By Martin Heubel, Amazon Strategy Consultant at Consulterce
Closing annual negotiations is a key priority for most Amazon vendors right now.
The problem is:
Many of you will have reached their investment ceiling.
Yet, your Vendor Manager asks for more.
So how can you find a way out of this deadlock?
Should you:
- Go and find more budget?
- Forego your growth targets?
- Stop selling to Amazon?
No, it’s none of the above.
Here’s what to do instead:
First, bring your senior leadership on board.
Ask your Vendor Manager for a top-to-top meeting with their Category Leader or Sales Director.
Then, bring your own leadership team to the discussion.
This will help you leave Amazon’s short-sighted negotiation focus behind.
Second, encourage creativity in negotiations.
The next step is to leverage Amazon’s business model.
Ask yourself: What does spin the online retailer’s flywheel?
That’s right, it’s your selection.
Without it, Amazon cannot sell to consumers.
So ensure you highlight that raising trade terms each year isn’t a sustainable option.
And that if Amazon insists on reaching its investment target, your teams may have to shorten its portfolio.
Third, create the solution.
Now that your Vendor Manager understands that fixed investment demands won’t yield the desired results, show them a way out.
There’s an opportunity to direct the discussion away from cost prices and trading terms.
Instead, focus the conversation on mutual cost savings through supply chain improvements, portfolio mix management, etc.
This bridges the gap between what you can offer and what Amazon needs to close the negotiation.
Unfortunately, most vendors shy away from this approach. They think bringing their leadership to the discussion is a sign of weakness.
But it is the single most effective way to break the cycle of increasing investments every year.
For further information and support, contact Martin Heubel here
