By Martin Heubel, Amazon Strategy Consultant at Consulterce
1. Cost Price Increases
While Amazon won’t like a conversation about cost increases, Vendor Managers will accept them if your ASP has increased over the last 3-6 months. So make sure you claw back this margin benefit regularly and outside the annual negotiation cycle.
2. Amazon’s Price Algorithm
Many brands assume that listing products on Amazon automatically leads to price erosion. But since Amazon is a self-declared price follower, it really just acts as the mirror of your distribution strategy. This means you can use Amazon to identify and close any leaks in your distribution setup, which leads to higher margins long-term.
3. Delisting Assortment
Amazon’s business model is designed to favour its own margins, not yours. So if you keep selling products that don’t return a profit for you, delisting them is always an option. You can also use product delistings as a negotiation lever with your Vendor Manager.
4. AVS Service Quality
If your Brand Specialist or AVS does not meet your expectations, raise your concerns early and often. You don’t need to wait for your next QBR or annual negotiation. Instead, ask to speak to an AVS Team Lead. It’s their job to ensure you’re satisfied with the service and continue to invest.
5. Automation & Offshoring
Today, 1P brands have to own more tasks to manage the online retailer than ever before. But this also gives brands more tools to achieve their set targets with the online retailer. Which lets vendors automate repetitive tasks to free up resources and focus on strategic vs operational topics.
6. Exclusive Assortment
Vendors often avoid launching channel-exclusive selections because of the initial upfront development cost. However, they forget about the opportunity cost of inaction: paying for matching compensation, cost support agreements, etc. So ensure you add channel-exclusive items to your NPD pipeline with Amazon.
7. Annual Negotiations
Most vendors fear the annual negotiation process. It’s transactional and often leads to sales interruptions with the online retailer. But it allows you to renegotiate your trade terms, and improve your supply chain setup. So preparing for these commercial discussions early is critical to unlocking long-term value.
8. Quarterly Business Reviews (QBRs)
QBRs are an effective way to discuss the state of your business and allow you to raise any concerns about the performance of your account. Vendors who have QBRs in place often outperform most of their category peers.
9. Leadership Escalations
Many vendors view leadership escalations as a sign of weakness. But the opposite is true. If negotiations are stuck, the best way to re-set the business relationship is to bring neutral stakeholders to the discussion. Which also allows you to leave your Vendor Manager’s short-term margin focus behind.
For further information and support, contact Martin Heubel here
