS)?
You’re not alone.
In fact, most Vendor Managers have significantly increased their asks for AVS.
This isn’t a huge surprise in light of the recent layoffs within Amazon:
With fewer buyers having to manage a large number of brands, buyers are incentivised to move vendors to a more comprehensive AVS level.
They seek to hand off more tasks to Brand Specialists.
However, brands that decide to raise investments may want to think again!
That’s because Amazon is increasing its efforts to reduce costs for providing the AVS.
How?
By shifting resources to countries with lower labour costs.
This so-called offshoring allows AVS to reduce costs and increase its operating margin.
At the same time, the service is going to become a lot more fractionalised:
Instead of providing one Brand Specialist as the main point of contact for a brand, Amazon is deploying multiple Brand Specialists per account, each with a specific knowledge focus:
- Sales
- Supply Chain
- Catalogue Management
While this sounds great at first, it increases the coordination effort for brands and often reduces the effectiveness of the service.
All while Amazon increases the price tag of AVS.
So what should brands do?
1. Ensure you moderate investment exposure.
Focus on negotiating an investment ceiling for 2024.
2. Agree on a service level agreement.
Only agree on investments with a clear resource commitment and improvement plan from Amazon.
3. Measure and Control.
Ensure your teams measure the effectiveness of the service, at least quarterly. If the quality of the service drops, so should your investment levels.
For further information and support, contact Martin Heubel here
