By Martin Heubel, Amazon Strategy Consultant at Consulterce
In 2025, Amazon Vendor Managers are targeting up to -10% in CPDs from suppliers.
So how can you say No to protect your profit margins?
Here’s a tried & tested 3-step formula:
1. Don’t panic
This is the most important step. Resist an emotional response, which will do more harm than good. Focus on step 2 instead:
2. Analyse ASP and Net PPM trends
Reviewing these KPIs for the past 6 to 12 months will give you a good understanding of the trends that have materialised on your account.
If your ASP and Net PPM are trending upwards or have remained stable, there’s no reason for a cost price decrease.
But if your ASP or Net PPM is trending down, you may need to prepare to make concessions in your negotiations.
3. Focus on shared negotiation benefits
Vendor Managers ask for lower cost prices to improve their profit margins on your account. And a cost-price decrease will certainly increase Amazon’s free cash flow.
But it’s not the only way to achieve that.
Instead of responding to their CPD request, focus discussions on shared cost savings.
For example:
- Launch of SIOC/FFP items
- Delisting of unprofitable listings
- Supply Chain Initiatives (PICS, Direct Import, …)
Remember: Cost price decrease requests are part of a wider negotiation. You don’t have to accept them, but you shouldn’t ignore them either.
For further information and support, contact Martin Heubel here
