By Martin Heubel, Amazon Strategy Consultant at Consulterce
Net PPM is the worst margin metric you can track with Amazon.
That’s because it tracks what’s not broken:
- Cost Prices
- Trade Terms
- Average Selling Prices
And still, Vendor Managers only want to discuss Net PPM targets.
Why?
Because they are lazy and want quick results (take it from a former VM)
Think about it:
Structural margin improvements take time to materialise in your P&L with Amazon.
You need to invest in:
- Supply Chain Improvements
- E-Channel Packaging (SIPP/FFP)
- Free Cash Flow Initiatives
All of these aren’t reflected in Amazon’s Net PPM.
So the next time your Vendor Manager wants to review Net PPM targets?
Don’t get bullied into improving cost prices or trade terms.
Instead, let them know that you need to discuss a more holistic approach to improving profit margins.
For further information and support, contact Martin Heubel here
