By Martin Heubel, Amazon Strategy Consultant at Consulterce
Amazon is in money collection mode right now. Here’s what that means for your upcoming negotiations.
If you’re a 1P vendor, you’ll likely have faced cost support requests and temporary delistings from your Vendor Manager over the past few weeks.
As Amazon prepares for the peak holiday season, its buyers want to ensure their bottom line is in good shape.
But their rationale for demanding cost reductions, margin support, and increased trade investment gives us a great insight into their upcoming annual vendor negotiations (AVN) strategy.
Here are 3 key takeaways vendors should take note of:
1. Net PPM remains Amazon’s NorthStar metric in 2025
As brands feel more pressure to improve their sales performance, price promotions have picked up again.
This puts Amazon’s Net PPM under pressure, especially in CPG categories. Which leads Vendor Managers to focus on recovering Net PPM losses across vendor accounts.
2. Defensive sales strategies will become more important
Amazon is known to remove the Buy Box from listings with low margins. So make sure you protect your business from sudden sales interruptions.
CPG brands should use the fourth quarter to increase Subscribe & Save revenues. And work with distributors to back up their 1P Buy Box when Amazon decides to pull the Buy Box during annual negotiations.
3. Vendors must find ways to bridge the profitability gap
The current economic dynamics remain difficult for brands to navigate. Amazon still attracts tons of traffic, with suppliers scrambling to protect their top and bottom line.
So as you prepare your AVN strategy for 2025, make sure you have a solid plan to close the profitability gap with the online retailer.
The best way to do this is to ignore Amazon’s laser-focus on cost prices and trade investments.
Instead, consider how investing in retail media and off-site traffic can positively impact your portfolio margins. And combine this with other cost-saving initiatives, such as logistics and fulfilment programmes.
For further information and support, contact Martin Heubel here
